England last hosted the FIFA World Cup in 1966, which was the same year it last won. With the recent success of the England team in the European Championships, there has been increasing talk of an English or even a United Kingdom bid for a World Cup in the near future.

The FIFA World Cup is an international footballing event that happens every four years. Multiple countries bid against each other in order to win the rights to host the next world cup. The country with the winning bid will receive guaranteed entry into the tournament. The eligible 32 countries battle it out in a knockout tournament format for the ultimate goal: to win the World Cup. 

Beyond soft power (Country showcasing/branding and a political tool), the general consensus is that hosting a World Cup is not really worth the direct return on investment. Although the tournament halo may drive indirect economic benefit (e.g London 2012 Olympics ‘have boosted UK economy by £9.9bn), it is very hard to be certain. Let’s explore this view today.

Opportunity costs

FIFA imposes stringent requirements on countries wishing to host the World Cup. They expect high-quality stadiums to be provided in these countries. In addition, more hotels and even temporary housing is required to accommodate the players as well as international fans. These costs must be covered by the government. Furthermore, a large amount of the infrastructure is never used again after the sporting event.

For the 2014 World Cup, Brazil invested an estimated $14-15 billion on stadiums, transportation, and other infrastructure. Mane Garrincha Stadium, the most expensive of the stadiums, cost $550 million and was only utilised for a few events in the months following the tournament – it is now used as a place to park buses.

An increase in government spending should lead to a rise in gross domestic product however, this is not the case. Unfortunately, sporting infrastructure is costly to build and maintain, occupies valuable space, and is often difficult to utilise frequently enough to offset maintenance expenses.

This raises the question as to whether, had the money been spent on developing underprivileged communities instead, it would have been a superior investment. According to the Brazilian National Court of Auditors, state spending on the World Cup would have been “enough money to pay the entire country’s annual Bolsa Familia [social welfare] bill twice over”.

Recouping the costs…

Tourism is frequently mentioned as one of the key advantages of hosting the FIFA World Cup but, is it really? The World Cup is the reason why people from all over the world travel to the host country. As a result, local hotels and restaurants profit, and the economy as a whole benefits.

However tourism isn’t enough to make back the billions of dollars the governments have invested. To begin, it should be highlighted that the increase in tourism is merely a transient phenomenon. When the World Cup is finished, tourism returns to pre-World Cup levels. As a result, it doesn’t truly help the economy!

If the government had to repay the costs of creating the new infrastructure, the average tourist would have had to spend $130,000! That was obviously not going to happen and as a result, the taxpayer lost a lot of money.

Who actually profits from this?

Ticket revenues and the sale of the event’s television rights account for the majority of profits in World Cup competitions. The earnings do not go to the host country, FIFA is the sole owner of these profits!

The 2014 World Cup brought in $4.8 billion in income for FIFA, resulting in a $2.6 billion profit. Sponsorships and ticket sales pulled in $1.6 billion and $527 million, respectively, while broadcast revenue reached $2.43 billion.

What’s more, all of FIFA’s earnings from the World Cup are tax-free. The government would have made a lot of money in taxes if customers spent the same amount of money in restaurants and movie theatres. FIFA’s monopoly strength, on the other hand, allows it to strike such unbalanced arrangements with foreign nations.

On the other hand…

This does not mean that hosting the World Cup is pointless. The 2006 World Cup in Germany was quite successful. The spark in interest is thought to have been caused by a lack of belief in the national team, who then went far into the tournament getting knocked out in a thrilling semi-final. The young, exciting and attacking team somehow sprung the nation into action.

The month-long tournament increased tourism revenue by 300 million euros ($399 million), increased retail sales by 2 billion euros, and created 50,000 new jobs in Germany. Ticket sales brought in another 40 million euros, while the World Cup Organizing Committee had a net profit of 56.5 million euros, which would be distributed to the German Soccer Federation (DFB) and German Soccer League (DFL).

And lastly, major sporting events are one of the few events that truly unite the world. Sport can also be an effective tool for bridging socioeconomic divides.