soccernomics: fifa world cup 2014 economics
Post on 23-Jul-2015
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SOCCERNOMICS
An insight into the economics of the FIFA World Cup 2014 and other Mega Sporting events
BRAZILIAN ECONOMY: AS IT STOOD
• At the 7th rank globally with a GDP of US$ 2.246 trillion
• Tremendous Absolute GDP figures
• The GDP growth has been very unstable over the last ten years
• The 2014 FIFA world cup and the summer Olympics of 2016 ensured an upward graph of the amount invested in Brazil through FDI
• Sudden spurt in 2003 pertaining to the announcement of hosting WC 2014
• Constant from 2006
FACTS AND FIGURES
$13,000,000,000
EXPECTATIONS The investment and construction would
create thousands of new jobs and investment opportunities would multiply.
It would attract thousands of tourists who will pump millions into the economy by spending on food, entertainment and accommodation.
Worldwide media attention would enable Brazil to brand itself once and for all on the global stage as a vibrant, rich, diverse, and sophisticated country
It would accelerate the economic boom and convert the country from an emerging market to a developed one.
$90,000,000,000
Aldo Robelo,Minister of SportsBrazil
REALITY CHECK Germany 2006-15 year impact
under $5 billion.
South Africa 2010 revenue-$500million. $900 million estimated.
World cups generate very little revenue compared to the expenses.Most of which goes to FIFA.
Issue of white elephants
ATHENS, 2004
$124 million per year maintenance cost
Arena da Amazonia
• Capacity 40,000
• Will host Nacional Futebol Clube, only 1,500 spectators on an average.
$250,000 per month
Tourist issue
• Brazil already a tourist destination. Rio de Janerio most visited city in southern hemisphere with 2.8 annual tourists
Athens 2004, 10% drop in tourists from 2003 to 2004.Beijing 2008. estimated less tourists in 2008 than in 2007
Look at the Past:South Africa 2010
Was supposed to be a major boost for the developing African Nation
ExpensesTotal $3 billion spent on the World Cup:
Transport was the biggest cost, with $1.3 billion $1.1 billion on building and upgrading stadiums
alone
Only 16% of expenses were paid by foreign sources, such as FIFA Organising Committee, the media, sponsors and broadcasters.
Rest all came from the public funds.
Concessions to FIFA“The concessions that South Africa had to give to FIFA were simply too demanding
and overwhelming for us to have material monetary benefits”, Adrian Lackey spokesperson for the South African Revenue Services (SARS).
Concessions included:• Tax-free bubble around FIFA Unrestricted import-
export, exchange and conversion of all foreign currencies
• Suspension of any labour legislation that could restrict FIFA or its commercial partners
• Guarantees to indemnify FIFA against all claims
Benefits• Tourism Industry managed to earn $400 million
Figures highly exaggerated• 695,000 new jobs were created
Only 280,000 sustained
The biggest financial benefits, such as TV rights and sponsorships are pocketed by FIFA
Intangible Benefits
The successful world-cup left a positive image of South Africa across the world
Supposed to boost FDI and tourism
The South African government was compelled to act in a manner to fulfil
the financial greed of FIFA and its commercial partners.
PREDICTING THE SOCIAL AND ECONOMIC IMPACT OF THE WORLD CUP IN BRAZIL
BRAZIL MIGHT BE ABLE TO BUCK THE TREND Hosting consecutive events
Sports related investment is relatively low
Construction, Telecom and Transportation sectors poised for maximum investments
DIRECT AND INDIRECT IMPACTSCreation of jobs
Investment
Spending by visitors
The Domino Effect
Legacy
INFERENCES BASED ON INITIAL TRENDS
Brazil lost the World Cup, on the ground and off it as well
Low growth, Recession looming
Fall in productivity
World Cup hangover
HIT OR MISS
CONCLUSION
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