Posted by John Vrooman on Wednesday, June 20, 2018 in UEFA Football.

Interview with Pacific Standard / (PDF Graphs).

Football 365 requote. Direktno requote.

In general, what does hosting a World Cup mean for the economy of the host country? Most countries, when vying for the right to host the tournament, tout the influx of tourism dollars and infrastructure investment that will theoretically boost the economy, but is that often borne out in reality? What factors, on a country-by-country basis could positively or negatively influence the economic impact of hosting the World Cup?

Estimations of net economic impact of hosting one-time sporting mega-events like the World Cup are grossly over-exaggerated by the host country. The overall direct impact is probably zero-sum at best because of the negative congestion costs and crowding out of other economic activity.

There are also significant underlying distributional factors that falsely prioritize the political agendas of football/soccer and hospitality industries. As a result, the wildly optimistic economic spread and multiplier effects for the World Cup are clearly self-promotion schemes designed to justify something-for-nothing state subsidy of the private business of professional football.

In this respect, the World Cup usually has the greatest lasting impact on advanced countries with well-developed domestic professional football leagues because of the overhead capital requirement of shiny new state of the art sports venues.

If either the domestic economy or the professional league pyramid structure are underdeveloped then the economic impact of the World Cup is a stunted negative-sum illusion that is quickly dissipated.

Recently, the Russian government estimated that hosting the World Cup would result in a GDP boost of nearly $30.8 billion over the next ten years, a number which was then disputed by Moody’s credit agency citing the size of the Russian economy and the limited duration of the tournament. How do discrepancies like this come about? Is the Russian government exaggerating the economic benefits for some reason? And how much does the size of the country and its existing infrastructure to host a major sporting event influence the potential economic impacts of hosting the World Cup?

The usual rule of thumb is to move the decimal point one place to the left for the self-promoting and economic estimates of the heavily politicized events like the WC. So the more accurate estimate would be $3.1 billion if not zero.

The limitations of the Russian economy and the state of Russian domestic football both restrict broadly distributed economic impact of the current World Cup. The recent demise of Russian national football serves as a metaphor for the Russian national economy (about the size of South Korea and Spain).

Russian national football/soccer is currently ranked 70^th in the world by FIFA and has been in steady decline since being ranked #9 in 2012 and #31 during the Sochi Winter Olympics of 2014. Coincidentally, Ukrainian national football/soccer is currently ranked #35 by FIFA (World Cup, Olympics).

By comparison, UEFA (Champions League) ranks Russian and Ukrainian professional domestic club leagues together at #6 and #8, just outside the Big 5 European leagues (Spain, England, Italy, Germany and France). Much of the benefit of the World Cup will accrue to the highly visible and economically ambitious Russian Football Premier League.

Exaggerating the economic impact of the World-Cup mega-event on the world stage is shameless self-promotion. Playing the meta-game of political football on the World Cup pitch is a very expensive and cosmetic quick fix.

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