“It was, by most accounts, 1986 when the residents of the United States became aware of the thing called the World Cup. Isolated reports came from foreign correspondents, and we were frightened by these reports, worried about domino effects, and wondered aloud if the trend was something we could stop by placing a certain number of military advisers in Cologne or Marseilles. Then, in 1990, we realized that the World Cup might happen every four years, with or without us.”
- Dave Eggers, “The True Story of American Soccer”
Because some of us at TILE HQ were forced to watch the Champions League Final on Saturday, this week we talked about the economics of the 2010 World Cup. Is the event a moneymaker or loser? How can a poor nation like South Africa afford to host? And who exactly is going to profit?
Most people probably aren’t thinking about money when they watch soccer. (It’s hard to think anything over the roar of the announcer’s “GOOOOOOOOOAL!”) But the world’s most popular sport is really big business. Many soccer clubs are listed and traded on the stock market, and investment giant Goldman Sachs just published its fourth hefty guide to the economics of the event. So where does all this money come from? Well, there’s the staggering cost of staging the month-long event, and then there are the costs of broadcasting and marketing the tournament to something like 25 billion cumulative television viewers. (Some viewers view more than once, which is why that number is 3.7 times more than the entire world population.) And, oh right, the tickets. So far at least 2,500,000 tickets have been sold at $320-$400 a pop.
South Africa is betting that all the money surrounding this year’s World Cup will make a big difference to their developing economy. A report by accounting firm Grant Thornton even estimated that the event could be responsible for 16% of the economy’s growth this year. The South African government has spent billions to construct the stadiums and infrastructure necessary for the games. And it’s true; besides taking in tax revenue from the 3 million tickets that will be sold, the business sector of their economy will definitely get a huge boost – especially in tourist-friendly industries like transportation, hospitality, and construction.
But will any of this actually amount to long-term results? It’s not really clear. On the one hand, hosting such a popular event will probably benefit South Africa by improving their global “brand image” and increasing interest in tourism. But is money injected into the tourism and hospitality industries enough to lift the whole country out of its economic rut? South Africa has a serious poverty problem and the highest number of HIV positive residents in the world. So would spending those billions on infrastructure, education, and public health provide a greater, more lasting economic boost? As for the rest of Africa, well, so far only 11,300 visitors are expected from African countries outside of the host nation. Many Africans either can’t afford to come, or can’t risk the possibility of an extremely long or dangerous journey.
Nobody expects the South African national team to do anything impressive in this tournament – it seems like Brazil is a favorite yet again. But one thing’s for sure: the Fédération Internationale de Football Association (FIFA) and its corporate marketing partners are going to be big winners when it comes to profit. FIFA controls the World Cup, but it also acts like a genius marketing firm, selling exclusive sponsorships and co-branding rights to companies who are able to exploit the emotion of the competition in order to sell everything from ad space to jerseys to sausages. (Yes, sausages. 3.5 million of them were sold at the 2006 FIFA Fan Fest in Germany.) If hosting the World Cup boosts a country’s image, imagine what plastering logos all over a playing field can do for a sponsor’s brand!
So what does this mean for the TILE Community? We’re not exactly sure. But if you plan on catching some or all of the games this year (for instance, the U.S.A. – England match on June 12th), think about all money it took to make it happen. And if you’re interested in international development and poverty or AIDS issues, keep a close eye on South Africa next year. Only time will tell whether this very expensive tournament is an investment or an impulse buy.
- Team TILE