Development Through Hosting the FIFA World Cup Joseph Wenner
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Playing the Possession Game: Development through Hosting the FIFA World Cup Joseph Wenner University Honors in International Studies Advisor: Professor Christine Chin (SIS) Honors Capstone, Spring 2012 May 8, 2012 Wenner 2 Abstract The benefits of hosting the FIFA World Cup are unclear. Existing case studies have restricted their analysis to immediate revenue flows, demonstrating only that host-nations lose money in the short run. Yet despite the World Cup's apparent financial detriment, countries continue to compete to host it. Can hosts use the event to foster development? And if so, how? To answer these questions, this paper utilizes a comprehensive framework which divides the analysis into ex ante and ex post sections. First, this paper develops the six-question Preparation Synchronicity Scale in order to succinctly rate and analyze the inclusion of the host's local and national policy communities in the World Cup's planning process. Next, the impact of the event itself is divided and analyzed through three dimensions: 1) economic; 2) social; and 3) national image. By applying this framework to three World Cup cases—United States 1994; South Korea and Japan 2002; South Africa 2010—this analysis provides a more accurate understanding of the World Cup's development potential. Findings indicate that nations which prepare for the event with focused objectives while including local and national policymakers in the decision-making process are more likely to experience positive social and national image impacts. However, even for countries that host the games with such goals—like South Africa—the top-down governance of FIFA can prove to be a detriment to local development and inflict heavy financial costs. Ultimately, if FIFA World Cup hosts are to reap the full benefits of the event in the future, they must utilize grassroots control over the event's planning and branding efforts. This implication is relevant to the operations of all international nongovernmental organizations within international sport tourism. Wenner 3 Introduction Like many mega-sporting events, the FIFA World Cup is often heralded by political figures as a watershed moment for its host, an event whose tourists supposedly are harbingers both of increased economic development and an improved national reputation. Regarding the most recent tournament in South Africa, former South African President Thabo Mbeki declared that it was “a moment when Africa stood tall and resolutely turned the tide on centuries of poverty and conflict” (Runciman 2010). Yet empirical evidence has raised questions concerning this conventional wisdom. In South Africa alone, poor planning led to exorbitant cost overruns and uneven returns for the hosts. A $225 million budget for stadium renovations ballooned to $2.13 billion. Moreover, the benefits of an “international reputation” remain unclear to many, and how one acquires them is equally enigmatic. Therefore, this paper attempts to clarify the potential benefits hosts of the FIFA World Cup Finals can realize, and the methods that lead to their realization. Justification What are the expected benefits of hosting the World Cup? And how can hosts achieve them to their fullest extent? Previous analyses of mega-events—including the World Cup—have established that economic benefits are few and far between. However, the opportunity to hold the world's undivided attention for two months—nearly three billion people watched the 2006 World Cup Final match—should not be ignored. Scholars like Anholt believe that focused branding efforts coordinated with such mega-events can offer nations the opportunity “for countries, cities and regions to earn a better and stronger reputation,” possibly leading to tangible economic and social benefits (Anholt 2009 25). But these hints at development lead to further questions. Do branding efforts guide the impact of the event? What kind of international cooperation is needed Wenner 4 between the host, its citizens, NGOs and supranational bodies to attain these benefits? While these questions go unanswered, the FIFA and host countries continue to prepare for future World Cups. But these supposed economic and reputational benefits are still often touted as the justifications for hosting the tournaments. After awarding the 2022 FIFA World Cup to Qatar, FIFA President Sepp Blatter spoke of the $3 billion of investment the tournament would bring to the small Arab country (Carlson 2010). Moreover, Qatar has already debuted an ad featuring the legendary midfielder Zinedine Zidane that portrays the World Cup uniting the Arab world. Yet the accuracy of such claims remains unclear, and host nations have little guidance to avoid past mistakes. Thus, further research is needed to clarify the feasibility of attaining multidimensional development benefits through the World Cup. Literature Review An analysis of previous scholarship concerning the World Cup, sports tourism and its sustainable development potential reveals several key points. First, most FIFA World Cup specific analyses focus on its direct economic impact, using data solely on the revenue received during the event and expenditures made during preparation. The large majority of these studies indicate that World Cups are financial failures, victims of cost-overruns and limited tourism boosts. Unfortunately, these are primarily short term statistics, and few analyze extended effects. Yet regardless of the apparent financial detriment of mega-sporting events like the World Cup, countries continually compete to host them. This suggests that studies that focus exclusively on financials do not demonstrate accurately whether the event is a vehicle for long term development because their limited scope neglects key elements of the event's impact. In analyses of other mega-sporting events, however, researchers have included other dimensions to better capture these events' effects. Scherly and Breiter have analyzed other mega- Wenner 5 sporting events in terms of social, ecological and image effects, as a supplement to economic analysis. Others such as Anholt have emphasized the role of mega-sporting sporting events in defining a nation's reputation in the international community, insisting that national image branding can have a significant effect on these multidimensional impacts. Moreover, Weed has added an equally important dimension to sport tourism impact by demonstrating the importance of the event's political context, and the coherence of the policy communities involved in organizing the event. These added dimensions create a clearer depiction of a mega-sporting event's impact and the impact's origins. While this collective scholarship has demonstrated its analytical capabilities through studies of Olympic host cities, their principles have yet to be applied to the FIFA World Cup. This paper seeks to examine this applicability. Skepticism of Economic Gains The skepticism of World Cups and their economic benefit has evolved from short term economic studies of other mega-sporting events. Many economists have provided convincing hard data consisting of consistent cost-overruns and increased national and municipal debt directly connected to mega-sporting events. Zimbalist (2010) examines the 2004 Olympic Games in Athens, noting that its $40 billion price tag was more the 30 times over its originally estimated cost of $1.6 billion. Similar fiscal sob stories abound. Porter (1999) highlights Barcelona in 1992, which added $4 billion to Spain's national debt and put the city itself $2.1 billion further into the red. Similarly, Nagano in 1998 drained the Japanese treasury of $11 billion. It appears that not only does the prestige of international sporting events come with an extortionate price tag, but one that grows following its original purchase. Still, the economist might content that this shocking cost could pay-off in the long run if the tourism it encourages is large enough. Here, the verdict is mixed. To many economists, one Wenner 6 of the World Cup's strengths arises from increased tourists and tourism revenue within the host nation. Vanhove (2005) argues that in the current age of globalization, the economic potential of international events has risen drastically as a result of rising ease of travel and expendable income. Nevertheless, there are those like Coates (2010) who suggest that even with increased tourism revenues, the long run outcome of hosting a World Cup would still be negative. While the United States was still bidding to host the 2022 World Cup (which would eventually be awarded to Qatar), Coates contended that regardless of number of soccer tourists, “the World Cup would likely cost the United States billions of dollars of lost economic impact.” Specifically, he argued that the needed infrastructure, security and logistical investments—which make up the bulk of expenditures—have routinely surpassed original budget estimates and have limited long term return to society. Thus, he predicts a net $5 billion loss in taxpayer funds. A More Holistic Approach However, tallying inflows and outflows of cash is not the only method of analyzing the impact of mega-sporting events. In fact, these case studies have typically focused exclusively on comparisons between expenditures and revenue to come to a conclusion on the event's economic merit to its hosts. Yet a deeper exploration into the literature reveals analytical frameworks that have taken a much more multidimensional approach to assessing the impact of a mega-sporting event. Examining these events