Should the U.S. Really Try to Host Another World Cup?

DESCRIPTIONPhoto: zoonabar Many of the structures built for the 2004 Athens Olympic Games lie vacant.

There is a good section in the book Soccernomics about the economic impact studies that cities and countries sponsor when they are hoping to host a huge sporting event like the World Cup or the Olympics. The gist of it is that you can make an economic impact study say pretty much whatever you want, since it’s an exercise in speculation, and that the economists hired by bid committees make sure the numbers say yes.

The truth, however, is that most such events don’t provide much economic stimulus, and often turn out to be money losers. This isn’t to say that cities or countries shouldn’t try to host these events — but, as the Soccernomics authors argue, they should at least realize that what they’re doing is paying for the right to host a big party. The same is generally true for public funding of new sports arenas, as the economist Dennis Coates made clear not long ago.

Coates, who teaches economics at University of Maryland, Baltimore County and is the immediate past president of the North American Association of Sports Economists, is back with a stern warning for certain people with soccer fever. As it seems the U.S. is going hellbent for leather trying to land an upcoming World Cup, he wants to get ahead of the cheerleading to make clear how the economics will actually play out. His new paper, “World Cup Economics: What Americans Need to Know about a US World Cup Bid,” is an attempt to challenge “the rosy assumptions being made by U.S. bid leaders, and I hope it will force proponents to be more forthcoming with answers about what we can really expect from a U.S. World Cup.”

Coates’s central claim:

Despite bid organizers’ claims, the World Cup won’t be a boon for the American economy; in fact, it will likely cost the United States billions of dollars in lost economic impact. For example, economic estimates in support of the 1994 U.S. World Cup were later shown by economists to have been off by up to $14 billion. Far from having a positive economic impact, the last World Cup we hosted, a so-called major success, had a negative impact on the average U.S. host city of $712 million. Yet no one is discussing these figures despite the current economic troubles we face. … Few analysts who aren’t in the employ of the event boosters have ever found such events to pay for themselves in a purely dollars and cents view.

The recently completed South Africa World Cup is hardly an exception, with the bulk of the trouble lying in the gap between optimistic projected costs and actual costs:

The proposed budget for the 2010 games was about $225 million for stadiums and $421 million overall. Expenses have far exceeded those numbers. Reported stadium expenses jumped from the planned level of $225 million to $2.13 billion, and overall expenses jumped similarly from $421 million to over $5 billion.

And don’t forget the “ruins of modern Greece” — i.e., the abandoned facilities from the 2004 Summer Olympics in Athens. You think Greece might be feeling a bit of buyer’s remorse about now?


The U.S. would build precisely zero stadiums for a World Cup so the comparisons to South Africa or Greece are misleading


If hosting a World Cup in the U.S. means more U.S. citizens become fans of the sport, it is probably worth it. More interest in soccer in the U.S. would likely help the U.S. pro soccer leagues, which would be a nice benefit.

While the host city/country may post a net loss initially, you can't argue that cabbies, hotels, restaurants, theaters, museums, etc. would benefit greatly in the short term.

Chicago has done a great job building up its recreational/tourist infrastructure, beautifying its lakefront, and making they city a more attractive destination than ever. If Chicago were to host a World Cup or an Olympics, the new structures would not be vacant after the games as they are in Greece.


Since the U.S. has plenty of stadiums, does it help the case for hosting the WC? Would most of the cost come from security and services to for the teams?


The real question is, why do events like this need to be geographically concentrated? Travel costs for the teams involved are a lot less than building a new stadium. This line of thinking was summarized well by Frank Deford on NPR a couple of months ago before the start of the World Cup:


My understanding is that US bid assumes that NO stadiums would be built for the World Cup. Each of the 16 cities in the bid already has a stadium that would hold 60,000 or more people (some of the stadiums in South Africa held under 50,000) and can easily be configured to play soccer in. None of those stadiums are in regular use by the NFL during the months the World Cup is going on. Historically, the US has had the best track record for filling those seats as the 1994 World Cup continues to hold the record for the best attended tournament thus far. What other major costs would be associated?

I don't think that the city of Houston (the city currently with the most ballots cast on the website) will have too much buyers remorse about Reliant Stadium, at least when it comes to a few World Cup games.


this reasoning may ironically backfire for a recession- that is, it may be a positive temporary stimulus to the economy to hire all the temp contractors + workers to run the show- surely alot of those workers could be otherwise unemployed, so it would likely benefit the economy via unemployed spending mulitiplier


It's hard for me to figure out how hosting the world cup could be a loser when -- unlike South Africa or Greece with the Olympics -- we wouldn't have to shell out a dime for infrastructure.


But . . . You work so hard, don't you deserve it?


How silly to compare the economic impact of hosting a world cup in the US with cost in Greece or South Africa. Different economies, different developmental needs. Still, the comparison might have been necessary, if we did not have a recent US experience as a comparison point. And what benefits are listed, other than questions of how busy buildings remain, after the event?

Clearly, a column written by a person without a day job.


While I would love to see soccer more popular in the US, do we really need to spend taxpayer money to make people more interested in sports? Really? We don't like them enough and spend enough on making athletes and owners megarich? Why not spend the World Cup money on something else we don't already pay too much attention to that will or won't pay off?


A couple of points:

1. The US is bidding for 2018/2022. The current economic climate is not really relevant, unless you believe it will last for another 8-12 years.

