Monday, October 31, 2011

Economic Impact of the World Cup

Many would be quick to assume that the largest global sporting event, held every four years, would bring economic prosperity to the host country, regardless of size. The World Cup is assigned through a bidding process that requires countries to outbid other nations for rights to host the tournament, and the winner eventually has to build stadiums, hotels, and tourist attractions for the month the tournament happens. Because it is already a generally large tourist destination, the economy will not thrive because of an unusual amount of visitors. South Africa is a relatively small country with 50% of the population living in poverty, and a 24% unemployment rate. Although the World Cup brings jobs and a temporary expansion and peak, to the country for the few years prior to the tournament, the people who are assigned the task of building the stadiums are out of a job as soon as the tournament comes to a close. The stadiums then usually sit empty, with no practical use for such a large venue. The government then usually sits in debt because of the millions of dollars they spend building on stadiums that don't bring in revenue. The host countries have to weigh the costs and benefits of hosting the tournament in their country before they decide to place their bid. Although the tournament brings temporary economic highs, the benefit of the economic boost may be outweighed by the contraction that follows.

3 comments:

hunter said...

I have to say that I can agree with this if it was according to a country like South Africa or Qatar. Although if we look back at Germany in 2006 I would say they did have economic highs but they didn’t suffer as much after the World Cup. One reason would be that Germany has the German Bundesliga, which has teams that play in those stadiums. Most of these stadiums sell out bringing a profit to the teams that own them. So maybe the problem is countries that don’t have a great economy already or have big stadiums already. So I guess the countries need to weigh the trade offs. The trade offs would be that either you spend a ton of money on the biggest sporting event in the world and then maybe suffer a little financially as a country or you cannot spend that money and use it to help your economy. Although if your country already has adequate stadiums and hotels then you should host the World Cup because it will not cost you as much. The reason it was so much money for South Africa was because they had to build almost everything.

-Hunter Prater

Travis S said...

I would have to agree with Hunter that each country has to think of the trade-offs for their country. Every country that places its bid to host the World Cup has different trade-offs. For examples some countries already have big stadiums, hotels and attractions so they would have to take less of a economic hit in building the venus for the tournament. Other countries however don't have these venus already built so they have to spend millions or even billions of dollars building these stadiums that could never get used after the World Cup is over. These countries also don't know if they will be able to make enough money during the tournament to be able to pay for everything they had to buy and build. This means that each country has to closely examen its economic state before placing its bid to host the World Cup.

Madison V said...

I agree with both of you. I forgot to mention I was mainly referencing the smaller countries that have been hosting, or bidding to host the world cups coming up. If a place like Germany hosts the world cup, they would experience economic highs because there wouldn't be a need to build stadiums, so the existing stadiums and cities would have more activity than normal.