South Africa’s World Cup Hangover

Monday, July 12th, 2010

The L.A. Times declares South Africa “the nation” is the World Cup’s biggest winner, praising the tournament’s “vibrancy and enthusiasm, and its ebullient African style.” Certainly, South Africa put on a good show, and proved wrong the critics who chastised FIFA for awarding the tournament to a country many feared couldn’t provide adequate security or logistical support.

But South Africa’s ability to pull it all together for six weeks doesn’t mean the World Cup will be a net benefit to the country in the long term. As the ESPN video below explains, South Africa’s government spent $6 billion on the tournament. Tournament-related revenues are expected to fall well short of that figure. Some of the hundred million dollar stadiums built for the tournament won’t get much use now that the games are over. The video points to one stadium built for the tournament which will likely remain vacant—it sits over over slums that lack running water.

Fond memories of the month South Africa performed marvelously on the world stage are nice. But $6 billion is a lot to pay for a memory. These spectacles—the World Cup and the Olympics—are nearly always money losers. They’re a lousy investment in wealthy countries. They’re particularly garrish in countries that aren’t as affluent. Economist Robert Baade ends the video with a strained search for a scenario where South Africa benefits from hosting the tournament in the long run. He doesn’t sound hopeful.

(See Reason.tv on stadium welfare here.)

Digg it |  reddit |  del.icio.us |  Fark

33 Responses to “South Africa’s World Cup Hangover”

  1. #1 |  JS | 

    The LA Times is sooooo stupid. Honestly, don’t they ever actually investigate anything?

  2. #2 |  EH | 

    Man, and people give bicycle racing a hard time.

  3. #3 |  Chance | 

    Depends on what you value. Games like the Olympics and World Cup are the national equivalent of a peacock tail. The point is just to be a signal to potential “mates” (trade partners, multinational companies, tourists, etc) that the host country can provide what they need and/or a warning to potential enemies (e.g. “I can waste $6B on a sporting event, imagine what I can do when I get serious”). Now, I’m not saying that in the end the events are worth it, but there are a bunch of intangibles I don’t think most reports like this delve into, but which nevertheless have value.

  4. #4 |  André | 

    I will never forgive South Africa for exporting the vuvuzela. End of story.

  5. #5 |  Chance | 

    I really don’t get the hate for the vuvuzela. How is it worse than an air horn or those inflatable clapping sticks I see at events?

  6. #6 |  Dan Z | 

    Its amazing that they can pull their shit together to build useless soccer stadiums but cant get it together for basic infrastructure and other needs.

    #5, Thundersticks and airhorns dont go off for a whole game. Those Vuvuzelas never stop, id hate any other device that was used like that as well…its awful.

  7. #7 |  JS | 

    Pretty much the final word on vuvuzelas:

    http://www.youtube.com/watch?v=QSg3iitvsQ0

  8. #8 |  Chance | 

    @Dan On point one, they don’t have to get their shit together, they just have to make it plausibly look like they *could* get their shit together if they wanted to. Again, it’s nothing more or less than a social signal, showing the world what they can do. The economic justifications are just excuses that are reversing cause and effect – cities and countries don’t do this to *make* money, they do it to signal they *have* money/resources. Just like in the animal kingdom though, sometimes the signal is a false one. As to the second point – I suppose that could get annoying, yes.

  9. #9 |  EH | 

    Again, it’s nothing more or less than a social signal, showing the world what they can do. The economic justifications are just excuses that are reversing cause and effect – cities and countries don’t do this to *make* money, they do it to signal they *have* money/resources.

    Baudrillard laughs.

  10. #10 |  ChrisD | 

    The World Cup should not be such a boondoggle. Many countries, the USA, England, Germany, Argentina…etc. already have stadiums that are perfectly fine. It’s not like building a water polo facility in a new Olympic city.

    That’s why South Africa was a bad choice.

  11. #11 |  KBCraig | 

    1. Winning bid for major sporting event
    2. ???
    3. Profit!!!

  12. #12 |  Rhayader | 

    Who does profit off something like the World Cup or Olympics? Does FIFA/IOC/whatever make a bundle? I know that, at least with the Olympics, the TV network loses money, which likely means advertisers aren’t doing too well with it either. And it doesn’t sound like there’s much of a case to be made for any sort of long-term economic boon to local businesses or governments.

    Is any major player — or aggregation of minor players — making out handsomely because of these events?

  13. #13 |  Nancy Lebovitz | 

    No guarantees that it will be a net win, but Africa has a reputation of being nothing but disasters. A competently run world cup may do significant good to improve that reputation.

  14. #14 |  flukebucket | 

    Who does profit off something like the World Cup or Olympics?

    You would have to follow the money but 6 billion dollars went somewhere. I would figure the guys who built the stadiums and the guys who supplied the material for building the stadiums made out okay.

    I got a kick out of the vuvuzela. Anytime I was watching one of the matches my wife would come through every time and say, what is that godawful racket? She couldn’t stand to stay in the room with it. I would like for it to catch on with college football. That way I could watch a game without her constantly interrupting with shit like “which curtain goes best with the dust ruffle?”