2. We are not directly comparable to South Africa or the Greek Olympics because we don't need to build a bunch of white elephant stadia. Thanks to the NFL, we have all the stadia we need to host a World Cup. There might be some necessary renovations/expansions, but not whole new construction.

3. It's hard to quantify or predict the long-term effect of things like national prestige or even good performance in the Cup (most nations experience some amount of home field advantage). For instance, will South Africa now see an increase in foreign investment, now that they've proven they can pull off an event of that scope? The 1994 Cup virtually created the MLS (the MLS was founded in 1993 as part of the 1994 bid), which is just starting to come into it's own as a national soccer league. Not only does that help sponsor a new professional sport, but has also resulted in the construction of a bunch of smaller, soccer-specific stadia.

4. I don't know about other countries, but most of the work that would be done for the Cup here would be done by American workers. For those Keynesians out there, that sounds like stimulus to me. It may not, in the end, add up to a net positive, but I'm curious what is meant by negative economic impact, or lost income. Are we talking about opportunity cost here (i.e. the government would get more bang for it's buck spending elsewhere... or not spending at all), or raw tax receipts minus government outlays?

I don't know that another World Cup here would necessarily make a positive financial impact, but I think the article glosses over some factors that are worth at least considering (even if they don't all translate well to dollars and sense).

I'm not saying that another World Cup here

That's not to say that another World Cup would be


Drill-Baby-Drill Drill Team

Only IF:

1. Adrian Cronauer, the Long Winded Radio Host of 'Good Morning, Vietnam!' fame is the official GOOOOOOOOOOOOOOOOOOOOOOOOOOAAAAAALLLLL!Anouncer.

2. Our Best Scientists can create a World Class Annoying Stadium Noisemaker that would put the Vuvuzela to shame, make it crawl into a cave and cower in a fetal position.

3. We have an American Octopus named Nostrodamus who does thumbs up or thumbs down for ever match before play can commence. He will have a glass acquarium on the 50 yard line. --Don't Forget, an Octopus has 8 thumbs.

4. We can save money on scoreboards. SInce most matches are low scoring affairs, drop the second and third digits from scoreboard construction. And don't buy the hand lettered numbers above '5" since most matches are 1-0 if not 0-0.

Ron Kaplan

If I'm not mistaken, the residents of Quebec are STILL paying for the 1976 Olympics.


Ok so throw out the Greece and South Africa example. You still have to look at the 1994 US World Cup which posted a loss and ask what changes are they going to make so that the city profits from the World Cup. We did not have to build stadiums then either.

John C

Read the report before you claim that stadiums are all that matter -- think security, which now runs into the billions post-9/11. Or the opportunity costs of allocating resources. Or the fact that temporary jobs, once gone, can lead to a new rush of unemployed in a worse situation than they were before. There are a lot of costs beyond what we think of (bricks and mortar).


I also don't understand how the US could lose money while hosting the WC.


1. Idiotic government officials/pseudo-governmental officials are allowed to run said affair.
2. These officials insist on foolishly high levels of security.
3. They also insist on unneeded infrastructure improvements.

A WC hosted in the USA could easily be a moneymaker if we treated it simply like 64 NFL games and played all of them in 20 (ish) of the NFL stadiums (maybe even one or two in the MLS stadiums built for teams like the Galaxy and the Fire).

The best part about hosting the WC in the USA is that most of the US games could be scheduled for AFTER work hours and preventing the massive productivity drop associated with millions of US workers streaming the games on scores every 30 seconds.

Heitor Shimizu

No quite. US has stadiums, good airports, enough hotel rooms, security and a fine infrastructure overall. Can host a WC (or a Olympic Games) in a split. Brazil in 2014 and 2016 will be a complete different story. Boom or burst. Can be something we would be proud of or might hurt the country for decades.


Don't we have enough violence here, without encouraging soccer fans to add to it?


Yes, as already noted by several commenters, the U.S. would not need to construct new stadia as many other sites have. To which I would say: read the report. The author notes this, and anyways this was true of the 1994 World Cup, which used only existing stadia, and still managed to lose ~$9 billion on projections of a ~$4 billion gain. Similarly, Germany in 2006 used mostly existing stadia (though inexplicably a few new stadia were constructed despite several existing suitable stadia remaining unused), and it, too, suffered a loss.

The point is, reports such as these are prepared by rent-seeking boosters with transparently self-interested motives. After-the-fact analysis has pretty much uniformly disproven their claims. It's been shown over and over again that substitution effects and lost opportunity costs pretty much entirely swallow any direct economic impact. And while there may be some difficult-to-quantify positive effects--a strengthened domestic league or an increase in national prestige--I'm dubious that they exist and certain they that they shouldn't be paid for by national and local governments.


Steve does this really talk to the "how" of hosting this big party? There are a number of NFL stadiums that are quite modern and can be used for the events, which mitigates the risk of having our own "ruins of modern Greece". Is there a way where we can show that what we built in the 90s along with other modernizations from the NFL can allow us to host it in a risk free and profitable manner? I do have to admit partial ignorance to all of the logistics that go into hosting a world cup, but my thoughts are the major items are stadiums, roads/airports, and security. I would think that most US cities have sufficient hotels (both city and suburban) to host the futbol fans, and with the exception of security, I think we have a leg up on those other items compared to competing countries, both in readiness in lower costs.