One of the greatest specialists in the economics of big sports events, Victor Matheson, writes in Five Thirty Eight that public money spent in these events are typically a bad investment, and Brazil is no exception to the trend. He says that with a price tag estimated at $11.3 billion in public works spending alone, it will take more than just a trouble-free four-week tournament to justify Brazil’s heavy investment in hosting the World Cup. In terms of long-run development potential, of most concern to economists is the $3.6 billion in total spending on the 12 new and refurbished stadiums that are being used for the event. The overwhelming conclusion of scholarly research on the subject of stadiums and arenas is that they provide little to no long-term economic benefits. It’s for this reason that Brazil originally emphasized that the great majority of the infrastructure spending for the World Cup would come in the areas of general transportation, security and communications, with less than 25 percent of total spending going towards stadiums.
Unfortunately, cost overruns at the sports venues increased stadium costs by at least 75 over the original estimates. Because of these increases and project
delays, Brazil was forced to divert its resources away from general
infrastructure projects that may have had greater long-run growth
potential in order to focus on a mad scramble to finish the stadiums in
time for the first whistle.
Matheson concludes that "The Brazilian national team may do great on the field, but the country’s
stadium economics look like a bust. The only thing really going for
Brazil is the fact that it may not hold the dubious distinction of
building the least economically sensible World Cup facilities for very
long. Russia, the 2018 host, is looking to spend nearly $7 billion on stadiums, nearly twice the amount spent in Brazil. And the event
moves to Qatar in 2022, where stadium expenditures could be … well, even
FiveThirtyEight may not have enough computing power to make those
Football’s Economic Back-Pass
10 hours ago