AT the Asean Summit in Bangkok recently, one of the issues that was discussed was a joint bid to jointly host the FIFA World Cup in 2034.
This news will be welcomed by Asean citizens, where football has a passionate following. No doubt hosting the World Cup will have positive impacts socio-culturally and economically yet there are negative effects that must be considered.
One argument is the creation of new infrastructure and improvement of facilities. For example, Russia had created more than 800ha of parks and green zones, and it upgraded power stations and built new hotels to cope with the demand during the World Cup last year. These are beneficial to Russian citizens as the infrastructures are in use after the World Cup. Similarly in Asean, upgraded infrastructure could provide much needed electricity and water to poorer areas.
During the 2018 World Cup, visiting fans (an estimated 570,000 international fans) spent about US$5,000-8,000 each which contributed an additional US$2.5-4 billion to Russia’s coffers.
It is estimated that countries which host international sports events enjoy an increased tourist flow of about 25% the following year. This large influx of tourists and consumption would generate higher revenue for Asean countries if they decide to host the World Cup. This additional revenue could be used to develop the region as a whole.
The World Cup would create new jobs in the construction, service and trade sectors.
For the Russian World Cup, an estimated 220,000 jobs were created annually during the preparation and hosting of the event, which led to an increase in US$6.59 billion in personal income.
Besides that, 210,000 Russians acquired additional skills in preparation and hosting of large tournaments in areas such as construction, hospitality, communication and transport. A further 52,000 people received volunteer training.
When these numbers are transposed to an Asean context, the number of jobs created could reduce the unemployment in Indonesia and the Philippines, which have an unemployment rate of more than 6%. The creation of new jobs and skills would reduce the poverty rate in Asean which is at 14% in 2015.
Overall, the Russian World Cup generated around US$2 billion of investments annually and the boost for GDP is estimated to be between US$26 billion and US$30.8 billion from 2013 to 2023. On the face of it, the World Cup is beneficial to the economy, however various factors have to be considered, such as the cost of hosting the event, opportunity cost, changing tourism patterns and an increasing share of revenue going to sports governing bodies.
The cost of hosting the 2014 Brazilian World Cup was US$11.5 billion. The cost might not seem much when considering the long-term benefits of the infrastructure, jobs and skills created and investment generated from the enhanced reputation of the region. If there are the resources to host the World Cup, it signifies that there are the resources to solve pressing issues such as poverty, lack of proper education and lack of vital resources. It is true that an increase in government spending should lead to an increase in GDP, however spending on stadiums which are expensive to build and maintain, such as the Arena da Amazônia in Brazil which cost US$300 million does not improve the economic wellbeing of an average worker. The argument that the World Cup would lead to new infrastructure being developed does not stand because the equivalent benefits of having new infrastructure can be derived by eliminating the need to build additional stadiums.
This leads to the next argument that the “new infrastructure” in terms of stadiums mostly become white elephant and money would be better spent on alleviating poverty. Various stadiums in Brazil and South Africa are barely used and it is expensive to operate the stadiums. For example, the Moses Mabhida Stadium in South Africa costs US$6.3 million to maintain every year. This huge amount of money could be used to alleviate poverty.
It is argued that the World Cup would increase visitors, however it would also disrupt established tourist flows and end up reducing traffic away from popular attractions and sites.
For example, in Beijing and London, the number of visitors dipped during Olympic years. The British Museum had reported a 22% decrease in visitor numbers in the month that the games were held, and the British government had concluded that there was substantial displacement of regular visitors who were deterred by the potential for overcrowding, disruption and price rises.
The argument that hosting the World Cup would lead to an increase in tourism does not hold. This spells bad news for Asean countries that rely on tourism, such as Thailand whose tourism industry contributes to more than 9.3% of overall GDP, which translates to US$36.4 billion. Asean should reconsider any proposal to host the World Cup.
Besides, an increasing share of revenue goes to the governing body. The local organising body generates revenue from gate receipts, merchandise sales, sponsorships, licensing agreements and television rights.
However, in recent years, the governing bodies behind these sporting events are getting a bigger share of the spoils, and it is harder for the local organising bodies to make a profit.
For example, FIFA had generated almost US$5 billion in revenue despite not having any significant contribution to organising the games. This is daylight robbery as the hosting states do not get to reap the rewards of their labour as most of it is taken away by the “governing bodies”, who do not have any financial costs in organising the tournament.
This leads to the question of whether hosting the World Cup is worth it as the profit does not go to the organisers.
On the surface, hosting the event might seem to be a wonderful idea with lots of benefits to the host states. However, the costs are too great and the impact of the potential benefits are uncertain which does not justify hosting the World Cup.
Jeen Ann Young
King’s College
London
