How Much Money Did South Africa Make From The 2010 World Cup

Using legislation enacted to tackle criminal enterprises such as the Mafia for its investigation, the FBI is alleging that rampant abuse became "owned" to international football association Fifa.

The contempo claims of abuse related to South Africa's hosting of the 2010 World Cup are not the first. Members of a structure cartel, institute past competition regime to have rigged bids and ramped upward prices by several billion when building the stadiums that hosted the matches, take already paid R1.v-billion in fines as penance for their collusion.

Fifa's awards of World Loving cup rights to Russia in 2018 and Qatar in 2022 may now have to be revisited. The organisation will get a new president at the end of the year, amid widespread calls for reform to make information technology more transparent and answerable.

The reform job should not be left to Fifa itself, observers say, with one likening this to letting Ponzi scheme cheat Bernie Madoff reform the fiscal system.

International Olympic Commission president Thomas Bach this calendar week warned that the reform of Fifa would exist a painful process. The Economist wrote that the procedure would not exist easy when "the reality is that Fifa'southward structure nurtures corruption".

Fifa reforms
Kenyan news site the Daily Nation implored sponsors to put pressure on the association, noting "sectional, rich and powerful, Fifa cannot reform itself". Commonwealth of australia has announced it will no longer bid for the 2023 Women'southward World Cup, pending the outcome of Fifa reforms.

Transparency International, which has long called for Fifa reforms, has now urged the arrangement to enlist independent oversight to do so.

Local reports have focused on the payment of $ten-million to the Confederation of North, Central American and Caribbean Association Football under Jack Warner – alleged to have been a ransom in return for votes that helped Due south Africa win its bid to host the event. At the time the payments were made, in Jan 2008, this would have been worth R70-meg – a negligible amount in the context of the billions of dollars flowing in and out of the effect.

The available numbers allow for some retrospection about who benefited near and least from the 2010 issue.

Fifa spent R13-billion on the 2010 World Cup, mainly in the course of prize coin, a contribution to the local organising committee and television set production costs, and the Southward African government spent R30-billion on preparations to host it.

Guarded finances
Fifa boss Sepp Blatter, in announcing last week he would be stepping down, also revealed that the nonprofit organization would exist subjecting itself to a reform process.

Although Fifa does publish its fiscal statements, it is and then guarded that, for instance, Blatter'due south bacon has never been disclosed.

What Fifa did report in its 2010 financials is that the World Loving cup had brought in $iii.nine-billion in revenue – sixty% of which was generated past awarding idiot box rights for the event.

Fifa reported a $631-billion surplus for the 4 years spanning 2007 to 2010.

In this written report, Fifa noted that in 2010 it was able to give its 209 members an extraordinary payment of $550 000 each; its six confederations got $v-million each. A further $100-million was donated by Fifa to the World Cup Legacy Trust to develop football in Due south Africa.

Fifa'due south wage bill, every bit stated in its 2010 study, was $65-million. The association says that 70% of its expenditure goes to support football game; the other 30% covers its administrative costs.

Government investment
In Due south Africa the national government invested more than R30-billion in preparing to host the event. An estimated R10-billion (according to Grant Thornton) more was spent at provincial and municipal level.

The bulk of S Africa's Globe Cup spend went into upgrading and edifice stadiums across the land, which the competition authorities later found to take been subject to bunco and bid rigging.

The Competition Commission found the profit margins on the winning bids for the World Cup stadiums were far removed from industry norms and were closer to 17.five% than the average 3.five%, resulting in unfair profits.

A total of R1.five-billion was returned to the fiscus in the form of fines paid to the Contest Tribunal by the defendant parties, including major firms such as Group V, WBHO, Steffanutti Stocks, Aveng and Murray & Roberts.

The energy department was tasked with providing sufficient ability supply during the tournament. This was achieved by strengthening the grids in all the host cities and even leasing generators where necessary.

Load-shedding
When load-shedding began again in January this year, at present-axed Eskom principal executive Tshediso Matona fabricated it clear that the strain on the national grid was caused by a excess in maintenance because of having to provide power at the time of the World Loving cup likewise as during national elections.

