The Economic Impact of Hosting the FIFA World Cup
With this year’s World Cup now known to be the most expensive and largest capital campaign in history, its host, Qatar, is estimated to have spent an estimated $220 billion since being chosen to host the FIFA World Cup in 2010. This is more than 15 times more than what was spent in Russia for the event back in 2018.
In 2017, according to Qatar’s Minister of Finance, the small Middle Eastern nation has spent an estimated $500 million per week on building infrastructure including stadiums, hotels, a metro, roads, and airport upgrades in preparation for the games and to accommodate for the expected 1.5 million visitors. Other major expenses include costs for competing clubs at $326 million, TV operations at $247 million, and workforce management at $207 million.
To put this into perspective, Qatar was first awarded the opportunity to host the World Cup in 2010, and since then have spent up to $18.3 billion per year on preparations. This number is almost 10% of Qatar’s $180 billion GDP, which is equivalent to the United States spending $2.3 trillion a year for 12 years.
The costs were never this high in previous games, as more stadiums are being built for each competition. In 1966, the World Cup cost England around $200,000 (in 2018 price) per player, with 16 teams playing. This jumped to $7 million for Russia in 2018. In Qatar, for example, seven stadiums were built from scratch, and one was completely renovated.
While the competition’s governing body, FIFA, covers all the operational costs of the World Cup, all the major expenses fall on the host country. The largest of these costs being $440 million in pay-out prize money, $42 million of that going to the winning team, alongside $9 million that goes to each team who don’t emerge from the group stage.
This can be compared to the 2019 Women’s World Cup, in which the pay-out prize money was $30 million, a sixth of the men’s pay-out this year. The operational costs in total cost FIFA around $1.7 billion, however they take home most of the revenue generated by the games. In 2018 alone they generated $5.4 billion in revenue through ticket sales, sponsorships, and broadcasting rights.
While FIFA does not share revenue from international television, hospitality, and corporate sponsorships, they are expected to generate $4.7 billion in revenues, making them $3 billion in profit. 10% of this will go to FIFA, and the rest will be distributed to the national football associations around the world to promote the development of the sport.
However, Qatar is expecting to make only $17 billion back in revenue, a drop from the $20 billion that they initially predicted at the start of the games. Ultimately, hosting this game is a massive commitment for Qatar.
Looking at the chart below, it can be seen that the majority of games in the history of massive sporting events, including the World Cup and the Olympics, generally rack up rather large losses. Russia is one of the only exceptions, making $235 million in revenue because of a massive broadcasting rights deal. Organisers of the games insist that this expenditure will still be beneficial to the host countries after the World Cup, however this data suggests that massive sporting events may not be the best investment.
Some of the investments made by Qatar could be beneficial to their development in the long-term. However, some of them are either extraneous or low priority, such as the metro that connects two stadiums that has no real contribution to Qatar’s economy, despite being convenient for the World Cup.
It is also worth noting that the costs of being the host country will continue to rise even after the games are over. With only 300,000 permanent residents and little football history, the stadiums and hotels built for the World Cup will go unused, while still requiring millions of dollars in maintenance annually. They will also occupy valuable real estate that could be used for potentially better uses, and guest workers will be evicted.
There are doubts about whether this risk that Qatar took in hosting the World Cup would be beneficial for either the host country or FIFA. The former president Sepp Blatter even stated that it was a “bad choice” for FIFA to host the games in Qatar due to its small size, as “football and the World Cup are too big for that.”
It is standard that the sporting event will be watched by billions around the world, and thought that it would put Qatar on the proverbial world stage, making it more significant in geopolitical politics and boosting their foreign trade, tourism, and investment. Qatar believes it will eventually grow its “soft power” and long-term economic benefits.
However, this does not seem to be the case, and Qatar’s massive spending on the World Cup may not be a good investment in terms of economic international relations either. Negative publicity for Qatar has resulted due to claims that it had bribed FIFA for hosting rights and subjected tens of thousands of imported foreign workers to their oppressive kafala labour system, which led to several deaths.
Qatar also has multiple uncompleted investment projects that would be widely visible to their world, and among evicting the imported foreign workers from their housing, and eventually the country, in order to accommodate incoming fans will unlikely boost their economy.
In the end, Qatar by far will be the host country to spend the most on the massive sporting event. This acute imbalance of costs and revenues from hosting the World Cup will unlikely aid Qatar’s economic development, with its high spending on infrastructure built solely for the games, and increasingly negative publicity on the world stage.