Brazil almost let the World Cup slip through its fingers last weekend during a Round 16 match against Chile. Regular and extra time ended with a score of 1-1 and the game came down to penalty kicks. If it weren’t for Gonzalo Jara’s missed attempt, the host would have had to endure the remainder of the tournament knowing that glory would go to a foreign team.
They can’t let that happen. Because what Brazil wants more than anything is to hoist the World Cup on home soil—regardless of the cost.
Spending for the 2014 World Cup has far surpassed $11 billion, with many reports putting it closer to the $14 billion mark. A large portion went to building and refurbishing 12 stadiums (four more than required by FIFA), and construction costs skyrocketed to more than three times the initial budget of $1.1 billion. Despite that fact that Brazilian officials promised private funding, the money came directly out of the public purse.
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In comparison, South Africa spent $6 billion in 2010, completely demolishing their proposed budget of $650 million. Germany (2006) reportedly spent $12 billion. France (1998) and the US (1994) both managed to spend well under $1 billion for their respective events, relying heavily on preexisting infrastructure to save money. Japan and South Korea jointly spent $7.5 billion on the tournament in 2002.
Brazil is hosting one of the most expensive World Cup events of all time. At this point, even if they do win the World Cup, will it be worth it?
Despite having the strongest economy in South America, Brazil still struggles with poverty, sanitation (50 percent of the rural population doesn’t have access to basic services), and drugs (it’s the second-largest consumer of cocaine in the world). Understandably, when the government drops billions of tax dollars on a single sporting event, not everyone is thrilled about it.
So, besides the glory, why did Brazil bid for the World Cup in the first place? The obvious answer is to benefit from the massive economic boom that accompanies a world-class event. It takes money to make money, right?
It’s not hard to see how countries are seduced into coughing up the dough when, according to Brazilian Minister of Sports Aldo Rebelo, the tournament could pump $90 billion dollars into the economy over the next 10 years. FIFA adds their two cents, saying, “It is not unusual for [pro] clubs to find that the provision of a bright, new, clean and comfortable stadium brings with it a dramatic increase in attendance levels.”
But both statements, according to experts, are totally bogus.
German economist Markus Kurscheidt estimates the 15-year economic impact of the 2006 World Cup to be just under $5 billion. The US Bid Committee (who tried for the 2018 or 2022 World Cup) came up with the same quote for their proposed event. But it’s likely that the number is highly inflated (and many American economists were relieved when FIFA gave the events to Russia and Qatar instead). Leading up to 2010, South Africa anticipated revenues of $900 million. The actual number was closer to $513 million. It’s unclear where Rebelo’s $90 billion figure came from, but Brazil continues to spend with the reckless abandon of a teen with a credit card.
What’s worse, after studying the financial impacts of mega-events, economists Dennis Coates and Bran Humphreys concluded that there is “no substantial evidence of increased jobs, incomes, or tax revenues” in locations that host large-scale events such as the World Cup. Even new sports facilities, long thought to add value to communities, don’t have “a measurable impact on the economy.”
That’s bad news, especially for Brazilian cities such as Manaus with its brand spanking new $325 million stadium. Arena da Amazonia has room for over 40,000 spectators and will house a division-four soccer team. But the average Nacional Futebol Clube match draws around 1,500 fans. Beyond the incurred debt, it’s unclear who will cover the $250,000 monthly maintenance fees if the government can’t find a corporate buyer.
Arena da Amazonia’s short-lived World Cup career has already ended. It held four group stage matches. Now that the global focus has turned away, it’s doomed to become a “white elephant”—a money-sucking investment that has outlived its usefulness. Brazil, like South Africa, will soon have a herd on its hands.
Regardless, FIFA will come out smelling like a rose. Legally, they control “all kinds of financial rights, audiovisual and radio recording, reproduction and broadcasting rights, multimedia rights, marketing and promotional rights and incorporeal rights […] as well as rights arising under copyright law whether currently existing or created in the future.” At the same time, the host nation takes on full liability and risk for the event and FIFA is free “from all responsibility.”
FIFA is set to make $4 billion in revenue from the 2014 World Cup and according to 1994 superstar turned congressman Romario, it’s too late to turn things around: “Off the pitch I think Brazil has already lost the World Cup because so much money has been thrown away.” At the end of the day, Romario says, “FIFA got what it came for.”
Soon, the glitz and glamour of the World Cup will fade away. The cameras will stop flashing, the streets will empty, and the final scrap of confetti will settle on the pitch. At that point, Brazilians will be left to climb from the bottom of the financial hole that they’ve been digging since 2007. Unfortunately, it’s a hole that not even a golden Cup can fill.