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The World Cup Does Not Have a Lasting Positive Impact on Hosting Countries…

· World Cup,Sports,Sports Business,Government Spending,Football

The World Cup Does Not Have a Lasting Positive Impact on Hosting Countries…

When a particular country is chosen to host the World Cup, its leaders are usually seen in celebration with beaming smiles. Some may say that the excitement is due to their love for football, while more business-oriented people would suggest it is over the numerous economic possibilities that come with hosting a World Cup.

Delegates of Canada, Mexico and the United States celebrate after winning a joint bid to host the 2026 World Cup

Although these opportunities seem to be everlasting, many hosting countries have realized that the expected boom in their economy doesn’t last as long as they anticipated. Since the host is announced eight years prior to the actual event, a majority of the investments are secured in the years that follow. This has been proved by the World Cup’s most recent host, Russia, as explained by Kristin Lindow, a senior Vice President at Moody. She acknowledged that much of the economic impact has already been felt through infrastructure spending from 2013-2017. [1] It is also key to understand that all of these investments in the World Cup made up for about one percent of the total investments Russia makes into its own economy.

The Olympics has seen a lack of enthusiasm for hosting future events

Another negative for hosting countries is that the costs of improving infrastructure, paying construction workers, and hiring security deeply cuts into the profits made during the one month tournament. For example, in 2014, international economic forecasters claimed that Brazil was projected to earn over three billion dollars from being the hosts of the World Cup. When all was said and done, hosting the tournament ended up costing the country over eleven billion dollars, with the estimated cost of four billion dollars for maintaining the stadiums totaling three times the original estimate. [2]

Maracana stadium in Rio de Janeiro

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The reason why these countries believe that they can make so much profit is because of the anticipation of an increase in tourism within their borders. This could also be a fallacy, as seen when China and the United Kingdom each hosted the Olympic games in their respective years. The World Economic Forum discovered that yearly visits in the two countries “decreased in their Olympic years, while the UK’s most popular museum, the British Museum, saw 22% fewer visitors during the month that the games were held.” This was confusing to many, as the decline in tourists at main attractions was the complete opposite trend from what most would probably expect. The British government found that the Olympic Games did, in fact, deter the typical amount of tourists that came to their country. The official statement suggested that this was from “the potential for overcrowding, disruption and price rises," [3].

Pontiac Silverdome

Time will tell if the little amount of revenue that Russia made from this year’s World Cup will have any sort of impact on the nation’s relatively small economy. The World Economic Forum also found that the economic gains will benefit the tourist industry but will be so benign they will be “equivalent to that of a statistical error"[3]. Therefore, for the time being, it is pretty safe to say that hosting a World Cup has no lasting positive effects on the nation’s economy, and, if anything, it has more of a negative impact in the long run because of the costs.

Written by Robert Malzberg, Edited by Rachel Weissman & Alexander Fleiss

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