A Look Into the Economic Impact of Hosting the World Cup
Background
The FIFA World Cup is the infamous international soccer championship event that is far and away the most-watched sports broadcast when it comes around on its 4-year cycle. The winning international soccer team receives one of the most sought-after trophies in the sports world, creating roaring waves of nationality and competitive pride for all participating countries and their fans. Additionally, upwards of $400 million in total prize money is up for grabs for the competing teams. 2022 FIFA World Cup champion Argentina received $42 million in prize money on top of the trophy, and this figure has been increasing every tournament.
Although the soccer played in the World Cup is exciting and competitive, there is another highly competitive aspect in play. That is, the bidding process where countries apply to be the host nation of a FIFA World Cup. Hosting the World Cup is a lengthy and costly process for the country of choice, and there are certain standards determined by the FIFA Congress that the country must meet. However, being the World Cup host is still a coveted honor due to its economic and cultural impacts on a country. While everyone is looking for the country that wins the trophy, let us take a dive into these impacts, and analyze what it truly means to host the World Cup.
Economic Costs
To summarize the bidding standards and processes, the host of the World Cup is awarded to the nation that is financially and societally up to the standards set by the FIFA Congress and equipped with the infrastructure to handle an event of such a large scale.
Qatar, the host of the 2022 World Cup, was chosen as the host nation in 2010 after completing the bidding process and assessment by the Congress. However, the process was far from over; in 12 years, Qatar spent $220 billion prepping its cities and facilities to host the tournament (Lyjack 2022), amounting to about 10% of its $180 billion GDP spent yearly in preparation to host. Most of these costs were tied to building up hospitality and transportation, with only $6-$10 Billion spent on stadium infrastructure. (Lyjak 2022).
It is well known that hosting the World Cup can bring economic prosperity through tourism and international recognition, but it is much more infrequently discussed how it can be a financial burden as well. It can be a huge risk for a country to commit to spending billions of dollars in preparation to host a World Cup, with no telling how the economic impact can pan out. For example, the idea of hosting the World Cup was extra exciting for Brazil in 2014; not only is Brazil one of the hearts of soccer fandom, but many were hoping that the increased tourism could bolster the country’s struggling economy. However, the costs of the 2014 World Cup far outweighed the benefits, angering many Brazilians who were promised a 5x ROI and millions of new job opportunities. In reality, the $15 billion investment by the Brazilian Government into the World Cup ended up generating very little return, and their economic crisis continued to worsen through the 2010s. (Borgen 2023)
Economic Benefits
Sticking with Qatar as our nation of study, it is time to explore how their decision to host the World Cup has economically benefited the country. According to Forbes and the Michigan Journal of Economics, Qatar saw $1.56 Billion in revenue simply for being the host country, while FIFA received $7.5 Billion. Monetarily, Qatar seems to be running a substantial deficit in comparison to the $220 Billion the nation spent in preparation to host. However, this is a multi-layered analysis, and the impacts reach far beyond the dollar-figure amount reported by Forbes.
With seven newly constructed stadiums and one renovation, Qatar was equipped with eight stadiums and 386,000 total seating capacity for the World Cup (Hotels.com). Meaning, there were at least 386,000 potential new consumers based on in-person attendees alone. Officially, 3.4 million fans attended the World Cup games with a 96.3% stadium seating rate (Quintero 2023). It was also reported that Qatar welcomed 1.18 million international visitors, over a 300% year-to-date increase in tourism for November and December 2022. (Quintero, 2023). The Qatari government is reportedly expecting tourism to triple by 2030 due to the presence of the World Cup (Lyjack 2022). As of year-end 2023, this claim seemed backed by tourism data, Qatar saw a 2-3 digit percent increase in visitation for every month in 2023. (Quintero, 2023). Increased consumption from tourism has bolstered Qatar’s economy, adding another layer of economic diversity for the oil trade powerhouse. While the exact statistical long-term economic impact has yet to be seen, this is still a promising trend, especially for a wealthy nation like Qatar which is already established as an international economic player.
