Flags high in the West Bay Area ahead of the FIFA World Cup. (Photo by Catherine Ivill/Getty Images)
The World Cup is the biggest sporting event on the global calendar… even ahead of the Olympics.
More than five billion people are expected to tune in to watch the sporting spectacle in Qatar and more than a million to watch the games in person.
From ticket and merchandise sales to corporate sponsorships, prize money and tourism, there are huge amounts of money thrown around at an event like this.
But is it worth it financially for a host country? The short answer is no.
Most countries hosting a World Cup spend tens of billions on preparation, infrastructure development, hotel construction and so on. Much of this is often not recouped, at least not in cash.
The World Cup is certainly a hit. TV rights for the 2018 World Cup in Russia have been sold to broadcasters around the world for $4.6 billion. But that is kept by FIFA, the world governing body of football.
As is ticket sales, which is owned by a subsidiary that is 100 percent owned by FIFA. Marketing rights, which raised more than $1 billion in the 2018 cycle, also remain with FIFA.
However, the body will cover the main costs of running the tournament – it will pay Qatar around $1.7 billion, although that includes a $440 million prize pot for teams.
But Qatar is said to have spent over $200 billion on this World Cup and the infrastructure around it – hotels and leisure facilities, overhauling its entire road network and building a rail system.
With more than a million overseas visitors expected during the month-long tournament, a host country is set to see a surge in tourism that will boost sales for hoteliers, restaurateurs and the like. However, such an increase requires the construction of additional capacity, the cost of which is usually far greater than the revenues generated in the short term.
And who benefits in the short term?
The World Economic Forum reports: “Hotel prices rise during sold-out events, but service worker wages do not necessarily rise by the same amount, meaning the returns on capital are likely to be higher than those on work.”
People with money make money. people without it, don’t.
In addition, World Cup tourists who buy merchandise, beverages or anything else from FIFA partner brands do not contribute to a host country’s tax revenue, since huge tax breaks are required for FIFA and its sponsor brands as part of a World Cup bid process.
Germany touted $272 million in tax breaks in its bid to host the 2006 World Cup.
Non-World Cup tourists tend to stay far away from a host country during a World Cup to avoid crowds, traffic and inflated prices. If you do not have a match ticket for Qatar 2022, you will not be able to enter the country from November 1st until the end of the World Cup.
At least in the short term, it makes no financial sense to host a soccer World Cup. But some things are bigger than money.
Hosting a world championship is an exercise in soft power projection. It gives the world a glimpse of this country and how new infrastructure makes it a good place to invest or do business.
And in the longer term, the funds spent on hosting, if properly managed, build capacity for the expansion of this country’s economy.
New roads and transportation projects will bring economic benefits years after the final whistle of a World Cup.
Major international sporting events bridge societal divides and bring people together across borders – at the 2018 Winter Olympics, North and South Korea entered the stadium under a common flag. These events also encourage children to play sports – which later has economic benefits for a host country’s healthcare system.
For a host country, a World Cup is more about pride, honor and publicity than it is about making money.
Hosting a World Cup means that a nation opens its arms and its homes and says to the world:Hayjayou are welcome here.”