FIFAWorld Cup: The Economic Effects on Brazil
Introduction
In 1930, the first Federation Internationale de Football Association, or FIFA, World Cup was held in Uruguay. The World Cup is a much-awaited event that takes place every four years, except in 1942 and 1946, which did not hold the contest because of the Second World War. Senior male football players who are members of FIFA join the international contest.
For the year 2014, Brazil plays host for the 20th FIFA World Cup, which happens from June 12 to July 13. This becomes Brazil's second chance to host the tournament, ranking among countries such as Italy, Mexico, and Germany, as one of those countries hosting the competition twice. On the other hand, this becomes the sixth time that the World Cup is held in South America, which includes the 1962 World Cup in Chile and the 1978 World Cup in Argentina.
According to FIFA guidelines, countries are allowed between eight to 10 cities to host the games. However, for the 2014 World Cup, FIFA granted the Brazilian Football Confederation's appeal regarding 12 Brazilian cities hosting the event. This includes the cities of Curatiba, Fortaleza, Manaus, Recife, Brasilia, Rio de Janeiro, and Sao Paulo, among others.
Economic Benefits for Brazil
Apart from being a huge sporting event looked up to by various countries, the FIFA World Cup provides a great avenue for the country of Brazil to generate additional income that will help boost the nation's economy. With various sporting sponsors gracing the event and willing to dole out millions in sponsorships and investments, Brazil is poised to benefit a lot for hosting the event. In addition, counting the huge number of tourists who would watch the momentous event, not only will the country generate income from sponsorship, but from the influx of tourists as well.
Based on revenues in the past World Cup events, the biggest income provider comes from advertising and sole distributorship of broadcasting the competition. For instance, back in 2003-2006, revenues rose to as high as $2.4 billion, and even higher in 2007-2010 with revenues reaching the high mark of more than $3.4 billion. When the World Cup was held in Spain, FIFA began dealing with sponsors in terms of funding the event. In 1982, nine companies jointly paid around $23 million to sponsor the Spain World Cup. However, twenty years later, the figures grew as sponsors nearly doubled in number, thus raising the sponsorship total from $23 million to about $560 million. Information coming from TV Sports Market Research Company says that broadcasting revenues rapidly increased as interest in the sport increased as well. When Italy hosted the World Cup, it paid about $444 million for broadcasting right, while the USA paid about $425 million. With this, FIFA guarantees that the right to broadcast the 2014 World Cup means income for the host country, including increased tourism.
Preparations
Apart from being a huge sporting event, the boost in tourism will help Brazil up its income as well. In this light, the country has to prepare not only its athletes, but the surroundings as well.
Stadiums
Realizing that the benefits of hosting huge events such as the World Cup not only increases a country's revenues, Ricardo Teixeira declared in 2011 that, "over the next few years [Brazil] will have a consistent influx of investments. The 2014 FIFA World Cup will enable Brazil to have a modern infrastructure. In social terms, it will be beneficial [for Brazil's visibility] in global arenas" (Offik). Teixeira further asserts that the World Cup event can be Brazil's "tool to promote social transformation" (Offik).
As a result, the FIFA matches are scheduled to be played in 12 various stadiums all over Brazil, including Estadio de Maracana, Estadio Governador Pinto, Arenas das Dunas, and Arena Fonte Nova-Octavio Mangabeira, among others that will be rebuilt specifically for the sporting event. Two new stadiums are set to be built in addition to the existing ones, while others are currently undergoing renovations and rebuilding. Financially, the cities hosting the event are receiving financial assistance of up to 75% of the project cost from the National Bank of Social and Economic Development for the rehabilitation of the stadiums (Offik).
Infrastructure and Transportation
In 2008, after receiving confirmation that the next World Cup will be held in Brazil, campaigns of upgrading and improving infrastructure and transportation systems began with plans to connect the cities of Campinas, Sao Paulo, and Rio de Janeiro through a high-speed railway project (Offik). In addition, monorails and light rail lines linking the airport with the key cities will either be built or rehabilitated in time for the World Cup. This effort benefits the cities of Curitiba, Rio de Janeiro, and Recife, among others.
