Bidding for and Hosting a World Cup

Executive summary

• The World Cup is the greatest sporting event today, exceeding even the Olympic Games in scale and impact.
• The FIFA World Cup began in 1930 with 13 participants and since then has expanded to include more countries than are members of the United Nations.
• Bidding to host the World Cup has become highly competitive with large commitments of public money in bid costs and infrastructure development.
• The legacy of the World Cup hosting can be critical. Does the tournament have long term benefits? And, if so, for whom?
• Prior to the hosting of the tournament the claimed economic benefits are substantial, but post-tournament assessments of those benefits invariably are much less sanguine.
• Some critics argue that hosting major events actually fails to increase tourism, jobs and economic growth.
• The only index which moves unequivocally upwards is the happiness index, at least for males. Perhaps, then, the concentration on economic benefits is misplaced.

Australians like to gamble and as a country we have embarked on a national gamble in the hope of landing the contract to host the football World Cup in 2022.

The Fédération International de Football Association (FIFA) World Cup is the greatest multicultural sporting extravaganza of modern times. Its only conceivable rival, the Olympic Games, is a multi-sports activity in which all member countries can take part in a tournament that is concentrated in two weeks, usually in a single city. Even at the Olympics, however, the largest attendances at the Games have been for the football tournament, despite the fact that it used to be restricted to amateur players and now consists of players under the age of 23.

The World Cup, by contrast, lasts four weeks and usually is spread over a whole country, or even two host nations as in Korea and Japan in 2002. It is restricted, furthermore, to male players only (FIFA also organizes a separate women’s World Cup and age-restricted international tournaments for both genders). Yet, as the Secretary General of the United Nations Kofi Annan and the President of FIFA Joseph S. (Sepp) Blatter mentioned at a celebratory function to hand over the hosting of the 2010 tournament to the South African Football Association and the country’s then president Thabo Mbeki, the World Cup’s qualification stage involves more countries than there are members of the UN. Attendances are huge and are spread across the nation(s) acting as host(s). This makes the month-long tournament a truly national endeavour.

Garry Lyon, an Australian rules football star turned media personality with no previous interest in Association football, attended the 2006 World Cup in Germany along with an estimated 60,000 other Australians, said to be the largest outward movement of the population since the Second World War. Lyon wrote:

To be over there was a humbling experience. It is hard to argue against those who say it is the biggest sporting event in the world. I have been to the Olympics and they have a dignified prestige attached to them that demands everyone’s respect. But the World Cup is a seething mass of emotion where the passion generated by coaches, players and supporters is the closest thing to war without weapons that you are likely to find. The focus on the games reduces presidents and prime ministers to the same level as factory workers and school kids: that of the everyday sports fan.

Frenchman Jules Rimet, the president of FIFA from 1921 to 1954, turned the idea of a competition involving the footballing nations of the world from a dream into reality. The first tournament, held in Uruguay in 1930, was won by the host nation with only 13 countries participating, four of which were from Europe. In 1934 and 1938 the nefarious influence of the Fascist dictator Mussolini contributed to Italian victories, first at home and then in France. After the Second World War competition resumed with Brazil hosting the tournament and constructing the Estadio Mario Filho, better known as the Maracana, to accommodate 200,000 spectators. Brazil was overwhelming favourite but succumbed to tiny Uruguay in the deciding match. The Maracana, incidentally, was one of the inspirations of Reg Padey, the architect who designed Waverley Park in Melbourne, originally planned as the second biggest stadium in the world with a capacity of 157,000.

Since then the World Cup has expanded to encompass virtually every independent country in the world, and even some which are not. Countries bidding to host the tournament spend huge sums on that process alone. Frank Lowy, Australia’s richest person and the president of the Football Federation of Australia (FFA), obtained Federal funding of $45.6 million originally for a bid to host the FIFA World Cup in Australia in either 2018 or 2022 (though in June 2010 Australia officially pulled out of the running to host the 2018 finals and instead will focus on bidding for 2022 exclusively). In a media release from Sydney in December 2008, in support the FFA cited an independent assessment by PriceWaterhouseCoopers, which estimated that the economic impact of Australia hosting the 2018 FIFA World Cup and the 2017 FIFA Confederations Cup (a pre-tournament competition restricted to the champion countries of each of FIFA’s constituent bodies played now as a test of the facilities for the following year’s World Cup) would be a $5.3 billion increase in GDP and a cumulative employment effect of 74,000 jobs. But it is not just an economic benefit that is claimed. Other gains are proposed to include: ‘adding to Australia’s international prestige and reputation; the capacity to promote Australia’s regions and cities; the potential to motivate children to participate in sport leading to long-term improved health outcomes; promoting a healthy lifestyle; providing an impetus for initiating improved environmental practices, and providing an impetus for the creation of cultural and social events.’ Australians like to gamble on sports, but this exercise is a national gamble on a mammoth scale.

The infrastructure costs of hosting the World Cup are huge. Twelve host cities were involved in Germany in 2006, each with a modernised or completely new stadium ranging in capacity from 66,000 at the Olympic Stadium in Berlin to 43,000 in Leipzig. South Africa has built or reconstructed ten major stadia stretching from Polokwane in the north-east to Cape Town in the south. Ellis Park, the home of Springbok rugby, and Soccer City on the fringe of Soweto, represent the two poles of South African sporting culture a few kilometres from each other in Johannesburg. According to Lungile Madywabe, the bill for the stadia was around 9 billion Rand. For that you could build a quarter of a million houses for poor people, more than the South African government builds each year.