The 2010 Fifa World Cup Legacy Trust (non to be dislocated with the Diaspora Legacy Plan, to which the declared $10-million bribe was diverted) was likewise formed post-obit the World Loving cup to support a variety of charitable initiatives in South Africa.

Fifa contributed $100-million to the trust, $lxxx-million of which was meant to be invested directly in social customs projects.

The remaining $20-million was paid to the Southward African Football Association before the tournament to cover World Loving cup preparations and the structure of the association's headquarters.

For the first project financed by the trust, Fifa purchased 35 team buses and 52 vehicles, which were handed over to Safa on December 13 2010 for its regional teams.

Legacy trust
Joe Carrim, the manager of the legacy trust, told the Mail & Guardian this week that it was formally established on April thirteen 2013. That was when funds (of R450-million, merely one-half of the reported legacy contribution) were transferred. The trust has already awarded tranches of funding to beneficiaries following three phases of applications. Asked how many phases are planned, Carrim said it will be "ongoing until the money is finished".

He added: "The interest accrued on the funds is R88-1000000, expenditure on grants is R118-million, and the current balance is R410-1000000."

The 2010 Fifa World Cup Country Study, published by the department of sport and recreation and released in 2013, said the government had initially set aside R8.4-billion for stadium construction.

"Still, due to toll escalations this amount was readjusted to R13.v-billion.

"The host cities, together with their respective provinces, also made financial contributions totalling R2.1-billion towards the stadium construction," the report said.

Small price
The R30-billion would have accounted for roughly 7% of the government'due south consolidated national expenditure for the 2007-2008 financial year alone.

Information technology was a pocket-size toll, some say, for both the measurable and immeasurable benefits. "It was manageable in the broader context of regime finance," said Stanlib chief economist Kevin Lings.

That South Africa would fund the outcome through long-term debt had been a concern at first, but the country's debt-to-gross domestic product ratio dropped from 34.half-dozen% in 2006 to about 28% in 2008-2009, and all financing took place through the usual annual budgetary allocations since 2006, the government said.

South Africa'south World Loving cup legacy includes costly stadiums that run at an annual loss. (David Harrison, Grand&G)

For South Africa'due south economy, a straight benefit of hosting the tournament was that it added 0.4% to national economic growth, translating into R38-billion that year, as estimated past the finance government minister, Pravin Gordhan. This occurred at a time when the rest of the earth had fallen into recession.

The sport section's report claims the investment in 10 "excellent stadiums" lone created 66 000 new construction jobs, generating R7.4-billion in wages, with R2.2-billion going to low-income households and therefore helping reduce poverty. The 2nd-largest spend went to ship infrastructure – such as the upgrading of roads and the edifice of the Gautrain – and R1.5-billion was budgeted for consequence dissemination and telecommunication.

Marketing gains
"No doubt these things toll a lot at the time," said Lings. "The immediate tangible benefit is the boost to GDP, but yous are pretty much laying out that much so this is not a major proceeds to you at the time. The existent benefits are the marketing gains and how you apply information technology going frontwards, capitalise on information technology."

A heave to tourism was a key benefit, Lings said (run into beneath).

Mike Schussler, director atEconomists.co.za, said: "I'll say now what I said so. Physically, we won't make our money back. But information technology was a skilful marketing practice, it put united states of america at the centre of the world stage and was adept for tourism."

Gillian Saunders, head of informational services at Grant Thornton, agreed. "It offered a platform for a huge amount of marketing," she said.

The sport department reported that iii.1-million spectators attended the 64 matches during the tournament.

Worldwide viewership
Co-ordinate to findings by TNS Enquiry Surveys, 32-billion viewers worldwide watched the Earth Loving cup on goggle box.

The 2 minutes a game spent promoting S Africa amounted to an estimated R1.5-million worth of advertisement.

"There is a marketing reason to do this," Schussler said. "Although now we are stuffing it upwardly … Information technology now seems nosotros paid to lose money."

Lings said South Africa benefited considering disquisitional infrastructure, some long overdue, was invested in.

"We did see infrastructure spending that did add to Gross domestic product – that'southward similar saying I baked a cake and added value when no one is eating the cake," Schussler said.