Airport System
Because most of the airports in Brazil were built prior to World War II, plans to upgrade the airport system began through the efforts of Infraero, "Brazil's government arm responsible for operating the main commercial airports" (Offik) in the country. These efforts for upgrade would cost about $2.5 billion in US dollars and need to be completed before 2014 in time for the influx of the tourists. Renovation plans include building of new runways and terminals that will help transport the tourists from one city to the other.
Effects on the Brazilian Economy
Apart from being a huge sporting event, the World Cup is expected to boost the economy of any country that hosts the event. Research conducted by the Sports Ministry of Brazil reveals positive economic growth for host countries considering that the World Cup is capable of generating more than $70 billion USD to a host country's economy. Consumption of goods will increase because of the influx of tourists during the event, and as it becomes a tourist destination before and after the actual World Cup event. This brings in additional revenues in terms of direct taxes of goods. On top of these, the developments in infrastructure and transport system such as the highways, stadiums, and the airports, among others, add as means of increasing investment possibilities for Brazil.
According to studies by the International Monetary Fund (IMF) on countries hosting the World Cup, although there are countries that experienced positive growth rates during the hosting of the event, there are countries who had negative results in terms of their economy during the event. For instance, countries such as Spain, Japan, Mexico, USA, and France, among others received significant growth results when they hosted the event, registering between 1 to 5 points difference than their previous increases economically prior to hosting the World Cup. Other countries that hosted the event did not experience the same growth marks when their countries played hosts to the World Cup, including Italy, Germany, and Argentina, among others.
Taking the year the World Cup was held in the host countries, some countries showed that they did not reach the expected growth rates that could have been taken advantage of considering that they won the hosting for the World Cup. Based on the same IMF report, only the following countries - Argentina, Germany, France, and Mexico - registered positive economic growth during the hosting of the event. However, taking the general picture of their economic standing without the World Cup hosting, the countries still failed to reach their targets, which could be attributed to other factors other than the World Cup hosting. Thus, some countries did not benefit much from hosting the international event.
In order for Brazil to experience a significant and positive economic growth is by winning the 2014 FIFA World Cup. Studies showed countries that won the World Cup experienced additional surge of tourists after winning the world title. The significant economic improvements can largely be attributed to winning the Cup as it helps attract more visitors into the country. An example of this is how the economy of Italy increased the year they won the championship for the World Cup. This was during the 2006 FIFA World Cup held in Germany. Although the games were held in Germany, winning the World Cup helped push the economic standing of Italy upwards. For instance, in 2005, Italy registered economic growth marks at 65 per thousand, but after winning the title, the country registered a growth of 2.03% more than the previous year. While other factors may have played out significantly and positively in the economic growth, it must be said that the performance of the country's national team during the World Cup event has helped boost the salaries of the Italian Football League.
In the same light, Brazil experienced the same thing when it won the World Cup in the past. Winning the World Cup in 1994 and 2002 boosted the nation's economy as it registered growth marks of 5.85% in 1994 from its previous 4.92% in 1993 and 2.65% in 2002 from 1.31% in 2001, respectively. Likewise, the fact that Brazil has won the World Cup five times already has added to its glow as a tourist destination. Thus, considering these facts and if Brazil wins the 2014 FIFA World Cup, then the country will once more experience huge and significant economic increases.
Conclusion
The importance of the World Cup cannot be downplayed as it helps in advancing a host country's economy, including the sports association that organized the event. Assuming that sporting events such as the World Cup series is managed correctly, both the host country and the organizers benefit from this a lot as investors worldwide will surely come in and help. However, in the event that the sporting organization mismanages the event, the host country still benefits because of the infrastructural and transport upgrades done for their country, including the publicity the country gets from hosting the event. Therefore, it is still a win-win situation for the host country as they can use it as a way for their country to receive international coverage which could further boost tourism in their country.
References
Offik, Michelle. (2011). Ricardo Teixiera and Brazil's preparation for the 2014 FIFA World Cup. Foreign Translations. Retrieved from http://www.foreigntranslations.com/news/ricardo-teixeira-and-brazils-preparation-for-the-2014-fifa-world-cup
