Next year's World Cup in Brazil will cost tens of billions of dollars, but is a month of play worth such an expense? And why does it need to be so expensive in the first place?
Several years ago, Canadian finance minister, Jim Flaherty, decided to drop the unpopular GST tax by two percentage points, despite the fact that many economists across the country argued that the decision didn’t make much financial sense – that the smarter thing to do would be to lower income taxes instead.
Flaherty later defended his decision in an interview with the Globe and Mail by saying that one shouldn’t underestimate the "psychological value of a highly visible levy.”
"There is something else that goes on too, and that is, middle-class people don't believe that governments reduce their taxes," Flaherty said. "But if you do it on a consumption tax, people see it. That, in part, restores faith in government.”
Hosting a World Cup doesn’t actually make a country wealthier, even though it may seem that way given the incredible fanfare such a large-scale tournament receives.
For one month, the host nation becomes the world’s center of attention. Hotels and restaurants are suddenly swamped with cash-flush tourists and plush new stadiums are erected. With all the euphoria that is generated from the event there almost always lies a prevalent feeling that the country will surely be turning a profit.
But that couldn’t be further from the truth.
World Cups are a huge cost and next summer’s edition in Brazil will be no different. In fact, it will be, by far, the most expensive World Cup in the history of the competition.
But as author Simon Kuper explains in Soccernomics, World Cups usually have a positive psychological affect.
“Staging a World Cup won’t make you rich, but it does tend to cheer you up,” Kuper writes - just like reducing GST.
However, many Brazilians aren’t exactly buoyed by the prospects of hosting the World Cup next year. Triggered by hikes in bus and subway fares, hundreds of thousands of people across Brazil are taking to the streets in angry protests over billions of dollars of their own public money spent on preparing for the World Cup instead of on other areas of much greater need.
Brazilian filmmaker Carla Dauden has taken the fight against the World Cup online through her YouTube video, which immediately went viral after its release – it garnered nearly two million clicks after only two days.
Brazil should never have been given the World Cup in the first place.
FIFA’s old rotation system meant that the tournament needed to be staged in a different continent every four years. FIFA wanted the 2014 World Cup to take place in South America, and Brazil was just about the only country that showed some interest in hosting it and that seemed capable of doing so effectively.
Given the lack of options, the World Cup was, in a way, forced upon Brazil.
Unfortunately, the protests have come much later than they should have. The 2014 World Cup was awarded to Brazil in 2007 and now that kick off is only one year away, most of the damage has already been done; the majority of the budget has already been spent. Cancelling the World Cup now would only make things worse.
At this point, Brazil is better off trying to reap as much benefit from the tournament as it can.
But that isn’t to say these protests serve no purpose. FIFA will now not only have to think twice about who it decides to award World Cups to in the future, but it will also need to think about how much money really needs to be spent on making this tournament happen.
The World Cup is the biggest single-event competition on the planet and it will always prove to be an expensive one to organize. As Kuper writes, “you don’t throw a party to make money; you do it because it makes you happy.” But spending tens of billions of dollars on a party is absolutely absurd, especially considering the fact that all of what the excitement is really about is two sets of 11 players and what they're able to do with a ball on a grass field.
A much cheaper World Cup is possible; it doesn’t have to be as expensive as FIFA demands it to be. For starters, state-of-the-art stadiums aren't necessary.
“You would have thought that people would learn from the shame of the South Africa World Cup; from the way FIFA forced a developing country to build unnecessary stadiums fancy enough for sponsors, while a few miles away people lived in corrugated-iron shacks,” Kuper laments.
But judging by this week’s proceedings, Brazilians haven’t been fooled by all the hype and it’s important that they help bring to light the inexcusable negligence of both FIFA and the Brazilian government so that important changes can take place and these issues can finally be averted henceforth.