After losing the bid to host the 2006 FIFA Soccer World Cup by one vote cast in favour of Germany, South Africans were nothing short of euphoric when we secured the bid to host the prestigious sporting event in 2010.It was an emotional moment that brought together the fulfilment of several dreams. It brought the soccer tournament to the African continent for the first time in history and it brought the tantalising dream of enrichment closer to reality for a vast number of people. The expectations of South Africans and even those in neighbouring countries are high. Everyone is hoping for a slice of the action – both sporting and economic – and the projections look tantalising, but are they grounded in reality? The South African government is pouring billions into infrastructure development: stadia, transport systems, communications networks … and everyone is promising the creation of a lasting legacy and glowing with PR-speak claiming things like: “the benefits will reverberate though the country long after the last whistle has blown” and that the economic benefits include job creation, ongoing training and skill development as well as the attraction of investors. In stark contrast, German journalist Jens Weinreiche warns us not to expect too much from hosting the 2010 event. He has followed mega-sporting events for several years and says they simply do not have the significant impact that everyone expects.
Weinreiche said that ahead of the 2006 FIFA Soccer World Cup in Germany there were 10 scientific studies projecting an increase in tourist arrivals, an increase in revenue earned by host cities and an increase in Gross Domestic Product (GDP). These were widely publicised in the press. In reality the benefits for Germany came in the form of new stadiums and infrastructure and a sense of nation branding – but Weinreiche says that even that was forgotten after the final whistle. There were only two articles in the press that looked at the financial success of the 2006 Cup after the games were finished. They found that overall there was a small, almost insignificant, increase in tourism numbers. But Weinreiche says Berlin had a big reduction in tourism because it was the most expensive place to be during the World Cup. He also said that the 2006 Cup had no effect on Germany’s GDP, but said that maybe the 2010 event mgiht be different and could have a small effect on South Africa’s GDP. But Weinreiche’s bottom line advice is: not to promise too much and not to expect a big soccer “party” to be a panacea for all South Africa’s problems.
So the next question: Is Weinreiche a realist or a party pooper?Given the recent credit crunch and global economic crisis, the prospect of the 2010 Soccer World Cup attracting foreign investors is now no longer likely. The leading economies are going into a recession and there is almost no likelihood of a recovery before the 2010 World Cup, says Gavin Chait, Risk Analyst and Strategist for Whythawk, a specialist in risk assessments for investors in emerging markets. Weinreiche believes that South Africa is also battling with its image as a violent and dangerous destination, and people, in a time of tight money supply, will be weighing up the costs of travelling to a long-haul destination combined with concerns over their personal safety – and many traditional tournament fans are likely to opt to watch the soccer from the comfort and safety of their own lounge. On the plus side, South Africa is likely to see an increase in visitors from the African continent, but they are expected to be travelling on a tight budget. We will benefit from improved infrastructure, and government’s continued commitment to infrastructure spend for the World Cup will go a long way to helping construction companies in South Africa stay afloat at a time of global recession, where most large construction projects have already been put on hold, says Chait. South Africans will have benefitted from improved employment opportunities in the lead-up to 2010, but the additional employment is not likely to counter a growing number of retrenchments as the effects of the global crisis hit our shores and mining and manufacturing companies lead the way in retrenching large numbers of employees in order to cut costs, he says. But Weinreiche warns that the combination of growing unemployment, slowed GDP growth in South Africa, and the high expectations that all South Africans are going to benefit economically from the 2010 event could create a situation of increased tension and possible riots as these expectations are not met. The employment offered around the sports event itself is not likely to be sustainable, although there will be a spin-off from skills development and training leaving people better qualified, which should broaden their employment prospects or perhaps equip them with skills to start their own business, says Chait. Unfortunately the reality of FIFA contracts means that there is little opportunity for small entrepreneurs to jump onto FIFA’s profit-making bandwagon – most of these are legally tied-up and carefully monitored. Chait explains that all FIFA logos and all imaginable variations of the words 2010 FIFA Soccer World Cup are trademarked and the manufacture or sale of FIFA branded memorabilia is not allowed, except by licensed trademark holders. Even printed feature supplements around the Cup can only carry the advertising of approved sponsors – leaving very little opportunity to benefit directly from the event itself. But there are opportunities in providing support and services to tourists. Taxi services from hotels to stadia are seen as one way of making money and a number of people have added B&Bs to their property in the hopes of cashing in on the tourist boom. Licensing could be an issue here but those without licences might still stand to benefit, as those with licences will not be focusing on serving the normal domestic market, he says. “African curious will be popular, as will guided tours of interesting local attractions, but regular vendors from stalls outside matches will have to think smart, as they will not be allowed to operate within a prescribed (considerable) distance of the match stadia,” says Chait. Unfortunately, there is a lot of ignorance regarding the regulation of business opportunities around FIFA events and a large number of South Africans are likely to be disappointed with the outcomes. In addition to a restrictive environment the current economic climate is going to make it harder for the average South African to benefit from this much-hyped event. Chait adds that on the plus side we will have invested in infrastructure and, a few possible white elephants aside, South Africa will be better placed to benefit from renewed investment when the negative economic cycle has completed its bear run and growth returns. This article by Sharon Davis was published in the April/May 2009 edition of the Wits Business School Journal |