For the host country the tournament represents major costs in infrastructure investment, security and the improvement of domestic tourist facilities, plus staging costs for the event and its ancillary activities. This, however, is offset by more than a month’s exposure in the world’s media, substantial spending by fans, tourists and visitors, and some possible long-term benefits from the experiences of those who attend the tournament in commercial or other capacities. Whether the facilities added for the World Cup then will be valuable and used by the domestic population after the circus is over is debatable. Over the years many host cities have been left with economic white elephants.

Australia may be a unique case: if it does win the bid, the major long-term sporting benefits may actually accrue to a code of football that has represented the main domestic source of opposition to the mounting of the bid in the first place, the Australian Football League (AFL). All the stadia being constructed or reconstructed for the event, if the bid is successful, with three possible exceptions (Newcastle, Townsville and the new stadium at Blacktown in western Sydney), will be used for Australian rules football after the World Cup is over.
What we can say with certainty is the pre-tournament claims about the economic benefits of hosting a World Cup will not be matched by the post-tournament assessment of the outcomes. Sports marketers claim economic and commercial benefits from public and private funding of sports events. But the evidence on this often is weak or critically dependent on some heroic assumptions. Euro ’96 has been claimed to be the most successful European football championship ever staged. Travel and tourist expenditure added 0.1% to UK GDP in the second quarter of 1996, about a quarter of UK total growth in that period. But some sectors of the economy went backwards and the impact on total UK consumer expenditure was modest. In 1998 France experienced a decline in overall tourism during the FIFA World Cup as ‘normal’ visitors stayed away during the tournament, fearing the disruption caused by the football and the possibility of football-related hooliganism and violence. Stefan Bielmeier in The Globalist concluded that the 1998 World Cup produced a net drag on French tourist revenues which normally make up about 7 per cent of GDP.

A detailed study of the 2006 World Cup in Germany concluded that visitor spending was around €2.8 billion compared with the €1000 billion spent annually by German consumers and less than the German state spent preparing for the tournament. As Simon Kuper and Stefan Szymanski recently summed up, hosting sports tournaments doesn’t increase the number of tourists, or of full-time jobs, or total economic growth.

Indeed, after a careful examination of a wide range of evidence about the costs and benefits of hosting the World Cup, Kuper and Szymanski conclude that the only indicator which clearly rose during and after hosting the tournament was the happiness index. People seem to have felt happier for the experience, even though in economic terms they were no better off. The jump in happiness was quite large. Citizens of wealthy countries would have to experience a huge rise in income to gain as much happiness as from hosting a football tournament. The only group the authors noted which did not get any happier was women! And the World Cup effect lasts for some time, a matter of at least a couple of years after the event.

For one young German writing about the World Cup of 2006, the abstract concept of happiness became personal. Jörg Wimper, a twenty-year old from Dortmund, a World Cup host city in Germany’s industrial heartland the Ruhr, was organizing extra-curricular activities for foreign students staying at a local language school during his gap-year prior to attending university. When interviewed by Tony Joel about his impressions of the World Cup immediately after it had unfolded around him in June 2006, the young working-class Dortmunder reflected:

I think Germany used the World Cup as a stage to present the country and the people in the best way possible. It was also really good to see German flags almost everywhere, whereas previously the chance to see a German flag in the city was slim to none. But since the ‘World Cup hype’ started in Germany, the Germans suddenly started to not only be proud of their country, but also to show it to the world. This led to a very good vibe throughout the whole World Cup and was supported by the wonderful performance of our national team. I have met people from at least 20 different countries during the World Cup and I didn’t hear one bad word about the whole event.

* This paper draws on some material collected for a broader study of the costs of sport. Roy Hay, ‘The real costs of sport,’ International Society for the History of Physical Education and Sport Conference, University of Stirling, 14-17 July 2009 and Roy Hay, ‘The real costs of sport,’ Dissent, 28, Summer 2008/2009, December 2008, pp. 58-60. It also extracts some quotations and other material from Roy Hay and Tony Joel, ‘Football’s World Cup and its fans—reflections on national styles: A photo essay on Germany 2006,’ Soccer and Society, 8, no. 1, January 2007, pp. 1-32.

For a fully-referenced version of this article, please contact Roy Hay at Sports and Editorial Services Australia: roy@sesasport.com.au or see the website at http://www.sesasport.com.au/

Selected Further Reading

Finn, Mick. ‘From Sport to Spectacle: the Emergence of Football as a Destination Attribute or Look What They’ve Done to Our Game: the McDonaldization of Football’, in Richard N Voase, Tourism in Western Europe : A Collection of Case Histories, CAB International, Wallingford, Oxon, UK, c2002.

Hay, Roy, Marnie Haig-Muir and Peter Mewett. ‘A stadium as fine as any on earth’ or ‘Arctic Park’? — The tortured past and uncertain future of a cultural icon’, Vision Splendid, Journal of Australian Studies, 66, December 2000, pp. 158-168.

Hay, Roy, and Tony Joel. ‘Football’s World Cup and its fans—reflections on national styles: A photo essay on Germany 2006,’ Soccer and Society, 8, no. 1, January 2007, pp. 1-32.

Kuper, Simon, and Stefan Szymanski. Why England lose and other curious football phenomena explained, Harper Collins, London, 2009, p. 275.

Murray, Bill, and Roy Hay, eds. The World Game Downunder, ASSH Studies in Sports History, no. 19, Australian Society for Sports History, Melbourne, 2006.

Ward, Tony. Kicking goals: Sport in Australian national identity, Routledge, London, 2010.

Citation: Roy Hay, Bidding for and Hosting a World Cup. Australian Policy and History. June 2010.