May 14, 2014, 10:37 AM
FIFA secretary general Jerome Valcke scolded Brazilians for using the World Cup to protest government waste, corruption, and mismanagement in an interview on FIFA.com.
In his explanation, he used an argument that contradicts almost all the research on the topic — hosting a World Cup is a smart long-term economic investment.
“When people are saying that we have put something into the World Cup that they could use for other projects, they’re wrong,” he said. “The World Cup is a way to speed up a number of investments in a country.”
“It is easy to criticize FIFA, it’s easy to use the Confederations Cup or World Cup to organize demonstrations. But the target is wrong if the target is that FIFA are the reason for what’s happening in a country.”
The 2014 World Cup will cost $11 billion, much of which comes from taxpayers.
While the nature of the protests is complex, many of the complaints are centered around the fact that Brazil is misusing public money, spending $11 billion to host a soccer tournament when its schools and social infrastructure desperately need fixing.
Valcke’s claim that hosting the World Cup is the best possible use of public resources has been found wrong over and over again.
In a 2006 paper, “Mega-events: The effect of the world’s biggest sporting events on local, regional, and national economies,” Holy Cross economics professor Victor Matheson found that the impact of hosting things like the World Cup is wildly overestimated:
“Public expenditures on sports infrastructure and event operations necessarily entail reductions in other government services, an expansion of government borrowing, or an increase in taxation, all of which produce a drag on the local economy. At best public expenditures on sports-related construction or operation have zero net impact on the economy as the employment benefits of the project are matched by employment losses associated with higher taxes or spending cuts elsewhere in the system.”
In his book Soccernomics, renowned soccer writer Simon Kuper summed up the academic consensus on hosting the World Cup, “Almost all research shows the same thing: hosting sports tournaments doesn’t increase the number of tourists, or of full-time jobs, or total economic growth.”
He says that the only benefit of hosting a World Cup is intangible — it makes a country happier. But it doesn’t make a country richer. It is, essentially, a national luxury item.
Brazil is not at a point in its history where it can redirect public funds for luxury items. As Matheson notes, investing in World Cup infrastructure is not the same as investing in long-term infrastructure that you need for daily life:
“At least in part, a portion of the blame for the poor, long-term benefits of spectator sports is the fact that the capital used in staging sporting contests is not easily convertible to other uses. While the construction of general infrastructure, such as modern airports, highways, and mass transit systems, provides economy-wide benefits, such architectural and technological marvels as Beijing’s ‘Water Cube,’ the 17,000 seat state-of-the-art swimming facility built for the 2008 Summer Olympics, has little use following the Games.”
This is the big worry for Brazil. The country spent $3.5 billion alone on stadiums it doesn’t need. For example, $900 million of that went toward building a stadium in Brasilia — a city with no top-flight professional team.
Protestors see this as a misuse of public funds. In economic terms, they’re right and FIFA is wrong.