  15. #15 |  ChrisD | 

    The politicians who get credit for “getting the World Cup” are the ones who profit. So do the constructions companies…etc. FIFA does not need money, they are awash in it with the TV money alone. They made this point in choosing the locale for purely soccer reasons. The US can always make them the most cash b/c we have the biggest stadiums.

    For ideological (spreading the wealth) and marketing (rewarding African fans) reasons, they wanted an African Cup. FIFA should have paid for the damn stadiums.

  16. #16 |  Michael Pack | 

    Can any one name a team sport that doesn’t rape the taxpayer,including the NFL,NBA,MLB AN NCAA football and basketball?

  17. #17 |  Robert | 

    There are very good points to be made that the Olympics held there are the cause of Greece’s current monetary problems.

  18. #18 |  Kevin3% | 

    Chance @#3:
    Would you care to delve into any of the “bunch of intangibles” you claim have value?

    I suspect the political whores who sold this bill of goods (Bread and Circuses)to the Nation of S.A. did very well and the construction firms and their suppliers but that is a one time deal.

    $6 billion is a lot of money. Wonder how much water could be purified for that or how much land could be cultivated for food or how many children could be educated as to develop the means of self sufficiency?

    What it really says to the global elites is that this is another nation ripe for exploitation by crooked banksters, unsavory business characters and anyone else with no sense of priorities that put people first.

  19. #19 |  Thyrezene | 

    Hey man, at least there’s no more apartheid! Now everyone can vote and share in economic decay and social devolution. Equality – isn’t that the summum bonum of modern liberalism?

    Besides, it’s not like it’s real money. Just adjust interest rates and/or print more bills. Keynesian economics is too big to fail.

  20. #20 |  Laertes | 

    I have this friend who throws parties from time to time. I don’t understand why he does it. Lots of people come over, and everyone has a good time, but it costs him more money to throw the parties than he earns as a result.

  21. #21 |  Big_Texan | 

    Oh yeah, South Africa is stupid, those guys wasted all those taxpayers money! At least in the United States we don’t spend taxpayer money on stadi…. eerrrrrr what. Oh right, we do the same damn thing.

  22. #22 |  ClassAction | 

    #19

    If your friend had an uneducated wife with HIV trying to put herself through school and ten children, six of whom were malnourished and undereducated, and he had to take out a second home equity line on his home to pay for his parties, then you might be on to an analogy.

  23. #23 |  Mattocracy | 

    Gwinnett County, Georgia is a excellent example of this failed theory. The county built a minor league baseball stadium, a hockey arena, and concert venue to attract “big event” money. Their property taxes have gone up over 50% since then.

  24. #24 |  Laertes | 

    #21 It’s his money, y’know? None of my business how he chooses to spend it. I should probably take my crazy views to a more hospitable place, like maybe a libertarian blog or something, where people aren’t likely to get so exercised about how other people choose to spend their money.

  25. #25 |  PogueMahone | 

    To the point if South Africans were to benefit economically, leave it to TDS and John Oliver to bring it home…

    “… and they even provided the local street vendors who’d been working the stadiums for decades with their own special zones, conveniently located nowhere near bothersome customers.

    Link via Huffpo,
    http://www.huffingtonpost.com/2010/06/25/john-oliver-blows-a-vuvuz_n_625280.html

  26. #26 |  ClassAction | 

    #23

    Except that the South African government isn’t a person. It’s an institution that depends, like all governments, on pilfering the money of its productive citizens in order to fund itself and grand bondoogle projects. I am not complaining about how a person spends his own money (although I think that in some circumstances, it’s perfectly acceptable to criticize people for how they spend their own money). I’m criticizing how a government chooses to frivolously spend the money it has pilfered from its own population, particularly when the country has other, quite pressing concerns.

  27. #27 |  qwints | 

    Panem et circenses.

  28. #28 |  Brandon | 

    Laertes, you seem to be missing the point. Libertarians aren’t against giving people advice on how to spend their own money, they’re against forcibly taking other people’s money and spending it.

  29. #29 |  Steve | 

    @16

    I’ve gone to MLB games for the last couple years in STL, about 3.5 hours from my house for less than 200 dollars for 2 people, merchandise and food at the stadium may be expensive, but you don’t need to buy it there to enjoy the experience. With building new ballparks, you may say that MLB does the raping, but it is really local government looking to raise taxes for these things.

    Recently, Indianapolis voted to close many libraries and other things in the city, while agreeing to give the Pacers 33.5 million dollars to keep them in town, I love the Pacers, but libraries are an investment in the future.

  30. #30 |  expat | 

    Nation Demands Tax Dollars Only Be Wasted On Stuff That’s Awesome
    http://www.theonion.com/articles/nation-demands-tax-dollars-only-be-wasted-on-stuff,17704/

  31. #31 |  PeeDub | 

    @ #16

    Can any one name a team sport that doesn’t rape the taxpayer,including the NFL,NBA,MLB AN NCAA football and basketball?

    All the unpopular ones.

  32. #32 |  Kolohe | 

    And SA is going to bid on the 2020 Olympics
    http://www.google.com/hostednews/ap/article/ALeqM5jsAFo6dMhsaNv0HYpHoeFU2dyR1QD9GUA2SG7

  33. #33 |  South Africa’s World Cup Hangover « Working for Liberty | 

    [...] “Tournament-related revenues are expected to fall well short of that figure.” [...]

Leave a Reply