FIFA WORLD CUP BIDDING: Why Countries Scramble For The Hosting Right

No doubt, FIFA world cup is the biggest event on earth apart from the Olympics. An estimated 3.5 billion people participated in the 2010 world cup in South Africa. That means the attention of the world shifts to the country that wins the hosting right. So we all focus on Brazil for the 2014 World cup. What does that portend?

 An economist like Mark Speigel, would rather look at the cost implications of hosting such a mega event. As BBC sports wrote, "Will South Africa's leader show the same impressive technique when it comes to balancing the books." 

There are few cast iron laws in economies, but organizers of sporting mega events over estimate the economic benefits and under estimate the cost. South Africa for instance, could only return a tenth of the $3.8 billion spent in hosting the event.

"Hosting FIFA world cup or the Olympics is a very expensive venture, which seems to yield few tangible benefits." Speigel argued. "Cost aren't compensated by either revenue earned during the event or the legacy of large Stadia or other obscure facilities left behind." Speigel wonders if it's the best way to use public treasury.

Yet, we see some extraordinary lobbying and political maneuvers between countries in the bid to win the hosting right. It's difficult to understand why policy makers and indeed, citizens of a country are quite enthusiastic about such spectacle. Already, Australia has budgeted $5 billion in it's bidding plan to host the 2022 world cup. Is it just about the fun fair or is there any serious benefits for hosting the tournament.

Trade Liberalization: A country that wishes to liberalize it's trade may want to signal this by bidding for the world cup. By so doing it can generate extra trade related investments.

The 1986 world cup held in Mexico caused the country to liberalize its trade and joined GATT.

Growth on International Trade: After 2002 world cup held in south Korea/ Japan, international trade grew by 28.6% and 25.5% respectively for the co-hosts.

The world cup has a positive impact on national export trade, usually get around 30% higher for countries that have hosted the world cup. It's not just during the event, research identifies countries that have hosted the world cup to have enjoyed a substantive permanent increase in trade.

Tourism Revenue Growth and Expansion: FIFA requires that host countries provide 60, 000 rooms in five star hotels across host cities. This drive host countries to build new hotels as well as renovate tourist sites - beaches, natural endowments, restaurants, shopping malls...

The 1994 world cup finals in Los Angeles saw a great increase in tourism revenue. There was a total economic profit of $625 million that went directly into the metropolitan economy. Revenue from hotels, restaurants, shopping, food and beverages increased by 15% and 1,700 part time jobs was created.

Building New and Upgrading of Infrastructures: A total of 20 Stadia were constructed in 2002 world cup, which include the gigantic 70,000 capacity Yokohama stadium - enough  facilities for the future development of the sport both in South Korea and Japan.

2010 world cup also brought about the overhaul of airports and the cities' transport system. Media infrastructures as well as security system were all upgraded. Today, South Africa attract other top soccer events such as 2013 AFCON tournament.

World Cup Legacy and the Transfer of Technology: South Africa has acquired some new technologies and have many of their citizens become skilled labor due to the trainings they received during the four years period of hosting the world cup.

The Soccer city stadium will ever bring back the memories of the world cup. Everyday after school, about 80 children come to play on a brand new football field in the heart of Hill-brow Johannesburg; donated by Johan Cruyff foundation during the 2010 world cup.

The behavioral changes cannot be measured in figures, but the children now adhere to the rules of fair play and social involvement. These are some of the legacies of the world cup.


Faisal Mahmud said…
I am eagerly waiting for Brazil world cup 2014 and i am surely going the event of Brazil. I hope it will be the best event i have ever seen. fifa world cup