A few days ago, President Vladimir Putin released a video welcoming football fans to Russia to witness the biggest sporting event in the world. Putin said that hosting the FIFA World Cup 2018 was a matter of “great joy and honour” for the nation. Turns out, it is mostly just that.
Pride is mostly what comes out for the economy of the host, according to a report by Germany’s Commerzbank. There’s barely any overall economic gain barring a short-lived spike going by the average five-year GDP growth – two years before and after the event – of the hosts, according to report by www.thequint.com.
“Hosting a World Cup is an increasingly onerous business with candidates having to meet ever more stringent standards,” Commerzbank said. “This significantly increases costs and there is little evidence to suggest that the host derives much, if any, net economic benefit, contrary to claims made ahead of the tournament.”
Russia is hosting its first ever FIFA World Cup that begins this week. The country, which also hosted the 2014 Winter Olympics, has budgeted spending about $11.6 billion to build or refurbish its 12 stadiums. According to Commerzbank, that’s thrice of what Brazil spent in the previous 2014 edition. “This figure is likely to rise, since it excludes certain infrastructural items that the organising committee believe would have gone ahead regardless.”
The World Cup comes at a time when Russia’s economy is undergoing a fragile recovery after two years of contraction due to economic sanctions and low oil prices.
The country’s organising committee recently released a study estimating that the 2018 World Cup will have a combined impact of $15 billion on Russia’s GDP.
That’s a big number. But Commerzbank disagrees.
Apart from the possible prestige element associated with being host, it is difficult to make a strong economic case for holding the tournament.
In its analysis, the German bank mapped the annual GDP growth of host countries for a five year period – two years before and after the event. And if found that there are “no obvious economic benefits to hosting the tournament”.