Thursday, September 25, 2014

The True Losers

Ana Maria Viteri
Mrs. Straub
Economics
15 September 2014

The True Losers


Every four years, soccer fans from all over the world hover over their TVs to watch their favorite teams battle against each other for the honorable title of World Cup Champions. This summer, the 20th FIFA World Cup tournament was held in the tropical country of Brazil, making it the fifth country to ever host the tournament twice. However, a lot of new requisites are expected for the World Cup host, and for Brazil, these included the renovation and construction of twelve new stadiums, new subway lines in São Paulo, and the expansion of twelve airports- to name the least (Zimbalist). In order to meet these requisites, Brazil had to invest 13.3 billion dollars to prepare for this special event. However, doing so has resulted in many economic issues, which has evoked Brazilians to doubt the true benefit of hosting this mega-sporting event.  

Although hosting a massive tournament such as the World Cup  may seem like a great opportunity for a country to boost its economy, this is not always the case. Unless the country is able to recoup its investment, the tournament will leave the hosting country with major debt rather than a profit. Not only does that given country need to be able to afford these expenses, but it also needs to have enough resources to comply with the requisites. In the case of Brazil, the massive construction projects for stadiums and subway lines required labor and land. However, Brazil faced issues in this area due to the shortage of qualified construction workers. In fact, at that moment, there was so much construction taking place that most of all the qualified workers were employed. This resulted in a delay of many projects, and due to the severe time pressure to get these stadiums and subway lines done, Brazil was forced to go forward with the construction by using unqualified workers- resulting in a low-quality job.Land was also compromised for the tournament. In fact, the opportunity cost of building so many stadiums is that such given space can no longer be utilized for other more productive uses.


Even though the cost of hosting this tournament is very high, there are reason as to why Brazil decided to undertake this challenge. One of these is the opportunity to attract new tourists. New tourists are likely to spend money on not only World Cup related activities and entertainment, but also on accommodations, meals, and brazilian merchandise. Along with these benefits exist the possibility that Brazil will reaffirm to its tourist that it is a vibrant, rich, and fun country to visit (Zimbalist). Creating that image for their tourists ensures that Brazil will position itself “as an attractive destination to potential investors and tourists now and in the future” (McGuire). However, it seems that for Brazil, the benefits did not outweigh the consequences. With only 3.03 billion dollars in revenue, not the same as profit, the country’s investment does not seem to be worth it. Although the World Cup tournament is a time many people look forward to, it did not end up being as rewarding to Brazil’s economy. In fact a research poll conducted by Pew Research center discovered that 61% of Brazilians respondents had negative feelings in regards to their country hosting the tournament. They expressed their doubts on this topic and many believed that their country was not economically competent to host this event. But, this issue does not mean that the excitement during the World Cup was any lower than that of previous years. The passion and love for the game spectators bring to this event remained the same.









Works Cited:

Heitner, Darren. “2014 Fifa World Cup Expected to Add 3.03 Billion To Brazil’s Economy.”
Forbes. Forbes Magazine, 14 May 2014. Web. 13 Sep. 2014

Macguire, Eoghan. “Who Benefits from World Cup 2014?” CNN. CNN News, 4 Aug. 2014.
Web. 13. Sep. 2014

“Social and Economic Impacts of the 2014 World Cup.” n.p., n.d., Web. 13 Sep. 2014

Zimbalist, Andrew. “Brazil’s Long To-Do List.” Americas. Americas Quarterly., n.p. 13 Sep





43 comments:

  1. Ana,
    I think that you chose a very interesting topic, and I enjoyed reading your post. Personally, I think Brazil was not ready for the task, and bit off more than they could chew. I remember hearing that hundreds of Brazilians were forced out of their homes and villages because land was needed to construct stadiums. I think that Brazil should have considered the fact that they don’t have the resources -- land and labor -- to host the World Cup. Sure they can boast that they’ve hosted the tournament twice, but at a huge price.

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  2. To me it seems strange that strong soccer nation like Brazil wouldn't have enough soccer stadiums in the country to support the world cup teams. This raises the question of the standards that FIFA requires the stadiums to be at. If these standards are as strict as they seem, FIFA is almost making hosting the World Cup a negative thing if every country that hosts has to build new stadiums that cost much more to construct than the country will generate in ticket revenue and jersey sales. In this case, the cost of hosting the World Cup far outweighs the benefit of hosting, because of the money the countries have to spend and also the amount of land and labor resources that are expended just for one grand event. Granted, the World Cup is the biggest event in sports, but putting your nation in large amounts of debt doesn't seem like a rational price to pay in order to host.

