Why Losing the World Cup Bid Is a Big Win: A Guest Post

Dennis Coates, a professor of economics at the University of Maryland-Baltimore County, is the immediate past president of the North American Association of Sports Economists. His paper “World Cup Economics: What Americans Need to Know about a U.S. World Cup Bid” carried a stern warning for the U.S. and other countries bidding to host a World Cup. Here, he weighs in on today’s announcement of the 2018 and 2022 World Cup bid winners.

Why Losing the World Cup Bid Is a Big Win
A Guest Post
by Dennis Coates

The host countries for the 2018 and 2022 FIFA World Cup were announced earlier today in Zurich, Switzerland. Russia landed the 2018 event in competition with England, Belgium/Netherlands, and Spain/Portugal. Qatar won the 2022 World Cup over Australia, Japan, South Korea, and the United States. Congratulations to them. Both winning countries’ representatives promised that FIFA and the world will be proud of the events they host. I wonder if anyone in those countries’ bid committees ever heard of the winner’s curse?

I wonder because bidding for the World Cup is a perfect place for such a curse to arise. The basic idea is that there is a prize of uncertain value sought after by numerous bidders — none of whom has much experience in assessing the true value of the prize. This lack of expertise is the result of the prize (or other very similar prizes) going on auction only rarely. Each bidder makes a good faith effort to determine the true value of the prize, but because of the uncertainty, none of the bidders is likely to get the value exactly right and, indeed, all of them are very likely to be wrong. Some will be wrong by a little, some by a lot. Some will undervalue the prize, while others will over value the prize. The “winner” — in our case the countries that get to host the World Cup — are those bidders that overvalue the prize most. Hence, the winner is cursed to overpay to acquire the prize.

Economists and public policy analysts have studied the economic impact of large international sporting events like the World Cup and the Olympics, and national events like the Super Bowl, and the evidence shows that there is very little in the way of economic benefit from hosting these events. Incomes don’t grow faster, more jobs aren’t created, governments don’t rake in significant hauls of new tax revenues. In other words, the best evidence produced by disinterested researchers is that the economic value of hosting the World Cup or Olympics is not especially large.

There is much less consensus about the value of these events in terms of prestige and national pride. Measuring these benefits is, of course, difficult at best, and impossible at worst. Countries whose bids rely on estimates of these sorts of benefits will be likely to make larger errors in judgment than countries whose bids are predominantly about purely economic, dollars and cents, issues. I would contend that Russia and Qatar fit the description of countries whose bids rely heavily on prestige and national pride benefits. In short, they are countries whose bids are very likely to be wildly optimistic in terms of the value of hosting the World Cup.

So, congratulations to Russia and Qatar. I wish you well as you organize the World Cups in 2018 and 2022. I hope for your sakes that the victory you have today time does not reveal to be Pyrrhic. At the same time, I celebrate that the U.S. avoided the curse of winning the bid.

Bobby G

Thank you FIFA.


The article you cite to show that there is "little in the way of economic benefit" from hosting a world cup does not speak to the benefits of hosting such an event given that the infrastructure is already in place. The US already has all the necessary infrastructure and thus would not have to build any stadiums with the aid of taxpayer money. The US hosting the world cup would be a windfall for the country and especially local economies surrounding stadiums.

The impact of hosting a world cup on the game of soccer in the US should not be overlooked, but that is a separate issue from the point you are making.


Everything is not about money! Some things make life interesting and enjoyable. Events that join people together and enhance the culture of a city and nation's memory as well as a collective experience should not be written off because they are not statistically proven to line peoples pockets. To bring up your observation is worth discussing, but to say "I celebrate that the US avoided the curse" is a COLD joyless outlook.


Agree with #3

Ian Kemmish

"Countries whose bids rely on estimates of these sorts of benefits will be likely to make larger errors in judgment than countries whose bids are predominantly about purely economic, dollars and cents, issues."

Can you adduce any evidence to support such a bald statement? It may seem obvious to you, but it seems equally obvious to me that the exact opposite is true. In other words, of all the countries which bid, Russia is the one most likely to admire and indeed boast of all the new airports, motorways and stadia it will be building, and the one least likely to experience buyer's remorse over them.

All this means is that they place a higher premium on national prestige than you do. It does not mean that your estimate of that premium is right and theirs wrong.

Karen H.

