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Does soccer give GDP a kick?
By Sudhirendar Sharma

People's sport football has come to symbolize political power, national pride and economic prowess. Can South Africa make expected socio-economic gains by hosting the world cup?


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German supporters during 2006 Football World Cup

South Africa is most unlikely to win the World Cup but within a period of four weeks, beginning June 11, it hopes to win on the economic front - achieving an astonishing 0.5 % of its projected 3 % annual growth during that short period. Thanks to 96 hours of football, an estimated $12.4 billion will be injected into the host country's economy according to an assessment by Grant Thornton Strategic Solutions. While some 415,000 jobs will be created, over 373,000 foreign tourists are expected during the tournament.

Some economists call such claims exaggerated, saying that the costs of organising football world cup outweigh the economic benefits. Much of the newly built sports infrastructure is unlikely to be used following the event. The desire to host a global event may seem insatiable, but the funds diverted to the mega event could have been invested in socially relevant projects such as schools and hospitals. Yet, nation after nation make frantic bid to host the most popular event that seeks massive diversion of funds for infrastructure development in the first place.

Interestingly, there is little resistance to such resource misappropriation even in poor (host) countries. Simon Kuper and Stefan Szymanski, authors of Soccernomics, contend that large sports events may not yield economic profits, but it does increase people's happiness. According to them, South Africa is likely to lose money on the forthcoming World Cup but it would be happier nation this fall - as also other participating African countries that could reap empowerment, pride and happiness from the South Africa-hosted World Cup.

Germans had invested US$ 7.7 billion with a hope to score additional 1.6 per cent on the growth curve during 2006 edition of the Soccer Cup. It fell short of target though - there were 10,000 fewer jobs created; the tourism industry earned $250 million less than expected and even the brothel owners complained of less than anticipated business on account of poor clientele. Yet, the official assessment of the World Cup by the German government considered the event to be a fairytale that had changed everyday life, helping improve the country's image internationally.

South Africa is likely to lose money on the forthcoming World Cup but it would be happier nation this fall - as also other participating African countries that could reap empowerment, pride and happiness from the South Africa-hosted World Cup.

Equating hard currency investment with soft emotive output may remain an enigma! However, gains from the soccer's mega madness may always remain an understatement with some businesses gaining the benefits much later. Japan & Korea, that jointly hosted the 2002 World Cup, are still realizing the return on investment made during the event. Japan pulled out of recession as its economic output rose by US$ 2.5 billion, contributing 0.6 per cent increase in GDP, whereas Korean economy gained a 2.2 per cent increase in its GDP.

With soccer turning out to be an economic ball game, the studies on its impact are emerging as a new subject in the study of political economy! Besides the economic impact, world cup soccer greatly impacts nationalism, both in positive and negative aspects, as well as the world-wide economy with sponsors and other affiliated businesses. For South Africa, staging the globe's most prestigious football tournament is intertwined with rebuilding the economy, reducing lingering social divisions and showcasing a new national identity.

The most popular sport, which had originated in England, has had its own share of politics too. The so-called 'football war' between Honduras and El Salvador, that had claimed 3,000 lives within 96 hours in 1969, was reportedly invented by European sports commentators to reflect the chaotic conditions in Latin America, In effect, the real cause of the bloodiest conflict was due primarily to the expulsion of Salvadoran farm workers from Honduras. But the 'football war' story persists in popular perception.

The football madness has come a long way since the World Cup was first hosted by Uruguay in 1930. Economists argue that there seems a method in this madness as nations hosting the World Cup stand to gain tremendously.

Whether or not such attempts were deliberate, sociologists contend that modern football has come to symbolize political power, national pride and economic prowess. If happiness is an intangible gain then the Europeans had it the most - hosting the World Cup has contributed to reduction in suicides. In similar tone, football symbolizes a faint hope of equal opportunity for the deeply-divided societies in Latin America and Africa? However, for million of deprived fans football is a sense of belonging that reflects a spirit of rebellion!

While Pele may remain a central source of identity for the Brazilian society and Maradona a 'rags to riches' dream for most Latin Americans, football has been systematically driven from the streets and slums of Brazil, Argentina, and Mexico to the elite clubs in Europe. Having gained an incredible political currency in the west, soccer has become a money-spinner of immense significance for governments, sponsors and business in Europe. It's hosting in South Africa, therefore, goes far beyond the immediate pride of hosting the event.

The football madness has come a long way since the World Cup was first hosted by Uruguay in 1930. Economists argue that there seems a method in this madness as nations hosting the World Cup stand to gain tremendously. However, how indeed this gain will get transferred to millions of fans who may not have the luxury of bread and butter remains a huge question? Conversely, however, as the stakes are raised those who might deserve the economic fallout of hosting it are often pushed to the margins. The game of football seems under seize!

Given the fact that the world-wide total sponsorship value for the World Cup has increased from a 1984 value of $2 billion to a 2006 value of over $20 billion, the event has long ceased to be a mere game of emotions, ecstasy, desperation and triumph. Instead, the desire and the ability of the nation to be the sole world-wide spotlight for promoting the tourism of that nation and its corporate sponsors hold the key. Since the existing evidence on the economic impact is developed by host country, ground reality is far in contrast to what gets reflected in the books.

But, isn't the unquestionable faith of those for whom football is 'God' being bartered away for economic gains? Are fans that experience a surge of nationalistic pride being used to make profit for the sponsors? As such, whenever a study comes out putting forth that the event shall earn a said amount for that nation, it must be clear that the gains will rarely, if ever, get shared on a level-playing field.

The views expressed above are personal and do not necessarily reflect the views of d-sector editorial team.

Sudhirendar Sharma  |  sudhirendarsharma@gmail.com

Dr Sudhirendar Sharma is an environmentalist and development analyst based in New Delhi. Formerly with the World Bank, Dr Sharma is an expert on water, a keen observer on climate change dynamics, and a critic of the contemporary development processes.

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