World Cup Rarely Meets Lofty Economic Goals

Don't spend that World Cup money just yet, South Africa. Statistics show that the World Cup isn't always an economic boon for host countries.
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When South Africa was chosen as the first nation on its continent to host the World Cup, national leaders toldThe New York Times the monthlong event would "add several billion dollars to the economy and create about 150,000 jobs." But economic analyses of previous tournaments suggest such estimates may be wildly overstated. A paper published in the journal Regional Studies reported that, rather than the windfalls they had been hoping for, "host cities experienced cumulative losses of $4.5 to $9.3 billion" when the World Cup was held in the United States in 1994.

"The apparent negative impact of the Cup can be explained by the fact that matches are not held on consecutive days," wrote economists Robert Baade and Victor Matheson, who noted that seven games were held in New York City over three-and-one-half weeks. During that period, an unknown but substantial number of conventions and individual tourists bypassed the city "due to perceptions relating to limited hotel rooms and high hotel prices, rowdy behavior of football fans and peak use of public goods such as highways and sidewalks."

Two studies in the journal Tourism Management examining the impact of the 2002 World Cup on South Korea were only slightly more upbeat. One concluded the games generated income of $307 million (in U.S. dollars) for the small nation, or — to crunch the numbers differently — $713 million of "value added." It reported that a typical fan who traveled to Korea for the event spent about 1.8 times as much as an "ordinary" foreign tourist, and such expenditures created 31,349 full-time jobs.

That relatively modest employment gain did not impress South Koreans very much, according to the second study. Reporting on a detailed public opinion survey taken before and after the games, it found "the economic benefits were rather a big disappointment for local residents." While agreeing the tournament brought certain social and cultural benefits, South Koreans were disappointed to realize "the cost of building the World Cup facilities and public facilities for visitors was much greater than they expected."

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