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What's a World Cup worth?

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Gordon Farquhar | 16:30 UK time, Monday, 29 November 2010

There are three billion reasons why Prime Minister David Cameron is going to be making every effort this week to support England's bid to stage the 2018 World Cup. That's because £3bn is the economic uplift in pounds sterling anticipated for the British economy should England win the right to host the event.

The principal reason that hosting major international sporting showpieces has become such a searingly competitive business is that, since the financial doldrums of the 1970s and early 80s, World Cups and Olympic Games have been perceived as something of a cash cow for governments now obliged to back them.

Political support is absolutely vital for any prospective bidder because of the guarantees now demanded by the likes of Fifa and the International Olympic Committee over security, infrastructure, financial support and even entry visas.

Governments need to be able to justify their decisions to stump up the cash - and a positive cost benefit analysis is just the tool they need.

The burgeoning revenues from television rights, ticket sales, marketing activities and tourism represent the large juicy carrot required to get governments motivated.

wcspain595.jpgSpain won the 2010 World Cup and hope to stage the 2018 event with Portugal. Photo: Reuters

You only have to look at the cast list for the 2018 and 2022 World Cups to get a sense that opportunity is knocking. Half the G8 are in there: the United States, Russia, Japan and the United Kingdom.

All the bidders believe they are going to get something out of the World Cup in economic terms - and you have got to be in it to win it. South Africa is an interesting case study. The government there spent something like $3.5bn on the 2010 showpiece, according to the SA public service commission.

That is a huge sum of money for a nation where millions live in poverty, without adequate access to education and services like clean sanitation and safe electricity. The justification for this spend was multi-layered but at its core was an economic argument. It spoke of reducing unemployment, increasing tourism revenues and promoting direct foreign investment in South Africa.

Perhaps its biggest success was one of the more intangible benefits, of building nationhood. There is no denying South Africans of all backgrounds got together behind their team and felt good about themselves.

Official claims for the German economy following the 2006 World Cup are just as robust. The German government reported that the tourism industry earned an extra 300m euros in revenue, while the event added 2bn euros to retail sales and creat ed 50,000 new jobs.

It was claimed that ticket sales ploughed a further 40m euros into the treasury, while the World Cup organising committee earned a net profit of 56.5m euros for German football.

There are plenty of academics and economists who will argue that this is all smoke and mirrors and that the benefits of staging a World Cup are substantially overstated.

Some like to highlight the loss of productivity during the World Cup, when we are all glued to our TV screens instead of our computer monitors.

A report by the Centre for Economics and Business Research in London calculated the loss of productivity worldwide could have been as high as $4.8bn, as people wasted time watching football while the tournament was on.

The British Beer and Pub Association are less concerned. They reckoned 21m extra pints would be consumed during England's first three qualifying games in South Africa.

That argument was brilliantly deconstructed by football finance expert Stefan Szymanski, who pointed out that the larger than usual number of people with hangovers the day after the matches would probably mean less pints sold on each of the following days!

There is plenty of scepticism about the real economic value of the World Cup, although there is no denying it makes plenty of money for world governing body Fifa, which has reaped the dividend of the TV rights explosion. Its 2009 accounts show a $196m surplus from revenues of $1.06bn.

It is those sort of numbers that keep the politicians interested in what football can do for their countries and why, as long as the bubble stays inflated, the nations of the G8 and G20 will continue to fight for the right to party.

Comments

  • Comment number 1.

    I don't believe its as lucrative as some people claim it is. I still haven't seen the real results of the 2006 WC. Its all vague and based on assumptions.

    Its a cashcow ,yes. But only for FIFA.

  • Comment number 2.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 3.

    There is no denying South Africans of all backgrounds got together behind their team and felt good about themselves.
    ---------
    Isn't there? Do you have a citation for this, as I'm inclined to think otherwise.

    Love your surname by the way :)

  • Comment number 4.

    hey gordon, quick question: what does FIFA do with all this profit? does it get invested in helping countries develop football? and if so, how do you qualify for investment? do you have to be third-world country or just a third-world country in footballing terms? scotland could do with a bit haha

  • Comment number 5.

    How will england make money if according to Panorama all money fifa make is tax exepmt. Or am i missing a trick?

  • Comment number 6.

    Are there any actual figures on any profit made by hosting Euro'96 in England?

    For purely sporting reasons I'd love to see the tournament back on these shores, but even the arguement of it allowing those who could never afford to travel to watch games abroad has gone out of the window in Fifa's attempts to milk the competition for every penny it's worth.

    How much has England spent over the years actually bidding for various WC's..maybe Fifa counts on us providing them with these funds every 4 years and it keeps the men in suits here in a job?

  • Comment number 7.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 8.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 9.

