Do host countries make money from the World Cup?

Major global events are costly to stage, and the benefits aren’t always easily quantifiable.

fan fest
Most countries hosting a World Cup spend tens of billions on preparations, developing infrastructure, building hotels and so on [Sorin Furcoi/Al Jazeera]

The football World Cup is the biggest sporting event in the global calendar … ahead even of the Olympics.

More than five billion people are expected to tune in to watch the sporting spectacular in Qatar, with more than a million turning up to watch the games in person.

From ticket and merchandise sales to corporate sponsorship, prize money and tourism, there are immense amounts of money kicking around an event like this.

But, for a host country, is it financially worth it? The short answer is no.

Most countries hosting a World Cup spend tens of billions on preparations, developing infrastructure, building hotels and so on. Much of that is often not recouped, at least not in terms of hard cash.

The World Cup certainly is a money-spinner. TV rights for the 2018 World Cup in Russia were sold to broadcasters around the world for $4.6bn. But that is kept by FIFA, football’s world governing body.

As are ticket sales, which are owned by a subsidiary company 100 percent owned by FIFA. Marketing rights, which brought in more than $1bn in the 2018 cycle are, too, kept by FIFA.

The body does, however, cover the principal costs of running the tournament – it will be paying Qatar in the region of $1.7bn, though that includes a $440m prize pot for teams.

But Qatar is understood to have spent in excess of $200bn on this World Cup and the infrastructure around it – hotels and leisure facilities, overhauling its entire road network and constructing a rail system.

With more than a million overseas visitors expected during the month-long tournament, a host country will see a tourism spike, increasing sales for hoteliers, restaurateurs and the like. But such a surge requires extra capacity to be built, the expense of which is usually far larger than the revenues generated short term.

And who benefits in the short term?

The World Economic Forum reports: “Hotel prices rise during sell-out events, but wages of service workers do not necessarily go up by the same amount, meaning the returns to capital are likely greater than those to labour.”

People with money make money. People without it, don’t.

Furthermore, World Cup tourists buying merchandise, drinks or anything else from FIFA partner brands are not contributing to a host country’s tax revenues, as enormous tax breaks for FIFA and its sponsor brands are required within a World Cup bidding process.

Germany touted $272m in tax breaks in its bid to host the 2006 World Cup.

Non-World Cup tourists tend to stay well clear of a host country during a World Cup, keen to avoid the crowds, traffic and inflated prices. For Qatar 2022, if you don’t have a match ticket, you are unable to enter the country from November 1 to the end of the World Cup.

In the short term at least, it doesn’t make financial sense to host a football World Cup. But some things are bigger than money.

Hosting a World Cup is an exercise in the projection of soft power. It gives the world a window into that country, showing how new infrastructure makes it a good place in which to invest or to do business.

And in the longer term, the money spent on hosting, if managed correctly, builds capacity for that country’s economy to expand.

New roads and transport projects will provide economic benefits for years after the final whistle is blown at a World Cup.

Huge international sporting events bridge societal divides and bring people together across borders – the 2018 Winter Olympics saw North and South Korea enter the stadium under a common flag. These events also encourage children to take up sport – which has economic benefits to a host nation’s healthcare system further down the line.

For a host country, a World Cup is about pride and honour and publicity, more than it is about making money.

Hosting a World Cup is a nation opening its arms and its homes and saying to the world: “Hayya, you are welcome here.”

Source: Al Jazeera