FIFA World Cup in the USA: Economic, Social, and Environmental Analysis

Introduction

In autumn 2010, FIFA, soccer's world-governing body, announced that the 2022 World Cup would be held in Qatar, the Persian Gulf oil state. The United States had bid on this event, and many believed the country had a good chance of winning (Leonard, 2010). The U.S. last held the World Cup in 1994. The success of that event — in which 3.58 million tickets were sold — spawned the return of a major soccer league to the U.S. and renewed, albeit slowly, interest in the sport in the world's largest consumer market. The Qatar decision left U.S. Soccer, which came in second in the voting, disappointed and searching for a new strategy to build interest in the game in the domestic market.

In addition to building the game in the U.S., the return of the World Cup to American soil would bring with it a host of economic and social opportunities. The World Cup also carries drawbacks, however. Certainly the prospect of air-conditioned outdoor stadiums — temporary ones — in Qatar smacks of environmental catastrophe, but there would be challenges in the U.S. as well. This paper discusses the benefits and drawbacks of bringing the World Cup to the United States again, using a variety of sources to analyze the potential issues involved.

Economic Considerations

The World Cup format typically involves multiple cities within a nation hosting dozens of soccer matches over the course of one month. This creates significant tourism revenue, but there are also high costs associated with the event. The host country is an important factor in this calculation. A substantial portion of the World Cup's benefit comes from the prolonged international exposure that the host nation and its cities receive. It is reasonable to expect that the value of this exposure is diminished for a heavily-exposed country like the United States relative to smaller nations that have hosted the tournament. Baade and Matheson (2004) noted that the costs of hosting the 1994 World Cup ranged between $5.5 and $9.3 billion, while proponents touted gains of around $4 billion. The United States already enjoys a high level of global visibility and therefore stands to gain less than other nations would from the same exposure.

Exposure for smaller countries does carry real value, and the effects are both long-lived and broadly distributed across the economy. As early as 2007, South Africa's real estate market was experiencing a boom linked to the 2010 World Cup. Property developers seized the opportunity to leverage publicity and create new housing and vacation rentals, much of the funding coming in the form of foreign direct investment (PropertyWire, 2008). South Korea, on the other hand, saw fewer tourists than expected, as the World Cup effectively reduced intra-Asia tourism to the country during the Cup period, which is otherwise a prime time to visit (Dwinger, 2010). Arguably, however, the United States — with its substantial capacity to absorb tourists — would merely see non-soccer tourists diverted to non-soccer areas of the country during the event.

It is also worth noting that in the United States, stadium infrastructure is already in place. No new stadiums would need to be built for the World Cup, meaning that there would be only limited construction-industry impact from a hosting decision. New stadium construction was one of the major sources of short-term economic activity for the South African bid (Dwinger, 2010). With only moderate short-term gains available, the economic benefit of hosting the World Cup in the U.S. rests primarily on long-run outcomes. Hagn and Mannig (2007) noted that the 1974 World Cup in West Germany did not "generate any short to long-term employment effects that were significantly different from zero." This could imply that a heavily-exposed country stands little to gain economically, especially compared with South Korea, South Africa, Qatar, or other smaller-nation hosts.

Studying the 2006 World Cup, also in Germany, Mannig and Du Plessis (2007) argue that the German experience shows very little long-run economic benefit accrued, and that this finding is consistent with other major sporting events, which are also "rarely identified with significant net economic benefits." If this holds true in Germany, it is reasonable to assert that the United States, with the world's largest economy, would be unlikely to register a noticeable positive impact on its roughly $14 trillion GDP. Even optimistic projections of the economic benefit of the South African World Cup pegged the figure at $3.5 billion — infinitesimal relative to the total U.S. economy — and analysts did not expect any long-run unemployment benefit despite South Africa's 25% unemployment rate (Dwinger, 2010). U.S. Soccer, the body bidding on the World Cup, touted a $5 billion economic benefit and upwards of 100,000 temporary jobs. Meaningful impacts appear only at the city level, where each host city could potentially gain $400–600 million in revenue and 5,000–8,000 jobs (U.S. Soccer, 2010). While host cities would undoubtedly benefit — their stadiums already being in place — the net impact on the national economy is not significant.

