By El Cheng
28 June 2018 16:00
From the build-up to the actual World Cup is certainly festive. But the big question is what happens after the conclusion of the World Cup?
It often predicted by politicians, economist, and even the public that the World Cup would bring in all sorts of benefit to the host nation for the World Cup. It is often stated that the World Cup would create jobs, increases the government’s revenue through taxes, and significantly improve the sports industry of the host nation. This is all partially true as there are many hidden drawbacks that
the host nation suffers from, and below are some the main drawbacks.
Clearly, during the World Cup, there will be a sudden influx of fans that would directly stimulate retailing, accommodation, tourism, and also the temporary employment. But these stimulus only work for the short-term benefits of the country. On the long-term, the nations and its citizen have bear the consequences of the World Cup. Some nations are able to absorb the cost of these preparation, but some nations are unable to successfully absorb these costs.
Nations from around the world make a bid to Fédération Internationale de Football Association (FIFA) to allow the said nation to host the World Cup. These nations are required to agree on numbers of requirements before being granted the rights to host.
One of the more prominent requirement is that the host nation would present 16-18 “suitable’’ stadiums for selection. Out of these 16-18 stadiums, only 12 stadiums would be selected to host the matches played during the World Cup. These stadiums are strictly all-seaters as FIFA will not allow any safe standing sections due to fatal accidents that prompted a legislation against safe standing in stadiums. FIFA will select a main stadium which need to have a capacity of over 80,000, whereas the other 11 must have above 40,000 seats. The maintenance cost of every stadium is 1.4-2.5 million dollars each year.
The stadium requirements will prompt the nations to build new state-of-the art stadiums and to also renovate and improve the existing stadiums. In FIFA World Cup of 2002, Korea and Japan spent a total of $4.6 billion to build and upgrade stadiums. These costs paid solely by the host nation and FIFA do not incur any cost. In instance, Miyagi Stadium, Rifu in Japan, cost $318 million and had the capacity of 49,133. Miyagi stadium had hosted 2 group stage matches and 1 last 16 matches for the World Cup and eventually could not find a tenant after the event. The Japanese sporting teams in the vicinity such as football and baseball were not big enough to attract close to 49,133 spectators and opted to not rent the stadium and continued to play in their own stadium. The inability to find an anchor tenant in Miyagi Stadium meant that the taxpayers in Japan had to bear the cost of maintenance of the stadium due to low turnouts and low revenue.
Although many countries that hosted the World Cup had suffered from debts due to the building of stadiums, there are few nations that thrived from hosting.
FIFA World Cup of 2006 in Germany, the nation had spent $2 billion on stadiums. Germany had opted to build the Allianz stadium that cost $472 million. The total cost of the stadium was absorbed by two football teams, FC Bayern Munich and TSV 1860 München. The agreement was that both teams would help to build the stadium and in return, they would both owned 50% of the company that manages the stadium. FC Bayern would eventually buy the other 50% of the share to become the sole tenant of the stadium but had to take up a 25-year loan to pay off the stadium cost.
In Dusseldorf, Germany, the nation decided to build the Esprit Arena for 313 million with a capacity of 54,500. The building of the stadium had received many criticisms due to having no prominent football team in its vicinity. The stadium was not selected to host any World Cup games and has been vacant as the closest team, Fortuna Dusseldorf was only a 4th league German team and did not have the ability to fill the stadium. This had meant that Esprit Arena could not be maintained independently until recently, where Fortuna Dusseldorf fought its was to Germany’s first league (Bundesliga).
The success of the German stadiums was due to Germany being a great footballing nation and many other countries would find it hard to emulate. The Esprit Arena was nearly a poor investment due to the low usage until the rise of Dusseldorf.
Taking in to account of the prize money for winning the World Cup, a total of $400 million split among the participants, with the winner of the tournament being awarded $38 million. This sum would be a drop in the lake when trying to recoup the total cost of building the stadiums.