The only exception to the loss is the 2018 Russian Cup, which brought in a profit of $250 million.
Will the $300 billion Qatar spent over 12 years hosting the 2022 World Cup have any financial return for the country?
If the last 14 cups are the parameter, the answer is no, according to a study by researchers Martin Müller, David Gogishvili and Sven Daniel Wolfe of the University of Lausanne, France.
The study, published in May this year, compiled a base of public data and analyzed major events ? Cups and Olympics? since 1964.
Analysis by economists shows that of the 14 World Cups held since 1966, 12 resulted in losses for the host countries.
The Mexico Cup won’t be counted as a loss as available data is incomplete, but it was likely a loss too, according to economists.
According to the researchers’ metrics, the 2014 World Cup in Brazil was also unprofitable, but at $240 million ($940 million in 2018 values), it had one of the lowest losses among countries where the event was last held. . . ).
The only exception to the loss is the 2018 Russian Cup, which brought in a profit of $250 million.
And with the study, which only includes direct expenses, with locations and with the logistics, such as building stadiums, hiring workers and security. Indirect expenditure with investments in infrastructure, such as the expansion of the subway and the creation of new hotels, were not taken into account.
“Indirect costs are typically those related to general infrastructure, such as transport, accommodation and others, which may or may not have been caused by the megaevent and whose benefits are not primarily limited to the event itself. Therefore, an airport expansion in preparation for hosting the World Cup may have been prompted by the World Cup, but it can continue to serve the region long after the World Cup is over,” the researchers explain in the paper.
The conclusion of the analysis is that the World Cup and the Olympic Games suffer from a structural deficit, could not exist without external subsidies and have no “financial viability”.
According to the survey, the balance of such an event is negative on average (3.8% return on investment).
Chart showing World Cup host countries losing or winning
Image: BBC
“Are the Olympic Games and FIFA World Cups profitable for the International Olympic Committee (IOC) and the International Football Association (FIFA), who own the rights to these events? Yes, a lot,” say the researchers in the study. “Are they profitable for the host city and the government? Hardly ever.”
The explanation is that FIFA keeps most of the main revenue from the event: from sponsorship and broadcasting rights to ticket sales.
However, the company practically does not introduce any money and covers only part of the operating costs. The host country bears almost all costs for the cup.
BBC News Brasil reached out to FIFA for comment on the matter but received no response as of the publication of this report.
However, the researchers recognize that the motivation for hosting an event like the World Cup cannot be economic, such as
‘Such an economic assessment brings to light only one element necessary for a full costbenefit analysis,’ the study states.
The high costs of sporting megaevents have been studied extensively, with studies published in 2021 (by Bent Flyvbjerg of the University of Oxford) and 2016 (by economist Robert A. Baade).
Previous research has looked at the level of expenditure or revenue from megaevents, but has tended to focus on isolated cases or fail to distinguish between direct and indirect expenditure.
There are also many studies on the negative effects on the host cities, such as B. the creation of large structures that are later abandoned, or on the economic impact of events in certain regions or countries.
They typically measure economic indicators such as changes in GDP, the number of jobs, tax revenues, etc. And they come to a similar conclusion as the research at the University of Lausanne: that the economic impact, when positive, does not justify the spending.
But the Lausanne researchers’ study was the first to analyze both the expenditure and revenue of both the World Cup and the Olympic Games, taking into account all the events of the last 60 years.
big losses
Among the World Cups analyzed, the biggest loss for the host countries was at the World Cups in Japan and South Korea in 2002, when the government spent around US$7 billion (in updated 2018 values) on organizing and building stadiums and gave something returned more than $2 billion resulting in a loss of $4.81 billion.
Another very lossmaking World Cup was South Africa 2010, which as the host of the event suffered a loss of US$2.85 billion.
Only the oldest cups included in the study, 1966 (England), 1970 (Mexico) and 1982 (Spain) had smaller losses, US$30 million for England and Mexico and US$220 million for Spain.
The researchers explain that the costs of hosting the World Cup have increased over the years. The main reason is FIFA’s requirements for stadiums, which oblige countries to build new structures.
“In Qatar, seven out of eight stadiums were built from scratch; England built none in 1966,” reads the survey.
Calculations by economists show that the cost of the 1966 World Cup was $200,000 per player (in updated 2018 data). In 2018, the cost of the Russian Cup rose to $7 million per player.
By the way, Russia is the only analyzed country that made a profit ($235 million) from hosting the event, mainly because it made a lucrative deal to sell the broadcasting rights.
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