Monday, November 1, 2010

South Africa's Lessons for Brazil in Overinvestment and Poor ROI

The economic impact of the World Cup has been mainly a loss for South Africa, according to this piece in the Financial Times -- a reality that the author says Brazil needs to face sooner rather than later.

South Africa had been saying the tournament would increase tourism, create jobs, build useful infrastructure, etc. But she realised: “It wasn’t going to be giving us the benefits that we had told the country the World Cup was going to give us.” True, Johannesburg’s creaky transport links would improve a bit, but “it wasn’t as much as we had thought”. And so, over a year before kickoff, Gauteng quietly binned hopes of economic bonanza. Somehow the officials forgot to tell the South African people, but then running a province keeps you busy. In the event, predictably, the tournament went well over budget, and attracted few big-spending visitors. I recently got an e-mail from an official at one South African university, which had reserved 92,000 “bed-nights” for football visitors. Shortly before the tournament began, he says, Fifa’s booking agency returned 91,000 nights unused. “We are still trying to sell off the additional linen we had to purchase,” the official complains. If sports economists are right, the Cup won’t boost future tourism and foreign investment in South Africa either.

South Africa’s football lesson
Financial Times
October 30, 2010