The economics behind hosting the World Cup

Tom Rood

With the conclusion of the 2022 World Cup in Qatar, economists have taken interest into understanding the economics behind hosting arguably the most prestigious sporting tournament.

In July 2008, the General Secretariat for Development Planning in the state of Qatar came up with a great economic ambition known as the ‘2030 Qatar national vision’. This vision included objectives such as:

· Economic growth

· Social development

· Building and infrastructure development

· Environmental management (sustainability)

· Expansion of the size and quality of the expatriate labour force

Shortly after formulating this vision, Qatar put their bid forward to host the 2022 World Cup, a bid which was approved by FIFA on the 2^nd  of December 2010.  From then on, the preparations began.

Forbes have estimated that it cost Qatar $220 billion to prepare for the World Cup. At such a steep price, it seems reasonable for economists to wonder how hosting the World Cup contributed to them reaching their 2030 vision objectives.

A United Nations Development report for the period 2021-22 showed the per capita Gross National Income figures for Qatar, Brazil, and South Africa – three countries that have hosted the World Cup in 2022, 2014, and 2010 respectively.  The Figures showed us that South Africa ranked 85^th, Brazil 81^st and Qatar 3^rd. These figures illustrated the stability of the Qatari economy and suggested that Qatar was financially more equipped to tackle the costs (approx. $220 billion) than previous hosts. Despite the expensive preparations, hosting the World Cup can bring lucrative opportunities.

The first step after securing the World Cup was an extensive infrastructure development project. Qatar began constructing the Sharq crossing (a massive strategic road hub of tunnels and bridges) and the Doha metro to link all the stadiums. Furthermore, Qatar expanded the Hamad airport, enhanced the mega water reservoir project, and finished building a new city (Lusail). The final touch to the development project came through Qatar’s construction of 7 state-of-the-art stadiums. This project proved opportunistic for growth of the expatriate labour force in Qatar too, and so the level of migrant workers grew up to 95% of the total labour force involved. At this stage, it was fair to say Qatar were well on the way to meeting 1/3 of their vision goals, after successfully meeting the building and infrastructure development target alongside expansion of the size and quality of the expatriate labour force target.

Gas shortages in Europe caused by the Russia-Ukraine conflict pushed prices up rapidly in the autumn of 2022 (around time of World Cup) to a level of 250% above those at the start of the year. Qatar holds the world’s third largest reserves of natural gas and is the third largest exporter of the commodity. Knowing the top exporter (Russia) were about to have trading ties cut off because of the war, Qatar was keen to capitalise. Hosting the World Cup, global media was brought to Qatar, giving them the platform to promote and advertise their resources. Further control of a resource with very inelastic short-term price elasticity of demand essentially helped Qatar achieve their main objective of the vision – economic growth. A boom in export revenue since the World Cup has seen Qatar’s economy expand by 4.8%. So, another one of their targets had been accomplished ‘through the World Cup’.

Social development was another important aspect for Qatar. Improving the quality of life by improving the ability to accommodate for all kinds of people’s needs was another objective Qatar hoped the World Cup could help them to achieve. With all the construction under way, the architects got creative in ways to make the structures as inclusive as possible. For example, many children and young adults live with autism, learning difficulties, and other special needs, so loud crowds at football games can be too intimidating and overwhelming. But sensory rooms were built inside stadiums to facilitate these sorts of needs, so everyone could be included in the celebration. Social development is projected as a proposal to improving society’s welfare, but there is an economical backing towards it also. With social development, a greater quantity would be attracted and keen to visit the country. Many businesses (particularly in entertainment, services, and tourism) would benefit from an increased number of people in their country, because if there’s a greater population then there will be an increase in demand. With greater demand, businesses would be able to sell more and increase profit margins. Growth of these businesses would also influence the rest of the economy (more employment would cause increased wages for workers, and there would be a subsequent increase in consumption from members of the population who see an increase in their real incomes), kickstarting a multiplier effect. Qatar began their development in social aspects such as inclusiveness by designing facilitating structures to benefit people, and found that developing socially positively impacted their economy too.

Sustainability was less of a priority for Qatar as it did not improve their economy, but public pressure forced the authorities to make the tournament somewhat sustainable. Vast new parks were built around the stadiums and training sites, and tree nurseries were introduced. Qatar also used a more sustainable energy source than fossil fuels, by powering the stadiums’ air conditioners with solar energy.

To conclude, we all know that the primary purpose of the World Cup is for entertainment and greater promotion of the beautiful game. However, Qatar also focused on alternative motives, namely economical aspirations. In order to make the World Cup pay economic dividends, they had to realise the country’s key ambitions (the vision), and then construct methods for achieving these targets. The most effective method was to use the World Cup’s global audience to increase international attention, which saw economic growth as a result. Consequently, Qatar obtained success in various other fields, and so hosting turned out to be very successful, taking them many steps further into the direction they ideally want to be going.