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  3. This topic was very interesting to me as I love soccer myself. I didn't know how much money countries have to spend to put on an event like this.

    I thought you did a great job of providing the numbers in spending for Brazil- giving us ho much money they lost. However, I think finding the positive economic impact, or how much money the businesses in the area might have gained from tourists, and giving us a direct comparison would give us an even better idea of what the effects of the World Cup were on Brazil.

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  4. You picked a very interesting topic, I’m shocked at how much money Brazil spent on hosting the world cup- 13.3 billion dollars!! That’s a crazy amount of money and land resources that they used up. Seeing as though they only brought in 3.03 billion dollars of revenue in, I agree that it doesn't seem like it was worth it for Brazil to host the world cup. Perhaps a country who already had the necessary requisites should have hosted the tournament instead. It doesn't seem fair that the majority of Brazil did not feel good about their county hosting the tournament, maybe there should have been some sort of vote to determine whether our not Brazil should have taken the risk of hosting the world cup beforehand.

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  5. I thought that this was a very well constructed blog post, and it kept making me want to read more about it because I think it is an interesting topic. I guess I didn’t even know about all of the behind the scenes work that had to be done to make this huge event happen. Building 12 new stadiums in that amount of time sounds insane. It was hard for me to imagine a city that is hosting such a worldwide event wouldn’t be able to make a profit but after reading this article I can see how that would be the case. But then again, as you mentioned that not all of the revenue happens during the World Cup itself, tourists that come back to visit could also bring in revenue that wouldn’t have been seen if it wasn’t for the World Cup. But in all, I thought that this was a great blog post on a very interesting topic.

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  6. The words that you used from the unit were quite a bit different than most of the other blog posts I have read, but I guess, yeah, they do have to do with economics. I think that the comparison with how much money they made versus how much they spent was staggering. Could it really have been that much? Wow. And the fact that they spent so much more money on stadiums than previous hosts of this event was also very interesting. Personally, I think that Brazil made a huge economic flop with this event, and I think that the citizens have a right to be angry considering they are now 10 billion dollars in debt! The information you present was relevant and interesting and you presented it in a professional cohesive manner. Nice Job.

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  7. Overall, I like your topic and how you seemed to come across with this topic with a passion. It is a topic that many people are interested in, and will enjoy learning about it. With this, it's good to know what some countries must do in order to hold such a largely populated and such a populated function. With hosting something like this it may be a struggle for some countries, but I like how you added the amount of revenue that the fans bring in. Yes, there are a lot of tourists, so in all reality, it can help a country out economically.

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  8. I believe that Brazil is paying the ultimate price for being so economically illiterate in how they handled the entire World Cup. They spent a large amount of money in order to build the best facilities in order to draw in more tourists. However, they spent so much money they were not able to get a return on their billion dollar investment because of their lack of knowledge towards how many fans would attend the tournament. Also, there may be even further economic damage done to this country as these stadiums sit and rot for years to come while the land could be used to help provide jobs to many of the nations poor residents. In addition, while some local economies may have seen a positive impact from this event they will surely see a diminished profit as the tourist money will dry up in years to come. Overall great article and I loved how you took a topic that has been largely overlooked since the conclusion of the tournament.

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  9. I agree with Alex, Brazil was not economically ready to host the World Cup. As reason as to why so many Brazilians were against hosting the cup was because many Brazilians are living in ghettos, with scare clean water, food, and money. It angered the citizens that Brazil was so ready to spend billions of dollars on a tourist attraction but unwilling to help boost their own economy and living conditions for Brazilians all over the country. Instead of gaining a high profit from hosting the Cup, Brazil only lost money and negatively impacted Brazil's economy.

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  10. This is a very interesting topic and one that we don’t always consider when we watch a majorly publicized sports event. I agree that the set up of these huge events are an equally huge expense for hosting countries or cities. I think that Brazil was a great example, because it has a preexisting unstable economy. It’s arguable that the opportunity cost is not being able to invest their money into things such as education which would help them get their people more jobs. Even though the construction of the stadiums and such provides jobs, the government doesn’t have the money to provide materials or even to pay the workers.

