Qatar has invested more than $200 billion to organize the 2022 FIFA World Cup. But history shows that hosting major sporting events does not bring great economic rewards. In fact, they even do financial damage. However, for the organizing countries, there is another dimension that goes beyond the financial element: they try to collect geopolitical dividends.
The numbers do not contradict. Since the 1966 World Cup, in England, only one tournament has generated more income than expenses. Russia 2018 had a positive balance of around $240 million, according to the study “The struct deficit of the Oympics and the World Cup: Comparing costs against revenues over time”, by Martin Müller et al.
Until today, the World Cup that recorded the biggest deficit was Japan/South Korea, organized in 2002: -$4.81 billion (at prevailing prices). But Qatar 2022 will largely surpass that mark, taking into account the large Qatari investment to organize one of the most controversial World Cups to date.
For a nation like Qatar, hosting a World Cup goes beyond economic rationale. Between two superpowers of the Persian Gulf like Saudi Arabia and Iran, Qatar made an effort to show itself to the world as a large, modern and open country, despite the small territorial size, the 3 million inhabitants and the enormous path that still have to go through the human rights chapter.
Therefore, there are those who see in this Cup a way for Qatar to “wash” its image (it is important to remember that it also owns the French team PSG, of Neymar and Messi). It is a practice known as sportswashing. Already used on other occasions that became, in some cases, historic, such as the Olympic Games in Berlin in 1936, in the midst of Nazi Germany, or the World Cup in Argentina in 1978, during the military dictatorship.
For example, in this Argentine Cup, the country recognized a loss of $1.74 billion, but the loss was largely offset by the political gains of the Jorge Videla regime.
The Most Expensive Cups
Let's go back to the present: Qatar, a country rich in natural gas, invested around $220 billion for this Cup, which is by far the most expensive ever organized. We will hardly see this level of investment in the future.
Previously, the most expensive Cup was held by Japan/South Korea, which spent over $7 billion in 2002.
The authors of the study take into account two types of costs: construction/renovation of stadiums and organization. On the revenue side, they account tickets, sponsorships and television rights. In the case of the Japanese/South Korean World Cup, it resulted in just over $2 billion for the coffers.
But they forget an important aspect: the impact on the economy that results from tourist consumption in travel, hotels, restaurants. That is, everything that is associated with the tourism industry. But not only during the competition month. It is also after the tournament is over, due to media exposure (although more difficult to calculate).
Then, with the investment in local infrastructure, such as the transport network, the inhabitants will also benefit from better living conditions in their cities.
However, the authors also consider that the numbers presented may not correspond to reality and may be underestimated in costs and overestimated in revenues.
From “big busts” to “cash cows”
Anyway, the conclusion of the study is clear: the World Cup hardly pays the costs of its organization. And this also happens in the realization of the Olympic Games.
Winter Olympics in Sochi (2014), the Olympic Games in London (2012) and Athens (2004) are considered the biggest financial failures. Also Japan/South Korea Cup (2002), the Montreal Olympic Games (1976) and the South African Cup (2010) had bad results.
Who thinks that a sporting mega-event can represent a cash cow, it is better to think twice. Only Russia (2018), Brazil (2014) and Rio Olympic Games (2016) achieved a break-even. Most were the same big busts or small tragedies.
Lesson for the future?
If the World Cup were organized by FIFA alone, this organization would have gone bankrupt a long time ago. Additionally, if the biggest sports tournament in the world is held every 4 years, it is because governments subsidize (at the expense of taxpayers' taxes) the construction of stadiums.
If history shows that organizing major sporting events does not bring a large direct return, it also tells us that countries pay little attention to this. Year after year they are being organized all over the world, regardless of the final objective.
The next Olympic Games will be organized in Paris, less than two years from now. The next World Cup will be organized by the USA, Canada and Mexico. And there is no shortage of candidates to host the next World Cups.
How to prevent history from repeating itself? Reuse existing stadiums and infrastructure as much as possible. This happened in Russia 2018. It would help save a large sum of money.
While the construction of sports infrastructure represents the biggest expense in this type of event, the stadiums end up becoming useless in many cases.
Thus, not anticipating that a World Cup will be highly profitable, being disciplined in terms of costs will make it possible to reach break even, while the country can celebrate the king sport for a month.