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2010-11-10

World Cup 2014: Brazil to invest R$29 billion, but return is doubtful

By Débora Bressan Mühlbeier for Infosurhoy.com – 10/11/2010

Tournament can generate R$17 billion in tax revenue up to 2014.

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World Cup 2014 will improve public transportation in Brazil, officials say. The Growth Acceleration Program includes the building of monorails in São Paulo, as the one shown in the above picture, and Manaus. (Courtesy of Bombardier)

World Cup 2014 will improve public transportation in Brazil, officials say. The Growth Acceleration Program includes the building of monorails in São Paulo, as the one shown in the above picture, and Manaus. (Courtesy of Bombardier)

CURITIBA, Brazil – After 64 years, the World Cup will return to the land of soccer in 2014. But to host the tournament for the second time, Brazil will carry out new – and expensive – works in 12 cities.

Brazil must spend R$ 29.6 billion (US$17.41 billion) to prepare the nation to host the world’s greatest soccer competition, according to the report “Brasil Sustentável – Impactos Socioeconômicos da Copa do Mundo 2014” (Sustainable Brazil – Socioeconomic Impacts of the 2014 World Cup), prepared by consulting firm Ernst & Young in partnership with the Getulio Vargas Foundation (FGV).

Of this total, about 42% will be invested by the public sector. The study also shows infrastructure works in Belo Horizonte, Brasília, Cuiabá, Curitiba, Fortaleza, Manaus, Natal, Porto Alegre, Recife, Rio de Janeiro, Salvador and São Paulo will cost about R$14.54 billion (US$8.55 billion).

The federal government announced in January it will invest R$7.68 billion (US$4.51 billion) to finance 47 projects to improve public transportation in these cities under the Growth Acceleration Program (PAC) of Urban Mobility.

With the financial contribution of states and municipalities, PAC will invest R$11.48 billion (US$6.75 billion) in airports, public transportation and hotels in the host cities, mainly in the surroundings of soccer venues. But the focus of FIFA – international soccer’s governing body –is on the stadiums, specifically on making sure the field are positioned correctly so players aren’t blinded by the sun and establishing clear sightlines for fans, who must be comfortable at all times.

Stadiums must have a seating capacity of 30,000 to host games in pool play. But stadiums must have a seating capacity of 50,000 to hold games in the knockout stages of the Confederations Cup and 60,000 for the World Cup.

FIFA’s requirements don’t take local reality into account

But FIFA doesn’t take into account the real demand of each country, says Oliver Seitz, a soccer industry researcher at the Liverpool University in England. The average attendance for soccer games in Brazil is 15,000, Seitz says.

“With this demand, the maintenance of a large stadium is not economically feasible,” Seitz says.

Cuiabá and Manaus will be hurt the most because their teams aren’t in the country’s top professional league, Seitz says.

“The choice of the cities was much more political than [anything else],” he says.

Four months after World Cup 2010, the massive stadiums built in South Africa to house the event remain mostly empty.

In order to have a seating capacity of 88,460 at Soccer City Stadium in the country’s capital of Johannesburg, the country invested R$756 million (US$444 million) – about R$227 million (US$133.52 million) more than expected.

Since the South African Premier Soccer League started the 2010 season in August, Soccer City has hosted only one game, according to the league’s website.

The attendance: 5,000.

That’s why urban planner Luiz Cesar de Queiroz Ribeiro, a professor at the Federal University of Rio de Janeiro, says mega events like the World Cup should be held only in rich countries.

“Only they can permit themselves the luxury of investing in important activities that, on the other hand, don’t meet the cities’ basic needs,” he says.

The technical advisor of Curitiba’s Institute of Research and Urban Planning, Suzana Costa, says taking into consideration a project’s impact over the long term is the responsibility of each city.

“In Curitiba, for instance, the World Cup’s works are consistent with the City Hall’s master plan,” she says.

FIFA and the federal government supervise the works periodically, which includes making sure all regulations are followed and investors comply with deadlines, Costa says.

The good legacy

Lycio Vellozo Ribas, author of “O Mundo das Copas” (The Cups’ World), says no World Cup has generated losses for the host nation.

“If World Cup caused the host country to lose money, there wouldn’t be many countries wanting to host the World Cup,” Ribas says.

The competition must generate R$142.39 billion (US$83.74 billion) in revenue between 2010 and 2014 for it to be profitable for Brazil, according to the study by Ernst & Young and FGV.

The figures announced by the Ministry of Sports, which were based on the study “Impactos econômicos da realização da Copa 2014 no Brasil ” (Socioeconomic Impacts of Promoting the 2014 Cup in Brazil), by Value Partners Brasil, represent an impact of R$183.2 billion (US$107.76 billion) on the economy from 2010 to 2019.

Value Partners’ study also estimates 737,800 jobs will be created up to 2014, and forecasts the gross domestic product (GDP) to increase by 0.4% between 2010 and 2019.

Public investments are offset by the increase in tax revenue.

The World Cup is expected to generate R$17 billion (US$10 billion) in tax revenue from 2010 to 2014, which corresponds to 66% of the total governmental investments, according to Value Partners’ report.

