FIFA World Cup Cost Explosion

Out of curiousity I decided to search a little to find the costs of the most recent world cups. Unfortunately there wasn't much about the return for the countries as the majority of the money the FIFA racks up by TV, sponsorship etc of course lands in the FIFA coffers and only a tiny fraction is given to the  hosts.

Moreover, the FIFA income is tax exempt, and of course due to the exclusiveness of the FIFA sponsoring, there is little chance for other traders to earn money and improve the revenue for the host countries. Here's what I could dig out:

Cost of the World Cups:
USA 1994 – Cost: 370 million USD
France 1998 – Cost: 700 million USD
Japan/Korea 2002 – Cost: 5 billion USD for Japan and 2.5 billion USD for Korea
Germany 2006 – 3.7 billion Euros
South Africa 2010 - Cost: 7.3 billion USD
Brazil 2014: Cost: currently around 11 billion USD

Sources:
http://www.umbc.edu/economics/wpapers/wp_10_121.pdf
http://www.dw.de/germanys-world-cup-report-hails-economic-social-success/a-2263053
http://www.businessinsider.com/world-cup-opening-stadium-isnt-ready-2014-6

That is crazy, any reason for the dramatic increase?

For Brazil, I just heard in some "sports inside" programme on TV that lots of the money for the construction work of stadiums and infrastructure disappeared into dark channels.

Allegedly, the construction work was deliberately slowed down so that the companies could demand even more money later on to finally finish the projects as the originally allotted amounts already disappeared to dubious targets (that is bribes, secret coffers and the like).

Italy 1990 was 935m dollars (just for stadia, not sure if that is the total construction cost), which makes it the most expensive WC for 12 years. So the explosion only started with Korea/Japan. I also think it's important to note that this also applies to the Olympics (both summer and winter) so it's clearly not just a world cup thing. And another point to add is that recently the only world cup in a developed country was Germany. It makes sense that in developing countries where there are no stadia or they are outdated the projects would cost significantly more.

Not that I dispute the overall trend at all.

AFAIK in Italy the stadia had to be heavily renovated and some newly built, too.

In Germany several stadia were built anew or heavily renovated, too, adding to the cost (by the way, the German stadia were actually financed by the clubs, the tax payer paid for the infrastructure, that is, streets, railways and the like). Additionally, in Germany the security costs were pretty high as there were quite some worries concerning the Fan Fests (even the military was involved to make sure the air space was secure etc.)

And yeah, the Olympic games are ridiculously expensive, too. When I read though the above sources, there was one quote of the person responsible for the London 2012 games who said that they would never have bid for the Olympics if they had known the costs and work involved. (By the way, in Germany the public voted against bidding for the Winter Olympics of 2022 due to the costs etc.)

So one might wonder that maybe it isn't so bad after all to have the next World Cups in Russia and Qatar - let them deal with the ridiculous demands of the FIFA and exploding costs ^^

Just for fun, I used an inflation calculator from here:

http://www.davemanuel.com/inflation-calculator.php

to calculate all those costs in 2014's dollars:

USA 1994 – Cost: 584 million USD
France 1998 – Cost: 1 billion USD
Japan/Korea 2002 – Cost: 6.5 billion USD for Japan and 3.25 billion USD for Korea
Germany 2006 – 4.3 billion Euros
South Africa 2010 - Cost: 7.8 billion USD
Brazil 2014: Cost: currently around 11 billion USD

I hope they weren't already adjusted to inflation, LOL.

So actually already in 2002 the cost was almost 10bn dollars, which isn't far from the cost in 2014, especially if Brazil didn't have those extra corruption costs... But I suppose the whole thing is explained by higher quality standards in stadiums, security, hospitality, everything, really, and the amount of infrastructure and workforce needed, that's what really eats up the funds. Would be cool if there was an estimation of World Cup visitor numbers from over the years, too, to see how the whole event has grown, that might explain this further (like, why you need more infrastructure now than in the past).

This is why developing countries like Brazil should never host these world cups.

wow the cost for jap/korea surprise me, aren't they developed countries and had lot of nice stadium before it? im too young by that time, tell me more.

AFAIK neither Japan nor Korea had stadiums as FIFA demanded them - they are not really traditional football countries after all.

And building impressive stadiums like this: http://en.wikipedia.org/wiki/%C5%8Cita_Stadium or this http://en.wikipedia.org/wiki/Sapporo_Dome doesn't come low cost.

Art Morte wrote:Would be cool if there was an estimation of World Cup visitor numbers from over the years, too, to see how the whole event has grown, that might explain this further (like, why you need more infrastructure now than in the past).

Well, in Germany there were 3.359.439 people officially attending the matches (52.491 per match). I have no idea how many of those were corporate seats and thus possibly only phantom people though.

Germany was special due to the Fan Fests as these were attended by around 15 million more (!!) people than originally expected. I didn't find a number of how many people were expected, I'm afraid, but I think I faintly remember I read that something about 2-3 million visitors without tickets were expected and obviously that number was vastly exceeded. (AFAIK Fan Fests first appeared inofficially in South Korea and Germany was the first venue where FIFA set them up officially).

In South Africa, the Fan Fests were attended by around 6 million people.

Source: http://www.dw.de/germanys-world-cup-report-hails-economic-social-success/a-2263053
http://www.fifa.com/aboutfifa/organisation/marketing/programmes/fanfest.html