Hosting FIFA World Cup 2014 Entails Much More Than Most People Think

BOS_Brazil

Photo obtained from www.whatculture.com

Brazil is gearing up to host more than the fabled Festival in the coming years. The surging South American economic powerhouse will serve as the sight of the FIFA Confederations Cup 2013, the FIFA World Cup 2014, and the 2016 Summer Olympics.  It’s a large undertaking to be sure, and if we take the stadium development progress as a sign of things to come, perhaps Brazil’s appetite was too large for its stomach.

FIFA had originally mandated that the 6 stadiums to take part in the 2013 Confederations Cup this coming June to  be fully prepared and ready for inspection by December 2012. However, due to construction and renovation delays on multiple stadiums, the deadline was pushed back until April 15, 2013 and yet all of the grounds still are not game-ready.

A recent article in the International Business Times reported that four of the six stadiums have met the new FIFA deadline: Belo Horizante, Salvador, Feliza, and Recife. The two problem stadiums for the Confederations Cup ’13 are Brasilia’s Mane Garrincha National Stadium, and Rio de Janeiro’s Maracaña (click here for the full article on stadium progress).

While many people focus on the aspects of the situation directly linked to the actual event of the World Cup and the Confederations Cup, such as the development of the stadiums, etc. few truly realize what hosting these events do for the host Country’s economy. The costs associated with the renovations might appear to be a burden, but these will more than pay for themselves if the estimates hold true.

A recent report projected that hosting the 2014 FIFA World Cup would add $116B to Brazil’s GDP between 2010-2019, or a growth rate of +0.4% per year.  Only $5.9B of that is expected from the roughly 3.7 million international visitors that will travel in for the event. Another $3.1B will be generated from an increase in domestic spending due to 700k new temporary and permanent jobs that will be created as a direct result of the event.

That said, there are other fringe costs associated with preparing for the World Cup that the average everyday fan wouldn’t typically think about. For example, an investment of $3.4B will be made to prep the country’s airports. “The creation of the Secretariat of Civil Aviation (SAC), with the status of ministry, and the beginning of the process of privatization of some terminals, were measures taken in 2011 to accelerate the process of expansion and to guarantee the efficiency of the airport infrastructure.”

The Brazilian Federal Government is also investing approximately $575 million into its port infrastructure in anticipation of the influx of tourists, cruise ships, and trade increases expected to come with the World Cup. There is also a myriad of projects underway all under the umbrella of Urban Mobility, that will receive funding via designated lines of credit totaling an approximated $7.6B investment. Other areas of significant investment include security, tourism and service professional training, and lodging renovations (click here for the full report on Brazil’s preparations).

Brazil is certainly making the investments needed to prove to a global audience that it is ready and excited to host the world’s biggest sporting event. However, the timeline deviations have raised considerable concern and high levels of frustration. FIFA Secretary General Jerome Valcke wrote on FIFA’s website that “The deadline for the FIFA World Cup stadiums delivery stands firm as December 2013. There will be no compromise.”

The stadiums for the World Cup require a minimum 6-month setup time in order to prepare for the event, making the December 2013 deadline a must make for Brazil.

What do you think about Brazil’s progress on the preparations for the FIFA World Cup 2014, and the costs associated with them? Let us know in the comments section below and on Twitter using @BusinessofSoccer

Reporting on the business side of the world's game.