Lessons to Learn from the Rainbow Nation

June, 2010
By Joyanto Mukherjee

The World Cup which is being hosted by South Africa this month has become the talk of the town for various reasons apart from football. It is being viewed as the coming of age for a country which was reeling in the clutches of apartheid till 1991. It is the first time that an African country is hosting the biggest prize in the game. It is seen as the birth of a whole new era, with countries from Africa and Asia embracing football at its highest stage. The world cup in Africa can be embraced as an education for all developing countries who dream of hosting the cup. Future hosts can understand the nuances involved in staging such a huge event. Will they actually benefit from such an event or is it another way of exploiting such growing markets? Will the money raised help in the development if the sport and the country or will it make the rich richer? Similar questions will be raised, but the answers are actually open to self-interpretation.

The FIFA World Cup is one of the biggest sporting events in the world, having the largest worldwide audience. It is an event that brings the world together and in a few days all eyes will be on South Africa. However questions such as should South Africa spend over $6 billion on this event while many people in its country survive on little more than $120 a month, are being raised by the local press. The government answers them by saying that the economic gains are huge. The World Cup is estimated to give South Africa an extra 0.5% growth. Around 373,000 foreigners are expected to visit South Africa during the tournament, with each of them spending $4000 on an average. In all about $12.4 billion is estimated to be injected into South Africa - Tourists are expected to account for 16% of this and the rest will come from the South African government’s spending on infrastructure. But economists are cautious about all such gains and predictions. It is said that the lasting effects of the global financial crisis and South Africa’s image abroad as a dangerous and crime-ridden country will be the biggest negative factors, with some saying that the best case scenario will be that South Africa will break even at the end of the tournament. 

In addition, it is important to observe FIFA’s role in the tournament as well. It has enforced a set of strict copyright regulations that makes it very difficult for the average South African to earn a profit from the event. Many informal traders sell home-made food and drinks to the crowds around the stadiums in order to make a living. However unlicensed traders are not allowed to sell food and drink within a one kilometre radius from the stadiums. Shop owners around stadiums will also lose out as they are not allowed to operate during the tournament unless they pay a large fee. This is being viewed as an infringement on the livelihoods of some of the poorest South Africans and is another major drawback.

The construction and improvement of stadiums for the World Cup and the improvement of infrastructure in South Africa has created thousands of short-term jobs. However it is not expected to have a lasting impact on employment. It is said that the only way South Africa can gain long-term benefits from this World Cup will be by indulging in a very expensive exercise of brand-building, which will reveal it to be a modern democracy, technological giant in the region and political caretaker of regional affairs. This exercise itself will depend on the approach taken and also the willingness of the government to spend on it, after the World Cup. Sceptics say that the country could have gone for such an exercise even without hosting something as expensive as the World Cup.

The other major lesson to be learnt is that, come what may, FIFA takes most of the spoils. South Africa is bearing most of the cost of hosting the Cup while FIFA stands to lose very little and gain very much from this mega-event. FIFA is responsible only for the prize money paid to the participating teams and their travel and preparation costs. Reports have pointed out that FIFA will generate an income of between $3.2 and $4 billion from the event. Also, all revenues from television ($2 billion), marketing ($1 billion), hospitality ($120 million) and licensing ($80 million) go to FIFA and its local organising committee. With the majority of all profits and revenue going towards FIFA, one stands to wonder how South Africa will even recover the $6 billion it will be spending on the event. 

These are important points which should be jotted down by countries hoping to host the biggest game in sports, especially China and India. Though China has already hosted the Olympics in 2008, the football World Cup still holds a special place. With India aiming to enter the league of developed countries, hosting the World Cup will go a long way in fortifying its image as a world power. Both these countries are already being targeted by FIFA as emerging markets and the next big investment points. But the question here is will the investment by FIFA actually help developing the sport or are they coming here only with the thought of earning more money. The beautiful game is not dying in the western world, but the organisers are desperately looking for newer markets to sink their teeth into. So come 2022, we may just hear Rooney or Messi scoring the winning goal at the Salt Lake Stadium in Kolkatta. What will that goal cost India? Only time will tell.