    Just a quick thought if Fifa have $196 Million dollars surplus and it was fifa officails who didnt notice the Henry handball which had a big hand ( no pun intended )in Ireland not going to the worldcup. With all their finincial problems how about they give them that money.

  • Comment number 10.

    i just want to ask,football is a business now so why does england have to answer to fifa as england invented this game,if you invent a new product people are not allowed to copy but it can pay royalites to the inventor,fifa started this bull by saying it is a world game and belongs to everyone,this is not true,then fifa make huge amounts of money from our world cup and "invest" it into thier personal bank accounts

    can someone tell me why fifa have so much power and why did england not bri ng this up

  • Comment number 11.

    A report by the Centre for Economics and Business Research in London calculated the loss of productivity worldwide could have been as high as $4.8bn, as people wasted time watching football while the tournament was on.

    So if any other nation apart from England hosted the WC, people will not waste time watching football?

    This calculation is an estimate from those geeks doesn't matter whoever hosts the Cup.

  • Comment number 12.

    Please complete this poll as to whether you think the BBC was right to broadcast the Panorama program yesterday

    Join my facebook campaign:
    http://www.facebook.com/home.php?sk=group_110668482336623

    or just vote below:

    http://www.pollpub.com/were-the-bbc-right-in-broadcasting-their-panorama-documentary-about-fifa-corruption-on-monday-2.aspx

  • Comment number 13.

    Cameron was quick to stamp on alledged corruption amongst MP's less so with FIFA

  • Comment number 14.

    Focus on running the UK government please instead of a football tournament...

  • Comment number 15.

    England invented modern finance and capitalism and the people leading the bid are the among the finest people in the profession. Does anybody in their right mind doubt that England, as well as all the other countries, is involved in somehow sweetening the pot and incentivizing (at a personal level) the fellows who'll be voting ?

    Come on now. The U.S. had its own olympics corruption scandal so we know this all going on -- even by the 'nice' anglo-saxon white countries.

    I think that what is angering the engilsh organizers is that this Panorama documentary has put them on notice - "do not do anything against the rules or you will be exposed." They now know that their personal careers and reputations are at stake ... and probably don't know how to proceed with some of the 'completely normal' dark-sided things.

  • Comment number 16.

    Could you please add a sub-heading to the headline saying "How costly might the Panorama journalist's ego have been for our country?".

  • Comment number 17.

    I wonder if the experts claiming there'll be a £3billion uplift in the economy because of the world cup are the same experts that claimed the Olympics were only going to cost £2.5billion? Whats the current cost, yep thats right £12billion.

    As they said on Panorama last night the only country to have carried out a complete estimate are the Dutch and they reckon its going to leave them 150million euros out of pocket.

  • Comment number 18.

    People are right to be concerned about the attitude of FIFA. Take the most recent example, in South Africa even street vendors were muscled off their pitches near the stadiums by FIFA heavies insisting that they had sole rights to merchandising. Is this going to be allowed next time? If that is going to be the case then the whole shooting match should go to Russia. They won't find it so easy to throw their weight around there, unless they cosy up to the Kremlin first and that could make a sizable hole in their profits. All this raises another question doesn't it, what about the introduction of goal line technology? I've got a sneaky suspicion why the football powers that be don't want it, it can't be rigged. Officials can be leant on to produce the 'right' result. All other major international sports use technology these days, so why not football? The digital camera doesn't lie, maybe that's the problem.
    Regards, etc.

  • Comment number 19.

    Well done BBC and Panorama.

    For too long now people turn a blind eye to corruption.

    It basically costs the average punter a lot of money as all these sums of money that are paid out are recouped in price of goods that organisations sell.

    It's easy for FIFA to turn a blind eye as having to properly investigate would most probably blow away any credibility the organisation has.

    In my opinion if proper investigations were carried out in the awarding of any major contract/event there will always be someone looking to line their own pockets.

    Once again, well done BBC and Panorama.

  • Comment number 20.

    The argument about extra pints consumed would have been 'brilliantly deconstructed' if england had played their games on 3 consecutive days. Unfortunately the chap in question seems to forget there are 5-6 days generally between games, more than enough time to get over our hangovers.

  • Comment number 21.

    You say the anticipated uplift would be £3 billion to the UK economy. If the forecasting is anything like the usual Government forecasting that could be wildly optimistic. The Panorama documentary suggested that another country that had looked at the figures more fully anticipated a substantial loss.

    More worrying, than doing business with an organisation under suspicion of being corrupt, is the indemnities leaked last night, including one that says FIFA will be indemnified against all taxes. There is no provision in the 35,000 pages of our tax legislation for this type of indemnity. How can the Government sign up to it when there is no provision for it? Is an NCIS report in point here?

  • Comment number 22.

    Where would any profit made from the World cup?

    To the clubs or into the pockets of those already awashed with money...

