Opinion
Pitch imperfect
The month-long World Cup extravaganza only looks to exacerbate dissatisfaction with Brazil’s ailing economySarin Ghimire
Football is a religion and the World Cup is the most cherished festival for more than 3 billion fans across the world. The tournament attracts a globally diverse audience for a month of action preceded and followed by four years of
anticipation.
The South American dream to host the World Cup will soon become a reality with Brazil, the most successful national football team in the history of FIFA with five championships, hosting the tournament in a few days time. The country, which has produced some of the world’s best players in Pele, Ronaldo, Romario and Ronaldinho, will feel like ‘football is coming home’.
A sluggish economy
But within the boundaries of the rich footballing culture creeps in local disillusionment with the tournament. Ahead of the presidential elections in Brazil, politicians tried to sell the idea of the country’s economy making a comeback through this extravagant sporting event. Even Goldman Sachs, the banking giant, which is traditionally not the first place to go for predictions on football, had their fair share through statistical analysis of teams for betting tips. But for those who see the World Cup as a possible game changer to push for a long-term growth in the economy, hopes are fading away. This explanation goes beyond what happens on the pitch.
When Brazil was named hosts in 2006, its economy was growing at 6.1 percent. But after the sluggish growths of 2.9 percent in 2011, 0.9 percent in 2012 and 2.3 percent in 2013, the country’s central bank predicts a similar fate for the next two years—1.68 percent this year and 2 percent in 2015. The manufacturing industry is marred by high taxes and a lack of competitive infrastructure, while numerous scandals have stifled oil discovery and production. The child mortality rate, likewise, is double that of the US. Moreover, Brazil is likely to see its investment-grade rating by Standard and Poor’s, an international financial services company, reach its all time low amid huge budget cuts, resulting in tax hikes and adjustments in the prices of public goods and utilities.
For South Africa, its hosting of the last World Cup brought in a total of $3.7 billion in sales as television rights generated $2.4 billion and sponsors paid $1.1 billion. What’s surprising here is that Adidas alone made a record $1.8 billion in football-based sales and FIFA earned $2.4 billion in broadcasting deals and made revenues worth $4.2 billion between 2007-2010 as every territory in the world had access to the biggest extravaganza in the world. Similarly, when Germany hosted the World Cup in 2006, the government reported that tourism revenue increased to around $400 million and the country made about $3 billion more in retail sales.
Costs and returns
So what are the costs and returns of holding the World Cup? “Look how many billions were spent on the Cup and how much got down to us,” a Brazilian who lives in Rio’s Santo Amaro slum, not far from where the final is being played, told the Wall Street Journal.
The World Cup in Brazil has come with the most expensive ever tag for an estimated $11.5 billion spent. Of this, $3.6 billion came from the pockets of citizens as taxes. But the list of unfinished construction projects has only depicted the weakness of the government. The bureaucracy, submerged in allegations of corruption, infrastructures contracting irregularities, temporary policy-making decisions and self-centred politics, has left behind unfinished airports, roads, stadiums and other long-term projects. As costs soared, the government’s promise to find private funding for stadiums and set aside taxpayer funds for projects that would provide long-term impact on the economy remained unfulfilled. Eventually, the spending only added to the inflation the country has been facing over the years.
A stadium built in Brasilia, the capital city, provides an example of corruption undermining preparations, as the cost of the 69,000-seater stadium rose by 68 percent from initial estimates to $636 billion. A reported prepared to scutinise the costs found grave irregularities in handling the budget.
Some might argue that the over a dozen new stadiums would ultimately generate revenues in the long run, spreading scattered benefits across the nation. But several cities with new stadiums do not have big football teams, which indicate a complete lack of vision. The Amazonian city of Manaus, where England will face Italy and the US will square off against Portugal, has a 39,000-seat stadium but has never witnessed a crowd of more than 2,000 fans during local games.
The Brazilian government has been quick to point out the foreseeable upsides of hosting the jamboree. One of the completed signature projects was the $16 billion bullet train between Rio and Sao Paulo, assuring that other projects such as airports and roads will eventually be completed and offset short-term costs. The country, moreover, expects to generate some 380,000 jobs and attract 600,000 foreign tourists and 3 million domestic travelers during the World Cup month. Healthy revenues from advertising, hotels, airlines and other spending have also been forecasted. What’s more, the current spending accounts for only 0.7 percent of the overall planned investment in Brazil between 2010 and 2014, as claimed by the government, which looks to attract more big name companies and investment into the country by capitalising on the world’s most popular sport.
Misguided priorities
However, economists predict that the generated jobs are largely temporary, comparing the total expenditure of the event to a small pie of the country’s $2.2 trillion economy. The costs currently incurred and expected revenues are being compared to the usual levels of investment spending and the annual revenues of most private companies in Brazil. Recent protests against FIFA and the World Cup in general within the country showcase the magnitude of dissatisfaction among citizens. Last year, over a million people took to the streets of major Brazilian cities to protest what they saw as excessive spending. To make matters worse, a recent survey claims that only 48 percent of the country, down from around 80 percent, think that hosting the World Cup is a good idea.
But all is not lost in one of the largest economies of the world. A country that went from pulling some 35 million people out of poverty since the mid 1990s to selling way too many cars during its boom, the short spurt of economic relief Brazil is likely to witness during the month-long World Cup should be directed towards more sustainable long-term growth. Hopefully, the World Cup tournament itself will bring about a positive mindset among Brazil’s citizens, more so if the Sambas win the trophy for the sixth time.
Ghimire is sub-editor at the Post