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  11. This was a very well written post that showed the negative affect on an economy from hosting the World Cup. Most countries that host such events budget themselves when making the necessary changes in order to maximize their profits. This is why it was so shocking to see that Brazil spent drastically more building the stadiums for the latest World Cup than other countries. I agree that this was a terrible economic decision, because there is no profit from this and only puts the nation in debt.

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  12. Overall, great blog post. I think that the topic you chose is relevant and can be highly connected to economics. I didn't know that Brazil built 12 new stadiums and new rails for the subway. I think that it is crazy that the country took on this much work to host the tournament. Especially if they had held it in the past, what's the point? They probably had some idea that they wouldn't reap the benefits of the tournament in terms of profit. I would be interested to see if the same thing happens when a country hosts the Olympics.

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  13. This was a very interesting topic. When watching the World Cup you never really think about how much work has to be done to make sure that the stadiums are some of the best in the world. It's hard to believe that Brazil spent billions of dollars on new stadiums and all that other stuff just for one event. Not only did they spend billions of dollars but they also used up a lot of land on stadiums that won't be used that much when they could have been used for buildings that would benefit them more.

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  14. Oh this post was very interesting! I had no idea that hosting the World Cup put such a horrible dent on the countries economy. I believe that Brazil clearly wasn't in good enough economic shape to host the World Cup and they should have measured their opportunity costs more efficiently. I wonder how much different Brazil's economy and better shape it would be in now, if they decided not to host the World Cup. In the end, I think that no matter the amount of new tourists Brazil may have attracted by hosting the World Cup, it wasn't worth the amount of debt they are in now.

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  15. It is quite odd that something one might think brings in a lot of money ends up hurting an economy of the country, but earlier this summer I had also heard that the World Cup had a negative impact on Brazil's economy. They didn't seem too prepared for all that they needed to do for the event, and their marginal benefit of having thousands of fans come to their country unfortunately did not outweigh their marginal cost of building the stadiums and adding onto airports. That graphic you provided was very interesting, it seems Brazil spent half of what Germany did, which definitely would take a toll on their economy. Should be interesting what they do about the Olympics in 2016

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  16. This post was very eye opening for me. This is the first year I watched FIFA World Cup, and I defiantly thought they would have brought in a lot of money. However I also heard about the riots, and after reading this I wonder if that is why the people were rioting in the first place. Also, I wonder about all the stadiums they had to build. First off why is that part of the requirements, and secondly all those stadiums will most likely go to waste when the World Cup is over. I think this was very interesting topic and certainty changed my perspective on the topic.

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  17. I really liked your idea for your blog post on the World Cup and I agree completely with your thoughts. I did not know that Brazil spent so much money on hosting the World Cup! I also agree that it probably was not worth it for Brazil to host the world cup since most of Brazil didn’t really want to host the tournament. It is crazy to host such a big event but I like how you talked about how much revenue the fans bring in. Overall, you had a really good topic and included good information that I did not know about the World Cup!

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  18. Its hard to think about how much money they wasted on an event that only benefits them for a little amount of time. They should have put the money into something different so the citizens could be better off.

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  19. The World Cup in Brazil reminds me of when Russia held the Winter Olympics in Sochi. The project ended up costing much more than in years past. This was very negative for Russia because of the fact that their economy and currency was very weak. When we choose countries to host large events such as these we need to look at the marginal benefits and costs associated with the decision. If an event is held in a country with a weak economy, they may not be able to afford the expense.

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  20. This was a very interesting topic to write about. I never knew how much money it cost to host the World Cup. You would think that this would help the economy with the amount of revenue that this specific event would bring in with the booked hotels, crowded restaurants and streets filled with hundreds of people. It is however the quite opposite. The city should have considered their economic stability before making the decision that they should host such a huge world wide event. They have to think of the opportunity cost of hosting the world cup. If they didn't host the world cup, what would be the best next alternative? These are just some of the considerations that the city should have made prior to hosting the Worlds Cup. They also should look at the marginal benefits and marginal costs. If the marginal costs exceed the marginal benefits, it is probably not the best option for the economy of this specific country.

