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2 Aug

Impressing that NRI relative is a costly affair!

Here’s a story I bet you didn't know about unless you’re a die-hard football fan:

Morocco holds the rather undesirable title for the most failed attempts at FIFA World Cup bids. It has failed the bid five times — in 1994, 1998, 2006, 2010, and 2026. For the 2030 FIFA World Cup, they’re planning to co-bid with Spain and Portugal again for a sixth time.

I wonder why Morocco is so eager to host the FIFA World Cup. Their 2026 bid note for the World Cup gave me some ideas. In the bid note, Morocco highlighted that the tournament would catalyse economic and cultural change. An excerpt from the bid read:

“The Morocco 2026 bid is also offering an opportunity to highlight lesser-known aspects of a country on a journey of significant change. Morocco has initiated major political, economic and social reforms, responding to developments within an unstable international climate, with the aim of harnessing economic potential and meeting the changing aspirations of a younger generation.”

And this logic of economic improvement is pretty standard where bids for mega-events are concerned.

But other than economic reforms, the World Cup host gets a chance at what a sports policy professor, Jonathan Grix, calls ‘image leverage.’

Image leverage is basically like a makeover but on a global scale.

Mega-events make it easier for a host country to show its capabilities on the world stage in terms of infrastructure and development. They also help these countries create jobs for its citizens and attract more business via tourism and international investments.

And while a chance at image leverage is enough reason for countries to host mega events, this popular saga has a flip side.

Let’s uncover what that is using a few case studies.

To host FIFA 2022, Qatar invested $36 Bn on The Doha metro and tram service to ease commute during the world cup. Additionally, it spent money to expand the international airport to accommodate the rush of tourist arrivals. It also constructed a cruise terminal port for tourists arriving via cruises.

Qatar’s government had allocated about $103 Bn to build the necessary stadiums, hotel facilities, and such, but the final expenses were around $229 Bn, making it the most expensive World Cup ever hosted since the 1930s.

Check this out —

The Qatar World Cup was more expensive than the previous twenty-one combined!

And speaking of the most expensive sporting events, I can’t help but mention the Commonwealth Games which India hosted in 2010.

India won the pitch to host the CWG in 2003, and as you can guess by now, the pitch highlighted that hosting these games would mean better infrastructure and more jobs in the country. An excerpt from the pitch read:

“The idea was to raise sports sponsorship and market India as a preferred business partner and destination across the Commonwealth.”

To further the cause, India spent

  • ₹2.93 Cr on sports infrastructure,
  • ₹678 Cr on team training,
  • ₹650 Cr for street scaping,
  • ₹900 Cr for the development of bus depots,
  • ₹3,000 Cr for the extension of the metro,
  • ₹3,700 Cr on flyovers and bridges, and
  • ₹18,000 Cr for augmenting DTC bus services,

thereby increasing the projected costs from ₹1899 Cr to around ₹30000 Cr ($4 Bn).

Now, given the scale of these events, it makes sense to opine that budgetary changes are only natural. And to scope out a complete picture for you, hosting the events did change the sports infrastructure in these countries and transformed how people in these countries commute.

For the record, Qatar earned $17Bn because of the FIFA World Cup. It also created 1.5 million new jobs by employing construction and hospitality workers and hosted about 7,65,000 tourists during the World Cup.  

The CWG also created 2.5 million new jobs and earned $2.3 Bn in tourism revenue.

More recently, if you are tuned into the rage caused by Taylor Swift’s concert or if you’re a Swiftie (Taylor Swift fan), you must have heard of the TSwiftLift, a term given for the revenue bump businesses get when Taylor Swift’s Eras Tour comes to town.

You see, a mega-event, because of its sheer scale, will require creating assets that don’t currently exist in a region, thereby providing jobs.

But the issue with the jobs created for a mega-event is that the jobs are transient.

Job growth, usually, is of two types: transient and permanent.

Permanent jobs create employment that isn’t limited to creating an asset useful only for an event. And mega-events typically generate employment in sectors like tourism, which is seasonal and conditional to the event's duration.

Generating employment is a good pitch to make on paper, but I wonder how beneficial it is when temporary.

