Depending on your point of view you probably think that hosting the World Cup is the greatest — or most stupid — thing that could have happened to South Africa.
The spectacle appears to polarise people, with many noisy detractors and passionate supporters, but few in the middle ground.
Supporters speak to its global appeal, the greatest marketing opportunity any country could hope for, while detractors think the money could be much better spent on more pressing issues.
But there is one thing Fifa knows about the World Cup. Countries want it. They queue for it.
This despite the fact that the host does not get so much as a look-in at the $3,2-billion (R7,3-billion) in revenue the cup generates. All revenues from television ($2-billion), marketing ($1-billion), hospitality ($120-million) and licensing ($80-million) go to Fifa or its local organising committee.
Fifa has other revenue sources besides the World Cup, but this so dominates its finances that essentially it is a pony that gets to do its single trick once every four years.
A Fifa fact sheet says that it and the local organising committee (LOC) have set aside $1,5-billion for the 2010 World Cup. The two parties have costs of $1,08-billion and $438-million respectively.
“These amounts are to cover logistic and operating costs, which include the prize money, stadium rental, marketing, team transport and accommodation at the match venues, media facilities and television production.”
The LOC finances its budget from ticket sales and a direct contribution of up to $250-million from Fifa. “Thanks to currency hedging from the exchange rate, the LOC benefited by an additional amount of R380-million,” the federation said.
Each participating team gets $1-million from Fifa during the four-year cycle, with another $10-million going to the confederations under its umbrella.
It says that 74% of its revenue is spent on soccer. Its main cost is running its events, notably the World Cup. Last year it spent $133-million on development, 17% of its budget.
Development programmes include financial support to build facilities such as technical centres, football pitches and headquarters, as well as holding seminars and courses, including for referees and coaches.
A programme launched in 2005, Win in Africa with Africa, put up $70-million to build turf pitches in 53 countries and to professionalise soccer through media and executive training and to develop sports medicine.
The LOC does not disclose its finances, says spokesperson Rich Mkhondo, who adds: “As a section 21 company financial statements are confidential and distributed to the board only.”
Mkhondo says the South African government has not funded the LOC. “The LOC is funded by Fifa so that the South African Football Association (Safa) can deliver on the World Cup obligations.
“Any surplus which might accrue will be dealt with in accordance with the agreement between Fifa and Safa.”
Fifa says there is a queue of countries bidding to host both 2014 and 2018 because “no other event attracts more global attention”.
The 2006 World Cup was broadcast in 214 countries, with a total of 73 000 hours of coverage and a Âglobal cumulative audience of 26,3-billion viewers, which “provides the host country with a fantastic marketing opportunity”.
“The benefits to the image of the country and the host cities around the world cannot be quantified.”
South African company Headline Leisure Management has trained 1004 community staff for the Confederations Cup and will train another 2 700 for the World Cup.
Fifa sees benefits in the estimated 450 000 visitors expected to visit South Africa during the World Cup, in what is traditionally the low tourist season.
It quotes research by financial consultancy Grant Thornton estimating that the World Cup will contribute R55,7-billion to the economy, generate 415 000 jobs and bring R19,3-billion in tax revenue to government’s coffers. “Grant Thornton estimates that the 450 000 tourists will spend R8,5-billion during their stay.”
Agnostics go home
Over the holidays two Dutch tourists told me that 100 of their countrymen have left Holland in a convoy, planning to drive through Africa to arrive in time for the kick-off in June; 2010 is here.
And now the debate rages. Shrill voices everywhere complain that hosting the greatest show on Earth is a dumb idea. One sees Fifa as having far too much power to decide what (and where) we buy. (It does.)
Others say that the fabulous stadiums will soon be pricey white elephants. The money should rather have gone into building power plants or directly lifting people out of poverty.
But this is not a matter settled by intellectual discourse. There are basically two kinds of people: those who think that hosting an event such as the World Cup is a good idea and those who think it isn’t.
Both camps trot out facts to back their case. There are a lot of easy targets around.
One is that Fifa and its key executives lead a charmed life, flitting around the world at great expense, answerable to no one.
Questions abound about the stadiums. They may be glitzy and look good on television, but can they be justified when people live in squalor in their shadow?
There is also unhappiness because the new stadium in Durban is seen to be unnecessary, while the local authorities are trying to induce the Sharks to move their base there once the World Cup is over.
Meanwhile, the competition authorities have started investigating cartel activities in the construction sector. The big infrastructural projects, including the stadiums, are understood to be part of the probe, the suspicion being that cartel activity has influenced the price of all inputs. The investigation, still in its infancy, could lead to civil claims against parties found guilty of collusion.
The private sector has covered itself in glory by delivering these major new projects on time. This shows the country’s ability to get things done. Time will tell to what extent this has been achieved on the back of rigged pricing.
Then there is the risk of the whole thing backfiring because we are too little a league to host this major event. With the world’s cameras trained on us, a few nasty crimes could turn the whole thing into a public relations disaster. But you can’t be a fence-sitter or agnostic on this issue, so let me declare my bias. I’m all for it. It is the greatest show on Earth, I’m glad we’re hosting it and know we’re up for it.
Already paying dividends
World Cup spending earmarked by government includes projects related to 2010 but not specific to the event that will have significant legacy value, says national treasury spokesperson Thoraya Panday.
“Government has invested about R33-billion, which includes infrastructure, ICT [communications technology], public transport and policing, among others. The World Cup provided us with the opportunity to accelerate and in some cases bring projects forward.
“Improved infrastructure will be one of the lasting effects of the World Cup.”
Panday says that upgrades to the OR Tambo, Cape Town and Mangaung (Bloemfontein) airports are complete.
“The Bus Rapid Transport system will be a lasting legacy. The Gautrain consortium and the Gauteng province have resolved to complete the ORTambo link and Sandton before the event.”
Panday says government will have contributed R11,7-billion to stadium construction and R14-billion to transport infrastructure. She says that Telkom’s “last mile” fibre network and Sentech’s satellite project implementation are well under way. Government has allocated R1,5-billion towards ICT. The police get R1,3-billion, including an allocation in 2010-11 of R640-million for deployment of 31000 police officers to provide security during the World Cup.
There are also allocations of R488-million in 2009-10 and R196-million in 2010-11 to host cities that supported preparations for the Confederations Cup and World Cup.
Other legacy impacts of the event are the R25-million invested in club development across sporting codes, especially in poorer communities, says Panday.
Up to R212-million is being invested in school and community sport over the period to 2010.
Panday says that preparations have already made a sizeable Âcontribution to job creation. For the period 2007 to 2010 construction accounted for about 130 200 job opportunities.
“This translates into R7,4-billion in benefits to households, of which R2-billion goes specifically to low-income households. It is estimated that the event could generate about 56 000 extra jobs over the period from 2007, with 73 800 extra jobs in 2007-08.”
Panday says the event is expected to contribute R4,9-billion to real GDP next year. From 2007 to 2013 its impact on real GDP growth over the whole period will be 0,02 % per annum.
“In 2010 itself, it is projected that the event will contribute about 0,6% to real GDP growth.”