Is hosting the world cup beneficial?
One of the greatest sporting shows on earth is underway in South Africa. The football has so far not been as good as might have been expected but what are the benefits to the hosts? The Olympics in particular used to be known as an event that often leaves a city that hosts the event in significant debt. Organisers of these events always try to emphasise that they will have some kind of lasting event on the country but does it? Sustaining a legacy after the buzz of the competition is over is difficult. In this case it is Africa’s first world cup, will it build a legacy of increasing prosperity and recognition for the continent?
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Africa on show
Hosting the world cup has immense benefits in showing off South Africa and the African continent more generally. It is a moment for South Africa like the first free and fair for all democratic elections on 27th April 1994 that will be remembered for decades by those who are a part of it. Africa is usually seen as a place of poverty, wars, famine and dictators who often inflict horrible human rights abuses on their long suffering people. The only good image that we regularly see from Africa is of its wildlife, often with an equally bad side of poaching and loss of habitat as is the case all over the world. This means that the world cup is a rare good news story. The world’s eyes will be fixed on South Africa for something that will hopefully leave a good impression on both those who are in the country to see the games and those billions who are watching the games on TV from around the world. This can hopefully help change perceptions from the usual negative perception to a much more positive version.
Zimbabwe Tourism Authority’s Chief Executive Karikoga Kaseke says Zimbabwe has a similar goal for the world cup "Our objective is to rebuild the image of this country through 2010, and you can't put a monetary value on that."
It is not all good publicity. There has been a lot of publicity about townships in poverty right next to swanky new the swanky new stadia. There has also been a lot of worry about the crime rate including rape and 50 murders a day. To reduce the increasing pressure to take action on violent crime before the World Cup South Africa's chief of police told Sky News that his officers should kill criminals if they came under attack. Which itself will probably not have been good for South Africa’s image. A British company has even begun marketing a 2010 stab-proof vest for worried football fans visiting the South Africa. And finally like the Chinese in the Beijing Olympics they may have to deal with journalists looking at other areas such as South Africa’s poor record on pressurising Zimbabwe’s Robert Mugabe.
Beneficial for African companies
The world cup is potentially valuable for African companies. Africa is known for its production of raw materials, well building stadia and transport infrastructure requires raw materials. South African companies can get their adverts noticed on a global stage and some such as its largest bank FNB.
It is not just South Africa that hopes to benefit but the whole of the continent. For some countries this may be unlikely but for South Africa’s neighbours it is more likely. Zimbabwe had a friendly match with Brazil in Harare and it along with other neighbours: Namibia, Botswana, Swaziland and Mozambique hope to gain more adventurist fans coming to see some of the world cup along with Africa.
It is not beneficial for Africa, it is instead a sanitized event that is tailored for the big multinationals who take all the advertising and splash their names over everything they can. Are there many big African companies being showcased? It is mostly brands like Coca-Cola, Kia, Nike etc. African companies barely get a look in and the event is policed well to make sure that no companies that have not been recognised by FIFA get airtime, can sell their drinks etc. This corporate branding may be great for the world cup and FIFA but it does not help South Africa or Africa in general at all. Indeed even the small things are being done by sponsors and foreign companies. Local traders have been barred from selling food, drinks and merchandise and even the mascot is manufactured by a Chinese company rather than a South African one.
Even the expectations of tourists going to other African countries are not proving to be correct. According Rainbow Tourism Group Chief Executive, Chipo Mutasa “Unfortunately there has not been much business that has been generated other than the excitement we had here over the trip by Brazilian team. We have not seen any increase in business as a result of the 2010 World Cup and this has been a great disappointment to the industry at large.”
Africans are not the ones benefiting from getting to see the World Cup due to the price of the tickets meaning that many cannot afford it. Africa is the world’s poorest continent so the majority will probably not even be able to watch what is supposed to be ‘Africa’s world cup’. Tickets were first sold online despite less than 10% of South Africans having internet access. This is only 6.7% for Africans as a whole and there are many of the poorest African countries with less than 1% access. Of the 3 million tickets available, less than 100,000 have been sold in Africa. It is grossly unfair that Africans should be so excluded from their own world cup.
Financially costly for the hosts
There are a lot of financial costs to hosting the world cup and it is not FIFA who foot the bill but rather it is the host nation who promises the earth and then needs to work out how to deliver on what it has promised to win the tournament to its shores. What is worse is that almost all big sporting events seem to have the cost to host them initially underestimated, possible to be able to sell them to the public, and then spiral when there is no getting out of hosting the event. This has been the case in South Africa. The South African Public Service Commission puts the cost at Transport - $1.2bn, Stadiums - $1.12bn, Organising committee - $428m, Broadcasting/ICT - $387m, Ports of entry - $200m, Security - $89m, Legacy projects - $45m, Telecommunications - $40m, Arts and culture - $20m, Training volunteers - $3m making a Total cost of $3.5bn. But this may well be underestimating the real cost as South Africa’s infrastructure program in the run up to the World Cup was $52 billion including $9.1 billion in the roads, $2 billion in railways and $2.4 billion in Airports.
There are however some financial benefits as well. It is expected to add $2.7billion to South Africa’s GDP. This will mostly be through the influx of fans to see the games. They will all be paying to get to South Africa and then for transport to see individual games within South Africa. Then there is also the benefits to local tourist industries as fans, who in such a long tournament may stay for the month long length of the tournament or more, will probably see the sites at the same time and finally all these people need to eat and will most likely drink rather a lot so benefiting restaurants, bars, clubs etc. To take Germany as an example In the 15 FIFA Fan Fest sites, the areas for travelling fans watching on big screens, throughout Germany during the 2006 tournament, over 3.5m hot dogs and 4m litres of beer were consumed by over 18m visitors. Over 19 000 staff were employed as a direct result of FIFA’s Fan Fest sites as well as creating the opportunity for official shops to make millions of pounds in revenue through the sale of official licensed products.
Scarce public resources.
The problem is not just the amount of financial cost of the event but that it could have been spent much more helpfully elsewhere. There is a large opportunity cost to hosting the world cup. South Africa is a country with pockets of wealth and a large amount of poverty. South Africa’s Gini Coefficient has risen from 0.66 in 1993 to 0.70 in 20008, where 1 is perfectly unequal. This shows that inequality has been growing and needs to be tackled. Unemployment is around 40%. So why has not all that money gone in to schemes to train the unemployed and get them back to work, or to encourage businesses to set up or come in to South Africa? Instead it has gone on a vanity project that benefits the wealthy most.
What do you think?