Stefan Szymanski, Director of the MBA program at Cass Business School in London and co-author of the new book Soccernomics, said on SAfm that the 2010 World Cup may turn out to be a ‘shocking waste of South Africa’s resources’ and not the economic ‘bonanza that government and Fifa would have us believe’. According to Szymanski, the only benefit that SA will reap from the tournament is a ‘feel-good factor’.
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9 replies on “Top Sport Economist Says World Cup a ‘waste of resources’”
The feel-good factor is key:
“With all the negative things that are taking place in Africa, this is a superb moment for us. If we are going to have white elephants, so be it,” said Archbishop Desmond Tutu.”
Source: http://soccernet.espn.go.com/world-cup/story/_/id/712940/ce/uk/&cc=5901?ver=us
It cannot be argued that from a purely fiscal standpoint, the South African government would be hard pressed to answer Szymanski’s tough questions.
While the feel-good factor certainly shouldn’t be ignored, the real story is at the bottom of the article. Germany profited €56.6m in 2005, while FIFA’s profit in Germany was about €1.4bn. Take a moment to recognize the difference between 56 million and 1.4 billion.
The real disparity to be addressed lies in FIFA’s reaping of profits with little work or investment compared to the political, infrastructural, and economic investment required by host nations. It would have been gracious of Sepp to lend a significant financial hand to South Africans as they fulfill his supposed dream of having an African World Cup.
Stefan Szymanski’s article is the common critics of sports mega events and the US major leagues franchises location and relocation. The economic impact of sport events, leagues or franchises is a continuing debate.
Emotionally, the feel good effect of a been the center of the world is unquestionable for South Africa and Africa. The collective celebration of such events cannot be measured but is a reality. For South Africa and the rest of Africa, the feel-good is also political. It is an opportunity for Africans to claim their wold citizenship often denied, questioned or silenced by developed nations.
Economically the story is different. The economic model of the FIFA world cup is only viable for FIFA. A healthy economic model should have suggested that the organizing country shares all revenues with FIFA or FIFA contributes to the facilities.
Although I feel good about hosting the World Cup in Africa, the economic return or impact will be limited for the majority of South Africans. South Africa government will subsidize the World Cup for FIFA which will collect the profit.
Beyond the World Cup should Africa continues to pay so much to be part of the modern capitalist world sport system?
“South Africa will be hosting a bumper party for the world. As it is the host, everyone will love South Africa and South Africans will feel very good about themselves. But, as with any party, there is a cost attached.” – Stefan Szymanski
I am not sure what Szymanski wants Africa to do!? Really, if this first historic FIFA World Cup Finals party won’t be the best, they will all be saying, ‘Africa! We told you so! What did you expect.’
So, as a South African of African orgins, and who deferred the dream to be a soccer player–for the less exciting profession as an African historian–I am supportive of this ‘bumper party!’ Who makes any party and not carry its costs!? Slavery, Colonialism and Apartheid were f**** costly for Africa and the African people! Can we talk about those costs! Please.
Neo, you’re absolutely right. Apartheid and colonialism carried an extraordinary price, and it’s for this very reason that South Africa should NOT be hosting the World Cup but using its public funds to address this appalling legacy which is evidenced in 24 million people leaving in dire poverty.
How can any country in good conscience host an event like this when our public education and public health services are in such a shambles? Frankly, the biggest “feel good factor” is a healthy, well-educated, working nation with declining HIV rates and access to ARVs.
I’m sorry. I know this reads as one big downer but I am absolutely appalled at how Africa has been duped once again and has sold its own people down the river once again – only this time to the global behemoth of FIFA. What on earth were we thinking? The cost of this football extravaganza is way too high and should never have been indulged.
The World Cup events are an enormous scam: FIFA promises enormous benefits with voodoo math and stats, but when all is said and done, the organization is the biggest beneficiary, not our people. The post-liberation rainbow nation has been had.
I love the beautiful game as much as tanybody. Thus, I would much rather have seen us bid for the 2018 World Cup and in the meanwhile get our nation on its feet. Water, education, health care, jobs, safety and security. These are far more important to our people right now than football. It’s a matter of urgency and what are we doing? Planning a party.