One benefit of hosting large, prestigious sporting events which the author does not mention is that often the infrastructure and public buildings and spaces get repaired, replaced or at least freshened up. Maybe there is not a huge economic benefit from that other than short term local employmet) but it does help the people who live in the host city to have a bit of an upgrade to their surroundings.


"I celebrate that the US avoided the curse" is a COLD joyless outlook." Well it happens to be a cold and joyless world. I'm Dutch and I'm mighty glad we're not going to be spending millions of the public's money to satisfy the whims of a questionable organisation like the FIFA, especially at a time of budgetary butchering like this.

Karen H.

Greg, please note that the infrastructure in many places in the US is in sore need of repair and rejuvenation!

Hey, you aren't my cousin in Long Island, by any chance, are you?

Jackson Jones III

Too much time analyzing and not enough time living. You need to get out more. Clearly you've never played 'the beautiful game'.


Dennis I think your point makes a lot of sense in auctions where the rules are known, but the FIFA bidding process was opaque at best and corrupt at worst and involved a great deal of 'lobbying'. What is also interesting is that the bids which promised higher legacy (economic) values to FIFA were not selected, which I think shows the FIFA members valued other things over pure economic value.


You're article really tells me nothing other than it's uncertain how much "intangible" benefit is gained and that the "tangible" benefit is not as much as you would think. I don't see how that implies that one shouldn't seek the prize anyway.

Dan T.

I find it hard to believe that the United State wouldn't be able to find any economic benefit out of hosting the world's most popular sporting event.


This is horrible analysis. The winner's curse does not apply because in the auction example you are actually bid a price and the object goes to the highest bid, thus meaning you are willing to pay more than anyone else, perhaps irrationally. In this example though countries aren't making bids on how much they are willing to pay FIFA so the argument does not apply.

Furthermore the US would have MUCH smaller costs in hosting than any other country, so even if it were the case that they were bidding prices to pay FIFA the winners curse would still not apply as they can put on a world cup more profitably than anyone else. The winners curse is about uncertainty in the value of the object where in the end it is of the same value to everyone. Here it actually is worth more to the US (economically) so they SHOULD be willing to pay more than other countries.


I enjoy watching soccer and other global sports, but I'm so glad that other countries have taken on the burden of construction, traffic, corruption, cost overruns, and so much more that accompanies every single one of these events. The recent Commonwealth Games fiasco in Delhi was an outstanding but not so atypical example.

We have enough real challenges as well as -meaningful- opportunities to pursue in this country. Let the others have their money-wasting ego-stroking boondoggles.


During the 2010 World Cup, I attended one World Cup party after another, watched from a giant screen on the beach with thousands of cheering fans, and listened to debates about successes and penalties in bars, clubs, and restaurants. Of course, I was visiting Rio de Janeiro. Although Brazil did not make the finals, fans continued to watch, debate, and criticize coaches and players; they knew each player's weakness, and some of the most sensational gossip about players and coaches. It is the kind of passion for the game that I've only seen in the U.S. with respect to the Super Bowl, NBA playoffs, NCAA Final Four, or the World Series, depending on the final two teams. Until the U.S. can generate the same sort of passion for soccer, regardless of whether the U.S. makes the finals, it will never be able to justify to an increasingly tight-fisted public, spending any money on the World Cup.


Mr. Putin

Sounds like a

Loooooooooooooooser !


The US may end up hosting it anyway. Qatar is in a volatile region and they must build everything from scratch. If the Mid East is a wreck or Qatar falls short in their development, the US would be the logical place pull off the games on short notice.

Henry M.

I am glad that posters above have pointed out that we already have most of the stadiums and infrastructure built. Furthermore, our experience hosting a previous World Cup as well as other international events like the Olympics gives us a pretty good idea of what the revenues and expenses are likely to be. Given that Sunil Gulati is an economics professor at Columbia, I am pretty sure he is a "rational actor" who thought this through before committing limited USSF and MLS funds to the cause.


Chicago narrowly lost on an Olympic bid - to this Chicagoan's delight. Why? Because there are travelling Olympic workers (almost like circus workers) but enough of them to warp the housing market among other similar warpage. With a mayor crying that the city is broke (and it is) trying to get this costly freak show, he made a fool of himself. That and the parking meters. He, instead of getting a megalomanic legacy, he pulled the ejection seat lever on his career by not running again.

dan s

nice post dennis!