Brazilian Cities Allowed Higher Debt Ahead of 2014 World Cup

Brazilian President Luiz Inacio Lula da Silva has announced that his government will invest more than $3.5 billion in port upgrades ahead of the 2014 World Cup, and that the country's 12 host cities will be allowed to rack up higher levels of debt to make sure they are prepared.

During the ceremony to launch the decree, the president announced that 3.545 billion will be allocated to upgrade airports and ports in the twelve cities hosting the soccer tournament in 2014.

"Things are going very quickly," said Lula, countering criticism of his government for delays in works, which he attributed to the "folly" of people who have no patience with the ritual required to put projects into practice.

Brazil tighten steps for 2014 World Cup, 2016 Olympics
People's Daily Online
July 20, 2010

Questioning the Wisdom of Hosting International Sporting Events

This article from the International Monetary Fund looks at the investments required to host big international sporting events like the Olympics and the World Cup and challenges the wisdom of making those investments.

Though the article explores some of the benefits Olympics can create for cities, it also warns that the costs of hosting these events are increasingly large.

Unfortunately, the Los Angeles experience was exceptional. Subsequent host cities found it impossible to procure the same proportion of private support. Several billion dollars in public monies was committed in Seoul (1988), Barcelona (1992), Nagano (1998), Sydney (2000), Athens (2004), and Beijing (2008).

The Barcelona Olympics left the central Spanish government $4 billion in debt, and the city and provincial governments an additional $2.1 billion in the red. The Nagano Organizing Committee showed a $28 million surplus, while the various units of Japanese government were left with an $11 billion debt (Burton and O’Reilly, 2009). In Athens, public investment exceeded $10 billion, and in Beijing, more than $40 billion.

Is It Worth It?
Finance and Development
March 2010

World Cup to Bring Debt to South Africa

South Africa's World Cup is likely to put the country deep in debt, according to economist Stefan Szymanski.

Szymanski, a professor at Cass Business School in London and co-author of the book Soccernomics, predicts that South Africa will find itself in the red after the World Cup.

He says countries that host big events such as the World Cup often have to borrow money or cut back on other social spending to meet the deficit.

Such events require a government guarantee, he says, and this demonstrates that they are not "ordinary profitable commercial activities".

World Cup will put SA in debt, says expert
Pretoria News
December 16, 2009