Every country that’s hosted the tournament also has benefited from an increase in tourism. Ernst & Young and FGV’s study foresees an increase of 79% in the flow of international tourists in Brazil in 2014, which is expected to generate additional revenues of up to R$5.94 billion (US$3.49 billion).

There are also some benefits that can’t be precisely measured, such as the country drawing the world’s attention.

“The eyes of the whole world will be upon Brazil,” Ribas says.

But Seitz says this kind of impact will not last.

“Before and during the competition there is an explosion of feelings. But that ends fast,” he says. “And the euphoria will end even faster if the Seleção doesn’t win.”

The works’ progress

FIFA recommends that at least the stadiums be finished by 2013, when Brazil will host the Confederations Cup, which serves as an opportunity to test the venues.

Four stadiums have yet to break ground – Arena da Baixada, in Curitiba, Estádio das Dunas, in Natal, Arena Pernambuco, in Recife, and the one in São Paulo. Estádio do Castelão, in Fortaleza, is in its initial stage of construction.

São Paulo also is behind schedule, as it has yet to decide which stadium will host games.

In June, FIFA announced the exclusion of Morumbi, home of São Paulo Football Club and the state’s largest venue, alleging the Cup’s Committee in São Paulo hadn’t presented financial guarantees for the venue’s renovation.

The Local Organizing Committee said on Nov. 8 it will officially present to FIFA a plan in which the stadium will become the future home of the Sport Club Corinthians Paulista, in Itaquera. The stadium also would house the opening ceremony of World Cup 2014.

Corinthians acknowledged in a statement the plans to build a stadium with a 65,000 seating capacity, with construction beginning in March 2011.

São Paulo’s state government and City Hall already have announced they won’t allocate funds to the project.

Ribas remains optimistic.

When the World Cup takes place, Brazil will be ready for the games, to welcome tourists, to cope with unforeseen incidents and to show the world the beauties of the country of soccer, he says.

“The Brazilians have an incredible capacity: solving things at the last minute and making sure everything works perfectly,” he says.

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10 Comments

  1. calaiza@hotmail 06/10/2014

    Bums.

  2. gabryelly 05/13/2014

    It still hasn't helped because I need deeper, more detailed information.

  3. Thiago 04/28/2014

    I like the article, impartial, showed both sides of the coin, the pros and cons, and it seems coherent. But, I heard in November last year that only R$ 8.9 billion would be spent on the World Cup. How did that figure go up so high? R$ 29 billion?

  4. HILDO CAETANO BARBOSA 05/09/2013

    BRAZIL IS MISSING BASIC SANITATION; LACK OF RESOURCES FEW ROADS PAVIMENTATION; LACK OF MEDICAL CARE AND AFTER ALL IT LACKS EVERYTHING. THIS IS AN ABSURD TO SPEND BILLIONS IN THE WORLD CUP...........AFTER THIS WORLD CUP THERE WILL BE MORE MISERY P. THE POVERTY OF OUR BRAZIL.

  5. angel alvarez gonzalez 12/13/2012

    Good for Brazil it is where all of us without work are looking toward and people like me with lots of experience in construction such as cutting and placing marble and granite we would like to get a job, in addition I have experience in brick laying and painting, lots of luck to those who get a job. Regards

  6. Raquel 11/24/2012

    I’m Brazilian and have lived in Italy for the past 22 years and would be glad if Brazil would show it knows more than just play soccer. In organization to take care of all details like hotels, airports and public order may the European value our country also for the spirit of renovation. I’m praying it would contribute not only for our economy but to help our country to grow since we’ve been sacrificed for so many years and this may become our rescue. GO BRAZIL MAY GOD PROTECT YOU.

  7. uerdes de olivera 07/02/2012

    congratulations to the Brazilian government for financing the World Cup 2014 and the 2016 Olympics, so far so good? we can also finance and improve the public health in neighborhoods of all cities in Brazil, the public school and more important basic sanitation in big and small cities Brazil would be great before its people because it’s not worthy to be so big and have so many problems in basic sanitation, health and education

  8. jose cesar evani ruiz 05/07/2012

    The Europeans are very afraid of us because they know we're going to win ,,,,South America is more.... and always will be...

  9. luzetina 10/08/2011

    Hopefully all these promises are fulfilled, so the World Cup can actually take place!!!!!!!!!

  10. João Vitor Buzzi Antonio 02/02/2011

    This article is very interesting. I hope some of this investment goes to airports since the structure we have today doesn't have the capacity for the number of people this event will bring, for example Curitiba which will host some games but the terminal (SBCT) Afonso Pena will be too small and probably some regional flights will be redirected to Bacacheri or even Joinville to avoid \”crowding\”, which I find difficult. Well, another runway should be built in Afonso Pena airport and the terminal should be extended. As I said, we hope that the government will apply part of the funds to aviation. I’m studying to be a pilot in the Paraná Flight Club, in Curitiba (Bacacheri), and due to the Cup I decided to \”shorten\” my three-year course to one and a half years. Commander João Vitor Buzzi

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