June 26, 2013
The recent mass demonstrations in Brazil have been propelled by public investment in mega football stadiums for the World Cup at the expense of desperately needed repair and maintenance of schools, hospitals and public transport.
This raises the more general issue for rich and poor countries: how should sports stadiums be financed?
Since Roman times, sports stadiums have been a tool for entertainment. To please their citizens governments like to build prestigious stadiums.
But as the Brazilian and other examples show, citizens increasingly realise that they have to pay a price for such public generosity by higher taxes or less social facilities.
Big stadiums suffer from low capacity utilisation. That is why private investors shy away from investing and let governments finance construction and maintenance.
National governments usually leave that job to regions and municipalities.
World Cups and Olympic Games are an exception because of the expected prestige impact for the host country.
But only wealthy countries can really afford to bid for them.
Well-planned investments in stadiums and related transport infrastructure may deliver long-term socio-economic benefits.
Poorer countries find this harder to achieve:
Greece’s high expenses for the Olympic Games in 2004 have worsened its chronic over-indebtedness.
South Africa over-estimated the positive economic impact from its big investments in the 2010 World Cup football stadiums.
Poland and Ukraine continue to suffer from the high cost of building/upgrading stadiums for the 2012 European Football Championship.
Brazil will, no doubt,also suffer from the high costs of the twin events it will stage, the World Cup in 2014 and the Olympic Games 2016.
Municipalities should build and operate small and medium size multi-purpose stadiums, which serve amateur sports and promote physical exercise and public health. This has become the predominant practice in Europe.
- Big sports stadiums, primarily used for commercial sports events, should be essentially financed by professional – football, ice hockey, basket ball etc.- clubs, which are money making operators. This applies to the USA, though states and cities often co-finance.
Countries eager for hosting World Cups or Olympic Games should be warned of the potential costs; and they should obtain higher shares of the TV ticket revenues.
Fortunately, the next big global sports events after the 2016 Olympic Games will be hosted by Russia and Qatar, which can afford to invest big amounts of public funds for impressive stadiums.
Eberhard Rhein, BrusselsAuthor : Eberhard Rhein