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  21. I was surprised that hosting the world cup would not be an immediately huge boost to the economy when one considers the extra money that would be going into complement goods and the services part of the economy such as hotels, in addition to merchandise goods. Clearly, the Brazilians did not consider the opportunity cost of building all these stadiums. In addition, they did not consider normative economics because I have heard stories of people being displaced from their homes in order to build stadiums, so all in all it does not seem like it was a good situation down in Brazil.

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  22. I suppose that not many people aside from a few policy makers view hosting a world sporting tournament as a possible risk due to the possible costs, but upon review of this piece, I would have to assume that this same problem would have to extend into other international events beyond just the World Cup and into events such as the Olympics, which Brazil is hosting in just a mere two years. I think that it will be quite intriguing to see how they handle the upcoming event after all of the backlash that came with and from the World Cup.

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  23. This is an interesting view on the actual effects of the World Cup and other sporting events, such as the Olympics, as well. The major opportunity costs do seem to outweigh the building of rarely used stadiums and hotels that could stay vacant, which brings up the question of why economically incompetent countries are chosen for these events, when it has become a trend that they will benefit little?

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    1. I guess I never realized that the hosting countries are "chosen." I always had thought that the country offered. Who then makes this decision?

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  24. This is a very interesting topic! Hosting a big world-wide event initially seems like a great opportunity for a country to make a profit, but as you pointed out, often time the hosting country has to invest a lot of money in preparation for the event. It’s a shame that Brazil didn’t make a profit after the World Cup, but it’s not like those structures are improvements are going to go to waste! I’m sure other events will be held in the new structures that can continue to help pay off the debt they owe. In addition, could they not host the event again? They are sure to make a profit the next time around because they won’t have to invest nearly as much for preparing. If Brazil truly could not afford these investments however, and the risks that come along with them, they should not have hosted. It only would make sense for financially stable countries and economies to take the risk of hosting an event. That way, if they do come out in debt, they will still be able to recover.


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  25. It seems fairly interesting that a large international event like the World Cup would actually be devastating to Brazil's economy opposed to uplifting, based on the revenue and money being brought in during this time. However it does also make sense, because Brazil's country as a whole is making a larger space for the time being, however that space is really not used throughout the entire year, which overall is a waste of money and space for a temporary international tournament. I would find it interesting also how Brazil's economy responds to the Olympics in nearly two years due to the economic problems the World Cup alone cost on the country.

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  26. Brazil's decision to host this did have its benefits, but its consequences certainly were greater. When you hear they're being ejecting from their homes and not having enough work,this clearly shows that either someone thought that the benefits were going to be much greater, or that it was not thought through very well at all.

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  27. I never really thought of how much money it would cost in order to host an event such as the world cup. It's crazy to see that Brazil spent close to 15 billion dollars on construction work for the games, while they only got back 3 billion dollars in revenue. They are now in so much debt that who knows if they will ever recover. One thing I found the most interesting is that some of the people who built the stadiums weren't even qualified. The stadiums looked very nice on TV so either the editing crew did a nice job to make us believe in the quality of the buildings,or these people who weren't qualified did an amazing job. I liked your topic of choice and I learned a lot about the world cup and how economics plays a role.

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  28. I would think that a country hosting a world cup would make a huge profit from the event, but for Brazil it wasn’t the case. Thinking people who need to rent hotels rooms, buy food and those who buy merchandise would almost come dead even with the amount of money the country spent on the world cup. If 61% of the country didn’t think they were economically prepared for the 13.3 billion dollar project why would the country go along with building. Built by inexperienced workers it didn’t seem like it was a good idea for Brazil to host the world cup.

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  29. Being an avid soccer fan, and having watched the majority of the world cup, I found this to be quite interesting. I always assumed it was a good economic decision for nations to host the world cup, because of all the tourists, but I never considered the changes to the infrastructure. I know that the US was trying very hard to host the World Cup, so it would be interesting to see when the US hosts the tournament next, how the economics are affected. Is the existing infrastructure in the U.S. enough to support the tournament, or would we too need to build more stadiums?

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  30. Although I personally am not a huge fan of the World Cup, I have family in Brazil who experienced first-hand the impact of the major construction and changes in Brazil. I'm curious what was going through the minds of those who decided upon all these changes, and how much profit they believed they would receive. Maybe they didn't know where to draw the line, I'm curious about when they realized this wouldn't be as profitable as they thought. Hopefully other countries that hold the world cup in the future will learn from these mistakes and the citizens of the country don't have to pay as much as well.