Additionally, even when the right set of stadiums, hotels and transport arrangements are created to facilitate the event, little thought is given to how useful these assets will be to citizens in the long term. A tourist doesn’t visit a country repeatedly for the state-of-art infrastructure that was built to host a single event.

To top it all, once made, these assets require maintenance, and it is costly. Refurbishing the stadiums can incur a significant cost when left without any maintenance.

And I am not making these claims up.

A paper titled The Mega-Event Syndrome highlighted that investing in infrastructure for mega-events is, at best, a suboptimal use of public money and incurs significant opportunity costs.

For instance, the 1994 Winter Olympics cost 100 times more than a tourism development program the Norwegian government ran in parallel and only generated twice the number of tourists as the tourism program. The costs outweighed the benefits almost always.

In Qatar’s case, most of the stadiums built were dismantled post the event because of the small country's size.  

“It is also important to observe that the costs of hosting will continue to increase after the competition is over. Parts of some stadiums are scheduled to be dismantled and shipped elsewhere. Stadiums and other buildings that remain will require millions of dollars annually in operations and maintenance expenditures. (Never mind that Qatar has only 300,000 permanent residents and little soccer history.) These structures will continue to occupy valuable real estate, foreclosing other potential uses. Hotels built to house World Cup visitors will lie largely idle. Guest workers will be evicted.”

India’s CWG stadia investment did no better. A report on the post-event analysis (2014) highlighted that,

“The stadium, renovated at a cost of ₹961 crore, has wires coming out of false ceilings which are broken, even raising the possibility of mishaps. At most stadia, there are sections where the seats are either missing or broken, and since there are hardly any competitions, the chairs are covered in dust.

In 2010, the government had proposed many ideas about the Games legacy, but all that remained on paper and lack of revenue generation mechanism has left the venues in ruins.”

After spending royally on building these assets and making no use of them, the whole exercise of hosting mega-events to boost the economy sounds like a pipe dream. It is wasteful, and the economic outcomes it promises at the start are short-lived.

Citizens are not better off because there is space to host sporting events or music concerts because these events are rare. A citizen’s day-to-day life doesn’t drastically improve because of these investments. We also cannot forget that when a mega-event is organized, the money that really flows into a city is, in the first place, public money that falls into the hands of private businessmen.

In essence, the bid promises of creating employment, improving infrastructure, and attracting more tourists is limited to the duration of the event. In reality, the picture is flawed.

But usually, with the kind of media mega-events tend to enjoy, the after-effects of hosting these events are never discussed publicly. The promise created around how such events will put the country on the map, attract investments and become a tourist hotspot also rarely lives up to the hype.

Don’t you wonder how hosting a mega-event is a hook for a country to become a tourist destination if it wasn’t one before the event?

The mega-event caters to a subset of a large population. You will buy an expensive F1 ticket or a FIFA world cup ticket for the sport or a team, not because it is hosted in a certain country. Likewise, you will attend a music concert for the artist or a band, not for the country. And if you are a team or an athlete participating in the Olympics or the Common Wealth Games, you’re there for the competition.

For brands that sponsor these mega-events, business decisions favouring the host country may or may not transpire in the long run. Because a business will evaluate if it is feasible to set up business in this country for a completely different set of reasons — reasons that have little to do with the mega-event.

And while I understand that a mega-event can serve as branding exercise for the country involved, I struggle to fathom if it creates a sticky brand perception for the country, and how potent and lasting that cultural soft power is on the global stage. A country’s brand likely doesn’t change just because of one event, it is built by how it is run consistently, on a day-to-day basis, and the general wealth and wellbeing of its people.

The economic boom generated because of a mega-event, too, is short-lived at best. Countries clamouring to create favourable global perceptions incur significant costs and build assets that don’t really help the economy or the citizens.

This other side to hosting mega-events is not rosy and highlights how the citizens are left to deal with the shorter end of the stick, all in the promise of jobs and improved quality of life.

For some reason, a country putting on a good show hosting a mega-event reminds me of when my mother would deep clean the house and buy expensive crockery and ingredients to impress that NRI relative who visits once every decade.

All that effort, and I am not even allowed to use the expensive crockery!

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