Monthly Article

June 2014 Monthly Article – The Downside of International Sporting Events

By Jerry Pacheco

It’s that time again -the 2014 FIFA World Cup is in full swing and billions of people around the world are watching the soccer matches. The best teams in the world gather every four years for the World Cup, which is hosted by a select country, in this case, Brazil. Having avid soccer (football in the rest of the world) fans in my office, I have been watching the U.S. and Mexican teams play their matches, which always turn into festive gatherings.

In order to showcase different parts of its country, Brazil chose 12 different cities to host the 64 matches. In the months leading up to the World Cup, I monitored the Brazilian government’s race to finish stadiums throughout the country. In places such as Manaus, which is considered the gateway to the Amazon, construction projects were particularly challenging. Final touches on stadiums and required infrastructure were applied days, and some argue hours, before the inaugural matches.

It is understandable why a country such as Brazil wants to host the World Cup. This worldwide sporting event provides it with the opportunity to receive the focus of the world’s attention for several weeks. The matches will bring increased tourism revenues, which is great for local merchants and eventually for the government’s tax collection. An opportunity also is created to attract more business interest in Brazil, especially if the country successfully manages the games.

However, I am of the opinion that there is just as much downside as upside in hosting a major, worldwide sporting event such as the World Cup. In this age of social media, any parties who are discontented can bring widespread attention to their issue as the country is put under a microscope. Leading up to the World Cup, protests broke out throughout the country, led by groups who complained that Brazil, a developing nation, shouldn’t be spending money to host a sporting event, but rather using this money to help the poor. Although the country has become a world economic force, millions of people still live in squalor and don’t have many options to improve their lot. Many people question how much the stadiums and infrastructure will be utilized after the last games are played. Several news sources also have reported that many residents have been displaced or evicted from their homes in order for the construction projects to proceed.

I have read several reports that Brazil is spending more than $11 billion to construct the stadiums and associated infrastructure, approximately double what the last World Cup cost South Africa to host. While that figure seems exorbitant, the global accounting and business firm Ernst & Young has published a report that the World Cup and future revenues from this event will pay for this cost. However, many Brazilians remain skeptical and have voiced their concerns publicly.

By hosting the games, Brazil will reveal its organizational and planning skills, which can affect the inclination of many businesses to explore entering and investing in this market. Reports of disorganization in planning the World Cup can work against Brazil’s objectives in letting the world know that it is a modern country which deserves respect. President Vladimir Putin of Russia had a PR nightmare on his hands when his country was awarded the 2014 Winter Olympic Games in Sochi. Russia was presented in the press as being very disorganized and corrupt in preparing the Olympic venues. Although the Games turned out relatively incident-free, many people will continue to remember the problems that Russia had as a host.

Pleasing the athletes themselves is another challenge that Brazil faces as it hosts the World Cup throughout its huge territorial expanse. Many of the players are complaining that cities such as Cuiaba have such oppressive heat that it will negatively affect their ability to perform. So even at the players’ level, Brazil will have to deal with some pushback and conditions that are difficult to control as it attempts to spotlight lesser known cities outside of Sao Paolo and Rio de Janeiro.

The World Cup is a great opportunity to bring the world together to focus on a positive factor – sports. Brazil should be commended for taking on the monumental task of hosting this major global event. Let’s hope that the upside for Brazil outweighs the downside in being the 2014 host, and that the World Cup remains a positive event for the country in the years to come.