In October of 2007, Brazil was announced as the host for the 2014 FIFA World Cup. Just two years later, they were announced to be the first South American host of the Summer Olympics in 2016. This was exciting news for a nation that was evolving into an important player in the global market. But issues soon arose surrounding their preparedness to host the two sporting events.
Brazil ran unopposed in the election to become the host of the 2014 World Cup. While their bid to host the tournament was being prepared, it was advertised that the tournament would boost the Brazilian economy.
However, Brazil was not prepared to be host as it lacked the necessary infrastructure. The country spent a total of three billion USD on the stadiums alone, including the Arena Amazonia, a 300 million dollar mega-stadium in Manaus.
The three billion spent on stadiums makes up only a small portion of the fifteen billion USD overall spent to host the tournament. With the amount of the revenue that FIFA takes for itself, the possibility of making a profit for hosting the tournament is highly unlikely.
FIFA made 4 billion USD in revenue from the World Cup in Brazil. This revenue comes from tickets, merchandise, and sponsorships, among other things. The only outlets Brazil can profit from are the tourist locations and local markets that fans go to. Brazil only made about half a billion dollars from such revenue. Preparations also ran behind, as many obstacles arose due to the country’s lack of infrastructure.
As put by FIFA’s then-president Sepp Blatter, “No country has been so far behind in preparations since I have been at FIFA, even though it is the only host nation which has had so much time – seven years – in which to prepare.”
In addition to needing stadiums built, many of the stadiums were very difficult to reach, and required more roads to be built to become more accessible.
At the time of the election for World Cup host, the Brazilian economy was growing into one of the largest in the world, and was projected to continue to grow. Currently, Brazil owns the largest economy in South America, and the seventh largest economy in the world. For a growing nation, the prospect of having tourism increase while getting a large amount of publicity from hosting a large event such as the World Cup is exciting.
But Brazil’s GDP peaked in 2012, at approximately 2.5 trillion USD, and has dropped each year since then. The national debt has risen to 1.4 trillion USD, nearly 60% of their GDP. While this debt is not on the same scale as other nations (for reference, the US national debt is currently at 105% of the national GDP), Brazil lacks a plan to deal with this debt. Recently, president Dilma Rousseff sent a budget proposal for Congress’ approval that projects a deficit of 8.4 billion USD for the fiscal year.
In 2016, Brazil will also be hosting the Summer Olympics.The cost projections for hosting the games are upward of 18 billion USD, even more than they spent to host the World Cup.
With the events a mere two years apart, stadiums should be used to incorporate both as Brazil can’t afford to spend more money after the amount they already spent on the World Cup, especially since many of the World Cup stadiums are now not in use.
The nation knew for five years before the World Cup that they would also be hosting the Olympics, ample time to incorporate plans to convert stadiums for the Olympics after the conclusion of the World Cup.
Historically, hosting these large sporting events has not been profitable, especially with the Olympics. The 1984 Olympics in Los Angeles were the first summer Olympic games to turn a profit since 1932. Barcelona also made a profit on the summer Olympic games they hosted in 1992. While these two games are popular examples, they are not a good representation of the profitability of the Olympics.
The Los Angeles games turned a large profit because of the infrastructure already present in LA. The city had multiple stadiums available to use, resulting in the cost of infrastructure to be significantly smaller than other games. When Barcelona hosted the Olympics, it was already in the middle of an economic remodeling that would have occurred whether the city hosted the games or not.
Brazil’s economy is in a downswing, yet they lack consideration for the necessary planning of high-costing projects taking place in the country. The near future could be a crucial time for their economy. But instead of focusing on improving their economy and eliminating their deficit, they will be focused on putting on a spectacle for the world at the Olympics.