  • Comment number 23.

    Ah ha this is all well and good and I see that you have fallen under FIFA's spell Gordon. Yes it increases exposure to your country, it certainly did for us in SA and to be fair watching worldwide media reports before during and after the world cup one could argue that it was a supreme event for us as there was nothing but positivity about our country afterwards when there had been crime warnings and negativity before the WC so tourism should be up in future years, and it did unite the country for sure. However one has to question this for the UK with the international exposure the UK already gets from the likes of Premiership Football and Rugby, Cricket, Wimbledon etc etc is the country really going to benefit that much especially when 2012 is added into the mix? I doubt it.

    Secondly do not fool yourself on the finance part. Post WC when the true cost had be established there was a wonderful acronym used FIFA=Football Investments Fail Always, do the real analysis of the last few WC's and there is sure to be a deficit of some sort. Ticket fees go to FIFA, Sponsorship money goes to FIFA, Broadcasting money goes to.....yep FIFA! Then there are the unseen, even before the WC is awarded FIFA will copyright certain things then sue the living daylights out of some poor unsuspecting person who dares to challenge this. For example they copyrighted the SA national flag, 2010 and football combination then added the Vuvuzela into the mix, so if you had a product depicting a SA flag with 2010 and a football or even just an SA Flag and 2010 on it you were infringing on their copyright so ended up in court. It sounds stupid but do not underestimate Sepps desire for money and control. Likewise all building work within a 25Km radius of the centre spot of each ground must be suspended for 1month before and after the tournament, all signs within 1Km must be FIFA approved. Also no other major sporting event can happen in the country for 1month either side they tried and failed to stop Tri-nations rugby matches from taking place, be warned Wimbledon!

    The SA construction industry has therefore operated on essentially an 8month financial year in 2010 when you add all of this into the normal summer breaks, so any good that happened last year has been seriously undone this year post world cup.

    So sure go and get it and we will celebrate with you but just remember the World Cup is there to line the pockets of FIFA and only FIFA so don't expect the country to have a financial shot in the arm from it.

  • Comment number 24.

    Politicians should not be involved in bids for sporting events.

    Didn't the government cut funding for sports in schools recently? Perhaps they should focus on encouraging kids to participate and provide better facilities for sport across the country? Maybe that would see stronger British teams in sporting events?

  • Comment number 25.

    World Cup is worth billions to the world. It is the most popular event in the world and has a massive global audience

    Most of the money generated from these World Cup go to FIFA and FIFA uses this money to make football move popular around the world

    It the only global sport than unites all the countries in the world

  • Comment number 26.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 27.

    The World Cup is immense, worth a ton of money for the economy, will hopefully help our grass roots out a bit, and be ace for me to go and watch at my beloved Villa Park.

    Please let us host it FIFA!

    http://www.inofftheghost.wordpress.com

  • Comment number 28.

    "Cups and Olympic Games have been perceived as something of a cash cow for governments now obliged to back them."

    In that case, Mr Farquahar, could you explain why in this week's Panaorama programme it said that the Dutch and Belgians had done their sums and calculated that they would lose money on hosting the 2018 World Cup?

    Of what relevance is the productivity lost by people watching the games on TV? People will do that regardless of where the tournament is hosted.

    Is there an authorative source that can be quoted for the claimed £3bn benefits or has it just been plucked out of the air by someone?

  • Comment number 29.

    Look folks what has caused the problems in this world? The love of money, greedy bankers, bent leaders, even us for wanting to consume what we don't need and the availability of cheap money all stoked by a desire to make money. So why is the UK government in Switzerland? Yes the attraction of money the same thing that is ruining football, I am not suggesting our world cup team are in it for selfish reasons but there are plenty of reasons why the FA would love to have it here. Finally what is ruining football? Money Money Money!!!!

  • Comment number 30.

    #27......."The World Cup is immense, worth a ton of money for the economy, will hopefully help our grass roots out a bit, and be ace for me to go and watch at my beloved Villa Park."
    Why do you think hosting the WC finals would benefit UK taxpayers ?
    Many many people will be bitterly disappointed because of unaffordable ticket prices and dodgy allocations (unless you're a pal of the likes of Cameron, Prince William or Brand Beckham, that is).

  • Comment number 31.

    What is the World Cup worth? Pity the headline doesn't deliver in the body of the article. You can dress numbers up anyway you want but the numbers mentioned (which are questionable and don't address the outgoings involved) are irrelavent in the context of the economies concerned.

    Stick with highlighting the abominable farce that both the process and FIFA are.

  • Comment number 32.

    Is the cost going to be covered by English taxpayers if its held in engerland or UK taxpayers????

  • Comment number 33.

    So far over 70% of people thin the BBC were wrong to broadcast the FIFA Panorama program on Monday.

    Under %30 think they were right.

