Complex Made Simple

The sport of spending billions only to lose the match and pay dearly for it

Participating in a major sporting event like the World Cup must be exhilarating especially knowing that billions are literally watching you on TV or a number of connected devices.

Nations spend anywhere from 4-8 years preparing for the World Cup or the Olympics, and while the benefit is increased tourism, branding, and exposure, the costs associated with putting together such events are astronomical and may never be recouped.

Only the memories last and last, good and bad ones, losses and wins, successes and failures, and you can’t put a price on these.

But who is footing the bill?

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Russia 2018

The Associated Press (AP) reported that Russian authorities say next year’s World Cup will cost $600 million more than previously planned.

There was no immediate explanation from organizers or the Russian government for the cost rise, published in a government decree and signed by Prime Minister Dmitry Medvedev.

Costs have risen to $11.8 billion, the decree stated.

“Of that, 57.6% comes from the federal budget. There is another 13.6% from regional government budgets, with a further 28.8% from “legal entities,” a category which can include both private and state-run companies,” the statement read.

According to Statista, the investment budget share of the International Federation of Association Football (FIFA) for the 2018 FIFA World Cup Russia, shows  it to be over $1.9bn.

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Courtesy of Statista www.statista.com

Qatar 2022

Last February, Qatar was shelling almost $500m every week on major infrastructure projects, the country’s finance minister, Ali Shareef Al-Emadi said.

“And this will carry on for the next three to four years to achieve our goal and objective of really getting the country ready for 2022.”

It was estimated that more than $200bn will be spent in total, a cost that includes stadiums, road and airport infrastructure, and hospitals, among others.

But later in the year, Qatar said it had slashed its budget by 40-50% for hosting the 2022 soccer World Cup.

Hassan Al Thawadi, secretary general of the Qatar 2022 supreme committee, told CNNMoney: “We wanted to ensure there is financial responsibility in relation to the infrastructure relating to the World Cup.”

He now expects tournament infrastructure will cost between $8bn and $10bn, mostly for stadiums and training grounds.

According to CNN, Qatar is now proposing eight, not 12 stadiums, building seven new venues and upgrading an existing one.

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Qatar WC at risk

The country was under attack from the moment it won the right to host the 2022 World cup event.

It was accused of bribery and these allegations persist till today.

It moved the tournament till winter, disturbing the schedules of soccer leagues around Europe and the world.

Heat was a main concern prompting Qatar to seek creative solutions that keep stadiums and fields cool.

The country has been accused of slave-like tactics keeping workers exposed to the heat for long hours of the day.

The June 5, 2017 Arab Quartet spat against Qatar has put the tournament at risk of boycott from Saudi, UAE, Bahrain and Egypt.

The British Daily Mail recently reported that fans will be able to consume alcohol only in remote locations, needing to travel away from stadiums to do so.

“This has worried sponsors and has caused fury and consternation among fans and football bodies like the FA,” said the paper.

“Sponsors like Budweiser are in an awkward position and there are real fears of a global boycott.”

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Management consultants Cornerstone Global recently published a study which cast doubt on the country’s hopes of actually hosting the tournament.

‘The reasons for this are many and include open allegations of corruption – both in the bidding process and in the infrastructure development,” it said.

“Qatar is under greater pressure regarding its hosting of the tournament… the current political crisis has seen – or at least raised the possibility of – a Qatari opposition movement emerging.”

The Gulf Cup is the first major tournament for Qatar since the disappointment of failing to qualify for the 2018 World Cup.

They were meant to host the competition, but it was relocated to Kuwait because of the political crisis in the region.

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An Olympic size struggle

The Olympics are a terrible investment and a huge risk for the host city, according to Business Insider.

Rio estimated the 2016 Olympics would cost $3bn. Instead, the final cost was closer to $13bn. The city had to cut healthcare and police spending to afford it.

One year later, the venues were in shambles.

Russia estimated the Sochi games would cost $12bn. Instead, the final cost was around $50bn. Tehend tally was that Russia wound up making just $53m for its efforts.

China spent over $40bn on the 2008 Olympics, making a $146m profit, only to leave the sporting infrastructure in total neglect.

The 2004 Olympics cost Greece around $11bn. Many of the stadiums are in disrepair today.