Why host the Fifa World Cup? The sacrifices seem to outweigh the gains

Chicago’s polite refusal to play host when the tournament goes to the Americas in 2026 makes sense when the scale of the outlay in Russia is considered

PUBLISHED : Saturday, 23 June, 2018, 5:40pm
UPDATED : Saturday, 23 June, 2018, 6:51pm

Whom would you trust more, Russian President Vladimir Putin or Chicago mayor Rahm Emanuel?

Whereas Putin is revelling in the attention that Russia is receiving as host of the 2018 World Cup, Emanuel has informed the US Soccer Federation and Fifa that Chicago has no interest in serving as a host city when the tournament comes to North America in 2026. Canada and Mexico will each host 10 matches, and the United States will host a further 60. So why is the third-largest US city taking a pass?

To understand what it means to host a global sporting event, consider that Putin’s government spent US$51 billion to US$70 billion to stage the 2014 Winter Olympics in Sochi, and is projected to spend at least US$14 billion hosting the current World Cup, which runs through July 15.

Russia’s budget provided for the construction of seven new stadiums – including one in St Petersburg that cost about US$1.7 billion – and renovations to five other venues. And that does not account for expenses for training facilities, lodging, expanded infrastructure and security.

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Chicago, having already hosted the opening ceremony and first match of the 1994 World Cup, has adopted quite a different mindset. Emanuel’s spokesman, Matt McGrath, recently issued a statement alleging that Fifa was demanding something tantamount to a “blank check”, including an “open-ended ability to modify the agreement … at any time and at their discretion”.

Moreover, Fifa would have required that Soldier Field – home to the Chicago Bears NFL team – be taken out of use for two months before the tournament. In the end, Emanuel’s office concluded that “the uncertainty for taxpayers, coupled with FIFA’s inflexibility and unwillingness to negotiate, were clear indications that further pursuit of the bid wasn’t in Chicago’s best interests”.

Fifa prohibits both direct and indirect taxation on all income from the event, exempting continental soccer confederations, host-country broadcasters and Fifa member associations, service providers and contractors. It is little wonder that Minneapolis and Vancouver have joined Chicago in declining the hosting honour.

To justify its imperious behaviour, Fifa uses carefully qualified language, only going so far as to promise an “opportunity for significant financial investment” in infrastructure, as well as attention and investment that “may contribute” to growth. In reality, scholarly evidence shows that the World Cup rarely benefits host countries and cities as much as Fifa would like the public, and public officials, to think.

For example, consider what Russia gets in exchange for its US$14 billion-plus investment in this year’s event. While all the revenue from ticket sales, international broadcasting rights and sponsorships will go directly to Fifa, Russia will be left with all those stadiums – and unless it demolishes them, it will have to spend tens of millions of dollars every year on maintenance.

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To be sure, images of sleek new facilities are being disseminated worldwide. But the optics are not necessarily working in Russia’s favour. Apparently, there was no hiding the 6,000 empty seats at the Uruguay-Egypt match on June 15.

If history is any guide, it is highly unlikely that the 2018 World Cup will increase Russia’s international investment or trade, boost its tourism industry or strengthen its people’s commitment to physical fitness.

What it will do is instil a fleeting sense of national pride among a significant portion of Russians, while offering an ephemeral distraction from the country’s mounting problems. With or without the World Cup, oil price volatility and international sanctions imposed in response to Putin’s 2014 annexation of Crimea will continue to darken Russia’s economic prospects and diminish ordinary Russians’ standard of living.

So, whom should you trust? I’m going with Emanuel.

Andrew Zimbalist, a professor of economics at Smith College, is the author of Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup