The Economic Impact on South Africa of Hosting the 2010 Fifa World Cup

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Category: Business and Industry

Date Submitted: 04/22/2010 04:06 AM

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1. Executive Summary

The FIFA World Cup is one of the biggest sporting events there is. To host the event countries make huge investments in infrastructure and organizing, whereas most of the profits are harvested by FIFA. The hosting countries often make their bids based on forecasts of long-term economic profits incurred by the event. However, these predictions mostly turnout to be invalid, and countries end up facing an economic setback from the World Cup. The experiences gained from previous mega sporting events, serve as good indicators on what can be read from economic reports, and give a good clue on inherent biases. From these it can be seen that the macroeconomic assessments of the gains from the World Cup should rather be evaluated from a comprehensive cost-benefit analysis, in where the intangible gains are weighted in providing a better overview of the returns from hosting the World Cup. The paper makes an argument towards moving away from the reliance of the conventional means of assessing the profitability yield from a World Cup, towards an increased focus on the “feel-good” elements that are present.

2. Introduction

The FIFA World Cup (WC) is along side the Olympics the two biggest sports events there are. The hosting country of such an international sporting tournament, have an obligation to conduct a series of costly investments, in order to qualify for hosting the event. These investments are usually done by local governments, and thereby needs to have the support of the native inhabitants, who in fact are funding the event. So naturally a question regarding the economical feasibility of this investment will occur.

Regardless of the countries economical capabilities before taking on the task of a WC, it needs to have an idea that the investment will yield a reasonable return in the future. The question is now, which factors to emphasize when evaluating the returns, and whether these return are beneficial for the society as a whole, or...