    Have your say. Please complete the Poll:

    http://www.pollpub.com/were-the-bbc-right-in-broadcasting-their-panorama-documentary-about-fifa-corruption-on-monday-2.aspx

  • Comment number 34.

    Is the issue really whether Panorama were right or wrong? Shouldn't the issue be about how the game is being run. I am a lifelong football fan and I would love to see the World Cup hosted by England, but not at any cost. Surely integrity has to come before ego. We were all against the bankers when their integrity and morality was brought into question, just as we are when members of government, the police or a local authority are found to be serving themselves and not the public. Lets clean up the game and then bid for the World Cup at a future time and host a clean and open competion that we can be proud of as a nation.

  • Comment number 35.

    What's a World Cup worth?
    Unfortunately the BBC have made this question irrelivant. Cause it's now worth nothing to England, as Panarama wrecked any chances of us getting it.

    The upbeat report that Jack Warner said the BBC programme won't effect his bid, means nothing. He would of been the last person to vote for us. Look at his history, he is Anti-English!

    Shame on you BBC. I have always championed you, refuse to pay the Murdoch shilling and get SKY. and now you stab us in the back with your pompous do-goodery!

  • Comment number 36.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 37.

    "England invented modern finance and capitalism." Come on now Andy Tevez2. Next you'll be telling us that they invented the Sun, or the human nose, or time. I doubt anyone could truly claim to have invented capitalism; and everybody knows that Scotland invented EVERYTHING ELSE!

    With regards to the world cup 2018: I reckon that if England are successful, then it will be interesting to observe some of the new means by which the English media will press the self-destruct button and ruin it for everyone involved.

  • Comment number 38.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 39.

    Complete crock, read Soccernomics which proved for a fact that hosting the WC makes no benefit finacially, but does cut the suicide rate for the host country and said by Paul whitehouse.


    "Which is nice"

  • Comment number 40.

    @ 35

    I don't understand your argument. First you say that BBC has scuppered any chance of England getting the World Cup then you go on to say that Jack Warner wouldn't have voted for us anyway?

  • Comment number 41.

    I expect this will get deleted but for what it's worth.

    FIFA have been accused of corruption

    That is a serious charge - there is a case to answer to the UK's satisfaction, if no one else considering we're thinking of inviting them here

    Yet the bid team, including Prince William, the PM, & the National Icon are ploughing ahead regardless?

    What on earth does that say about the bid team?

    That an accusation of corruption isn't important?

    Where on earth is the integrity in this? Where - to paraphrase the leader of the bid team - is the patriotism?

    I can't help thinking the ICC would be taking this incredibly seriously - whereas FIFA don't seem to be - & the bid team seem to be giving them the message to carry on regardless.

  • Comment number 42.

    If we win the chance to host the World Cup, all of the media will no doubt spend the next 8 years digging up dirt on anyone who could potentially manage or play for the England team during the tournament, and make sure it comes out at the most damaging time. Special attention will be given to players in good form and injury-free come the end of the season. Cynical? Me? I still don't believe Terry Venables should have left in 96.

  • Comment number 43.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 44.

    I think you've missed the main reason for David Cameron's personal participation in this bid - it will get him serious political credit at a time when the coalition is primarily associated with the current austerity cuts.

    If one thinks back to the winning bid for the olympics, there was almost nationwide applause, creating a huge boost for labour's popularity, although it was quickly eclipsed by the events of 7/7.

  • Comment number 45.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 46.

    I think that some of you aren't viewing the whole event from macro-economic perspective. At the end of the day there will be large amount of capital outlay involved in the organising the event. However, the number of tourists coming to visit the country that will be paying for the transport, drinking in the bars shopping, eating so on and so forth will create a large amount of private sector employment, tax revenues and reduction of benefits. All in all, even if it doesn't make a profit it will improve infrastructure, give people entertainment ( as the romans rightly said the crowd wants blood - their form of entertainment, not bread)and might even generate some permanent employment. Not to mension improved international status as a global leader, I thought British people were proud?

  • Comment number 47.

    And who benefits from the £3billion, only the super rich - haven`t they got enough?. Obviously the un-educated xfactor class will be happy in their delusion of reality but for most all this jingoism is pathetic. The Beckham-Prince William-Cameron show looks ridiculous. Think Spain-Portugal would do a good job and be better to visit but the back-handers will decide the vote. UK must shade it then :)

  • Comment number 48.

    The major beneficiaries of the WC finals will be the same names (the global brands brigade) regardless of where the finals are played.
    The vast majority of English people who wish to watch the WC finals will do so on TV regardless of who hosts them.
    If England do "win" [??] this bidding farce the initial euphoria will, by 2018, be matched by frustration and anger as people learn of unaffordable ticket prices and dodgy allocations............



  • Comment number 49.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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