Perhaps the most significant benefit of hosting the World Cup is international recognition. This is what makes running a massive financial deficit worth it to some countries. In Qatar’s case, this was likely their main motivation for hosting the World Cup. The recognition obtained from 5 billion international viewers and the presence of foreign governments/government officials is invaluable. However, with this big of a spotlight on an international event, comes an even bigger responsibility to make sure it is a success. By the numbers, Qatar’s World Cup can certainly be considered a success. Even with some pre-tournament controversy surrounding the country’s laws, the 2022 World Cup still welcomed 3.4 million live viewers, up from 3 million in Russia in 2018. In terms of entertaining soccer, the 2022 World Cup broke the record for most goals scored with 172 total. Qatar will also be remembered as the place where Lionel Messi, an all-time soccer legend, finally won the first World Cup of his otherwise star-studded career. While the Qatari government was not on the field scoring goals, it cannot be understated how impactful the World Cup is simply based on the soccer being played. Qatar will forever be linked to the 2022 World Cup, placing a spotlight on its sports industry and making its mark in soccer history. In fact, Qatar was selected to host the 2023 Asian Cup, given another chance in the sports spotlight due to their success in hosting the World Cup (Euronews 2023)
Furthermore, Qatar’s investments in infrastructure and transportation will leave long-lasting impacts on the economy and Qatari citizens. As mentioned earlier, a majority of the $220 Billion the country invested in the 2022 World Cup was used to build up hospitality and transportation. The goal was to make room for incoming tourists and increase interconnectedness between Qatari cities to make traveling easier; the project notably resulted in the construction of the Doha metro and tram service, Doha International Airport expansion, city Cruise Terminal, and several highways connecting major cities (Euronews 2023). While these were constructed with World Cup tourists in mind, they will undoubtedly be used in the future by Qatari citizens, improving their quality of life and potentially drawing in future tourists.
Finally, the newly constructed stadiums have begun to be repurposed in several different ways, extending the economic impact of the $220 Billion dollar investment even further. The plan is for Lusail and Al Bayt to become community hubs, including a sports medicine hospital in Al Bayt. Other stadiums will be reduced in size and half of the seating capacity will be donated, further cementing Qatar’s ties to the World Cup and their recognition internationally (Euronews 2023). It is clear that Qatar intends to cement the legacy it has built surrounding the 2022 World Cup, with plans to maintain both the economic and cultural prosperity that hosting the World Cup has produced for them.
Works Cited
What will happen to Qatar’s World Cup stadiums? euronews. (n.d.). https://www.euronews.com/2023/02/16/what-will-happen-to-qatars-world-cup-stadiums
What legacy will the 2022 World Cup leave for Qatar?. euronews. (n.d.-a). https://www.euronews.com/2023/01/17/fifa-world-cup-qatar-2022-what-legacy-will-it-leave-for-qatar
Project, T. B. (2023, April 9). The impact of the 2014 World Cup on Poverty in Brazil. BORGEN. https://www.borgenmagazine.com/2014-world-cup/
Qatar - beyond the World Cup. HVS. (n.d.). https://www.hvs.com/article/9774-qatar-beyond-the-world-cup
Lyjack, A. (2023, January 10). The finances behind the 2022 World Cup. Michigan Journal of Economics. https://sites.lsa.umich.edu/mje/2023/01/10/the-finances-behind-the-2022-world-cup/
Qatar Stadium Guide for the FIFA World Cup 2022. Find Out About the Stadiums Before Kick-Off on 21 November – Go Guides. (n.d.). https://www.hotels.com/go/qatar/qatar-stadium-guide#:~:text=Lusail%20Iconic%20Stadium%20is%20set,by%20British%20architects%20Foster%20%2B%20Partners.