Social Impact

The social impact of hosting a World Cup varies from nation to nation and can carry interesting implications. South Africa's experience was inevitably unique; that nation expected to see improvements in its tense race relations as a consequence of hosting the event. Some American scholars argued against this optimistic view, pointing out that the benefits of the World Cup largely accrue to wealthier classes while lower classes are effectively left out. Worse, public funds were diverted to infrastructure such as new stadiums rather than to pressing social needs (Colombant, 2010).

In the United States, where race relations are also relatively strained and income disparity is substantial, similar social dynamics may emerge. It is also worth noting that the host team is automatically entered into the tournament, which can allow fans from across the nation to rally around the team. While this did not work well in South Africa because the national team performed poorly, it has worked well in nations where the host team performs strongly — as South Korea demonstrated in 2002. The United States men's national team is competitive, but unless the team advances further than expected, the sport is unlikely to attract a substantial number of new fans, and any positive social outcomes from a rallying effect are unlikely to be lasting.

Often cited as a major social benefit of hosting a major sporting event is the legacy of the facilities themselves. Most nations use World Cup stadiums to attract other sporting events and concerts long after the tournament ends. In the United States, these benefits are not incremental to the World Cup decision, as the stadiums already exist and are already in active use. No new legacy benefits would accrue to any of the host cities as a direct result of the World Cup.

A study of perceived social impacts was conducted among Munich residents following the 2006 World Cup. Ohmann, Jones, and Wilkes (2007) found that Munich residents viewed the social impacts of that city's participation as generally positive. Benefits cited included urban regeneration, an increased sense of security, positive fan behavior, and the general atmosphere surrounding the event. Some negative impacts were also perceived — including increased prostitution, increased crime, and displacement of local residents — but these were reported by relatively few respondents and are generally short-term in nature. In the United States, many of these impacts would likely occur as well. The displacement of local residents is often tied to construction-related issues, such as the use of eminent domain to free up land for stadium construction; this would not be a factor since all of the stadiums already exist.

Conclusion

The World Cup is undoubtedly a prestigious event, but it is difficult to argue that it would deliver significant benefits to the U.S. as a nation. While there may be some benefits to individual host cities, those impacts are not expected to be long-lived. Proponents typically emphasize economic benefits. In most countries, these are offset by the high costs associated with staging the tournament, particularly new stadium construction. The U.S. would avoid those costs by virtue of already possessing extensive stadium infrastructure, but the economic benefits remain modest relative to the overall size of the American economy. A short-term improvement in GDP for host cities is expected, but this phenomenon is short-lived. Long-run employment gains are not anticipated based on past experience. Spinoff impacts — such as rising real estate values and increased tourism — that some hosts experience are unlikely to accrue to the U.S., which is already a leading global tourism destination and a major recipient of foreign direct investment. Economically, the World Cup's positive effects are not expected to be significant.

With respect to social and environmental benefits, these are often treated as secondary concerns by World Cup organizers. Social benefits may be short-lived, and many social scientists question whether meaningful benefits accrue at all, given that the advantages of major sporting events tend to favor wealthier classes at the expense of lower-income populations. This is not to say that there are no advantages. World Cups are exciting, and for host cities the hundreds of millions in additional revenue could provide a welcome boost. Some industries — particularly hospitality — may see a short-term uptick. Moreover, the World Cup could help soccer grow in the U.S., much as the 1994 tournament provided the impetus for a strong domestic league to re-emerge. Overall, however, the benefits appear to be outweighed by the costs, or at least negligible in terms of long-run impact.

Works Cited

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