Canberra: World Cup bad for economy?

In an appropriate follow-up to the IMF report that I blogged on yesterday, The Sydney Morning Herald reports today that the government of Australia has been sitting on a report that argues that the economic benefits from hosting a World Cup finals often don't materialize the way organizers predict. Australia's Tourism Department commissioned the report last year, but the government of Prime Minister Kevin Rudd -- which has poured millions of dollars into the bid and has hired expensive outside consultants -- intervened to prevent its publishing.

Excerpt here:

The report is believed to recommend a series of rigorous principles which governments should use to evaluate the costs and benefits of hosting major events and to include an analysis of the World Cup.

It is believed to argue that claims by proponents that countries which hosted such events would secure massive economic benefits often did not stand up to scrutiny.

The report says these claims often overstated or double-counted the benefits while also failing to take into account the full costs of staging the event.

In the case of the World Cup, it identifies building stadiums, improving public transport and providing security as significant costs mounting into several billions of dollars.

The federal government is spending $45.6 million over three years assisting the Football Federation of Australia's bid for the World Cup.

It strikes me as odd that that the government of Australia would commission such a report, knowing there have long been suspicions that hosting major international sporting events was hardly the economic breadmaker that everyone seems to say it is, if they would simply have to block its publication if it proved unfavorable to the bid.

Many casual observers easily fall for the classic line that the World Cup, Olympics, etc will bring huge economic rewards to host nations. The fact that nobody in Australia, or its main 2022 competitors like the United States, seems to be questioning this logic in the first place is a sure sign that governments often get a free pass by peddling this argument.

Why commission a study you know might take the wind out of your sails?

New Study Disputes Economic Benefits of Hosting WC

We're back from a short hiatus, and as the bidding for the 2018 and 2022 World Cups heat up, a new IMF study has been released which disputes the frequently-touted line that major sporting events bring major benefits to host nations. The Age newspaper in Australia has the story:

AS AUSTRALIA finalises its bid to stage soccer's World Cup, the International Monetary Fund has published an article arguing that the economic benefits of big sports events are negligible, while the costs tend to be far heavier and long-lasting.

Drawing on evidence from the Sydney Olympics, among other events, US economist Andrew Zimbalist concluded that the economic gains from staging big sporting events are ''modest to non-existent''.

While economic studies financed by host governments report net benefits in hosting big sporting events, the studies are not objective and suffer from many flaws, he warned.

The author is a Professor at Smith College, and he warns that countries should conduct careful cost-benefit analyses before bidding on major sporting events, as costs often wildly surpass what was predicted.


It's no secret that studies commissioned by bid committees are hopelessly biased. While it does not reveal anything new, this study simply reinforces what many skeptics have long been saying: That while national pride and other factors motivate countries to bid on expensive sporting events, the host nations are generally worse off financially than they were before the events began.