..sorry. That should read ‘living in dire poverty’
The argument on the economies or lack of in any mega sporting event has been a subject of many researchers for some time now since many academics are beginning to see the sports as an economic driver. Professor Stefan Szymanski assertion that RSA will not make as much as they would have projected, will depend entirely on what is expected of the 2010 World Cup. Briefly; this is what happened from the moment RSA lost to Germany to winning May 15, 2004 till now. The event (winning the bid) itself was arguably the most glorious day yet in the history of this country’s football. Four years earlier, after much anticipation and expectation, Germany was voted hosts for the FIFA World Cup in 2006. Amongst other immediate consequences, on July 7 2000 the Rand slid to U$ 6.73, after the announcement. Two days before, on July 5, it had stood at U$ 6.85, partly due to optimism that South Africa would win the bid. Even developing countries have begun to invest in sports as key economic stimulator. There had been argument that the above fact may be true to establish first world economies like Germany, Japan, England, USA and Australia but may not be so for developing economies like RSA.
Recent opinions by researchers suggest that Poland and Ukraine; co-hosts of Union of European Football Associations (UEFA) 2012 Football Championship, would not experience direct economic impact in comparison with money spent in preparation. The very fact that co-hosting is now becoming a common factor is probably a simple cost benefit analysis that may indicate that long-term economic benefit could be expected. For 2010 World Cup, RSA neighbours are looking forward as the event is seen to be effective regional economic development vehicles in especially for transition economies. The German government supported the 2006 World Cup bid as the saw a perfect stimulator to boost the ailing eastern economy. The tournament was expected to bring in an estimated U$ 2.5 billion to the host country. The post tournament research for Japan and South Korea in 2002 and Germany in 2006 showed that though the economy was indeed bolstered.
After signing the acceptance contract to organize the 2010 world cup, the South African government made 17 guarantees to FIFA to ensure that the tournament will be successful. To ensure this, the Parliament passed the act in September 2006 called “the Special Measures Act”, as per FIFA requirements. As of February 2008, the national Government’s contributions to the 24 World Cup projects was R28 billion (estimated to be Euro 2, 5 billion). The major financial commitments were on;
Stadiums and precinct development: R9 841 million
Transport: R11 728 million
Broadcast and telecommunications: R300 million
Event operations: R684 million
Safety and security: R1 305 million
Event volunteer training: R25 million
Ports of entry infrastructure: R3 500 million
Immigration support: R630 million
Communications, hosting, legacy and culture: R504 million
Today major cities are hive of activities and every proud South African cannot wait to see how renewed the country will be in just six months’ time.
The consulting firm Grant Thornton, which drew up the financial impact report for South Africa’s World Cup bid committee, said the tournament will contribute R21.3-billion into the country’s economy, generating an estimated R12.7-billion in direct spending and creating an estimated 159 000 new jobs.
On the tourism side, it was estimated that as many as three million tourists will be attending the tournament. The figure was 40 percent more than the average annual number of tourists in the country. Grant Thornton’s report indicated a further R7.2 billion direct benefit in taxes.
This does not include intangibles like an enhanced international profile and an improved sense of pride and unity among South African as we have seen in 1995 when we won the first rugby World Cup.
Importantly, the marketing value this country got from the tournament long before kickoff is incalculable. All countries that played the qualifiers in the last three years had to bear a badge on their sleeves advertising the tournament.
to quote former SAFA president, Solomon Morewa when we were announced as the host of 1996 African Cup of Nations, “we want to send a strong message to FIFA that Africa is well on its way to confidently bid for future World Cup finals. We are determined that South Africa will be the proud African nation to host the first finals on African soil. What a day that will be for our beloved Africa”.
But especially for South Africa and Africa as Kwame Nkrumah (former Ghana President), its time we use the game to “change world perception about Africa”.
thought you & your readers might be interested in a related new documentary, Fair Play, which explain why the ‘95 World Cup was so important to Mandela and the world. Here’s a trailer: http://activevoice.net/haveyouheard_fairplay.html.
I agree to disagree with my compatriot, Catherine Muller,
(December 17th, 2009), above.
I am re-phrasing Mullers’s question: “How can any country in good conscience” be purchasing the luxury cars that cost +R 1 Million Rands for its politicians and ministers who are rightly supposed to be the servants of their people – service to, and serving – the people! That for me is the greatest tragedy of the African and Black liberation struggle in my beloved country “when our public education and public health services are in such a shambles”!
Secondly, it seems that while “Apartheid and colonialism carried an extraordinary price,” those who benefitted from both crimes should be ploughing back their profits by making human and financial resources contributions to the country’s public health and public education, including higher education.
Thirdly, we supported Rugby World Cup in South Africa; rugby is traditionally a white Afrikaner sport in our country. But you never heard my compatriot(s) saying “How can any country in good conscience host an event like this when our public education and public health services are in such a shambles?”
The FIFA World Cup is associated more with Africa [read Africans and Black people], and by extension an African/Black Government, than with the entire South African citizenry. I have a problem with that!