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  31. Hosting a huge event like this could possibly cause a country to be in debt for a very long time. The only time I would ever go to an event like this, is if is near me and cheap. I like going to basketball games and such but I don't think I would ever go to a World Cup. I like soccer just not as much as others. Brazil taking charge and hosting this huge event might have costed a fortune but mainly, it was more than just money. It was the people that it affected. The amount of families this will affect is probably a lot.

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  32. It is strange that as big of an event as the world cup that countries could lose money. It seems that with all the people coming in from around the world that the country would benefit from hosting the world cup, but the more developed the country is and the less money it has to spend on hosting the games the more money they will get.

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  34. This article raises a good point on what could happen to the country's debt when they host a soccer game. Also the country has to choose wisely because if they open up at new stadium they are not able to use the land. Also the only way that I would go to a big event like this is it was near home because you wont have to pay for all of the expenses.

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  35. The world cup is a huge event celebrated across the globe and everyone is watching. Brazil being the host is a wonderful feat for them as they can boost there economy through tourists and what not also bringing jobs to the cities in need of help. Putting on a good show also reflects well on the country and the economy. they would never assign a world cup to a country that couldn't handle it. It leaves a lasting impression on people for 10-15 years and people come back to show there kids and stuff like that so the world cup is more than just a one month long event!

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  36. This article reminds me of what happened in Beijing after the winter olympics. In order to prepare for the crush of professional athletes and spectators, Beijing had to build countless new hotels, transportation systems, and especially the famous stadium named the "Bird's Nest". This huge structure built of steel was the pride of the games, but due to lack funding, it has now fallen into disgraceful disrepair and Beijing is still reeling in debt all these years later.

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  37. This article gives a good example of opportunity cost. On one hand, since Brazil hosted this great game it brought it many tourists and some profit; but, if Brazil wouldn't have hosted the game, there would be a question what Brazil could have used that money on to really benefit the country. Overall great job on the article. You gave important information on both sides to really inform the reader.

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  38. This piece is excellently done. The world cup is frequently seen as a time of economic prosperity, and seeing it for what it really is shows you put time and research into your piece. All in all it is very good.

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  39. I think it is a bad idea because the people in the country did not even think it was worth the money.

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  40. The issue over the World Cup in Brazil was one debated around the globe and within Brazil. There was much talk of civil war erupting throughout Brazil as a result of this extreme expenditure by the Brazilian government when their economy was already struggling. The marginal cost in this case of losing much of the country as a result of a failed attempt at regaining economy through the World Cup far outweighed the marginal benefit of hosting a World Cup. For many countries, hosting an event such as this would benefit the economy, and the Brazilian government was looking to accomplish just this. But, the difference is the amount of resources they had in terms of stadiums, airports, and other such things that were stated in the essay were far short of the amount of money and resources they were able to spend to still turn a profit for this event. Some countries can afford this loss simply because their economies are functioning at peak performance and the marginal benefit in that situation will outweigh the marginal cost, but for Brazil, this was not the case and it was for this reason that the World Cup was largely considered a failure for citizens across Brazil.

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  41. This is interesting because I always assumed that the marginal benefit that come out of something like hosting a big sporting event would cover the marginal cost, I didn't know it left the countries with a lot of debt. but it makes sense because they're basically building a tourist town for no more than a few days of business, then they have no way to pay off all the new buildings and stadiums. would it even be better to repeat sporting events in one location every year? or would the negative externalize of a sudden rush of too much tourism be too much on the people who actually live there all year round?

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  42. Ana! I had never considered this to be plausible due to how huge the world cup is. The facts you presented were actually kind of startling. One thing that did stand out to me is the graph displaying the costs of stadiums in Brazil. Was this a mandatory cost or an optional cost for the sake of having the best stadiums? If the money that is now missing was put into the luxury of the stadiums, then brazil can only have itself to blame. I also heard that much of the cost associated with this was due to getting the country’s infrastructure and its workers to a point where they could take on the feat. If this were the case and that did account for a lot of the price, then that could only be beneficial to brazil as they now have a more improved infrastructure, increased tourism, and more experienced workers. In the end, even if money was lost, it was a good investment by Brazil.

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