'Critical infrastructure'
Durban's Moses Mabhida Stadium made a reported loss of R34.6-one thousand thousand in 2013 and the Cape Boondocks Stadium makes a loss of virtually R40-million each year.

Saunders challenged the perception that the stadiums are not well used. Globally, "use of between 24 to 36 times a year is considered skilful for a Wembley Arena [and the like] … although not necessarily for Premier Soccer League stadiums".

She said that prominent musicians who have performed in S Africa since 2010 may non have come had the stadiums not been in identify, because they offer the size and quality that make such events lucrative.

Lings said: "Nigh of the infrastructure was well needed and disquisitional. I retrieve the money, the whole thing, becomes very beneficial over fourth dimension."

Keen to host a Globe Cup? Hither's how yous must bow and scrape

A Fifa Globe Cup requires the host country to bend over backwards to meet Fifa's requirements, ranging from revenue enhancement exemptions to commutation controls and fifty-fifty the price of hotel rooms. And South Africa was certainly no different after winning the bid to host the 2010 title. Fifa'due south legal status equally a nonprofit entity allows it tax breaks in its resident land of Switzerland – already a low-revenue enhancement jurisdiction.

And in the countries where World Cups take been hosted, Fifa and its "family unit" are known to enjoy full or partial taxation exemptions.

In South Africa, revenue laws had to exist amended to allow for the exemptions. In response to media reports at the time that South Africa would lose millions in income taxation, the South African Revenue Service said the event was not a profit-making do.

That might be so for South Africa but certainly non for Fifa, which made a $631-million surplus, largely generated by the sales of television, marketing and hospitality rights.

This was helped by a regime guarantee to protect Fifa's intellectual property rights (and those of its sponsors and partners) and to prevent deadfall marketing by declaring the 2010 football game World Cup a protected event in terms of department 75A of the Trade Marks Act, effected by a find in the Government Gazette.

In total, seven pieces of legislation covering and protecting the intellectual property rights of the 2010 Fifa World Cup trademark were drafted and regulations prohibiting the utilise of certain words, devices, letters, emblems and numerals relating to the 2010 Fifa World Cup trademark were published.

The section of tourism also undertook to ensure that hotel prices for the Fifa delegation and commercial affiliates, broadcasters and media teams would be frozen from January 1 2010 and that the prices would be xx% less than the frozen prices.

In addition, Fifa personnel were exempted from having to obtain work permits, and were guaranteed visas and priority immigration procedure treatment.

Commutation controls were relaxed to ensure that there were no restrictions on the import and export of all strange currencies to and from the country.

This enabled the unrestricted exchange and conversion of currencies for those involved in hosting, or attending, the tournament.

SA tourism soared after the World Cup

The 2010 Fifa World Cup elicited a great bargain of expectation about what information technology could exercise for tourism in Southward Africa. For the menses May 1 to July 11 2010, 2.4-1000000 international visitors were processed, compared with one.1-million in 2009. The section of sport reported that each visitor spent on average R11 800, bringing in a cumulative R3.64-billion, with the highest pct (31%) beingness on shopping.

"Undoubtedly tourism has benefited," said Gillian Saunders, caput of informational services at Grant Thornton. "Everyone in tourism would welcome such an event once again."

Gauteng's provincial economic impact report following the event noted that expectations of a greater influx of foreign tourists weren't met, "as evidenced by the number of unoccupied beds in hotels".

But Lings said there is no doubt the Globe Cup contributed to record tourism inflows, although the numbers never quite reached the level expected. "We were hosting the tournament amid a global recession," he said.

But the outcome has continued to benefit the country'due south tourism after the fact. "We know yous don't get the instant benefit [only] go repeat tourism, very evident in numbers," Lings said.

Statistics Due south Africa'southward numbers testify a steady increase in tourist arrivals since the World Cup.

Over the busy Dec menses in 2010 tourist arrivals peaked around 100 000, and in Dec 2012 the figure breached the 120 000 mark. In Dec 2014, more than 150 000 tourist arrivals were recorded.

Source: https://mg.co.za/article/2015-06-11-was-world-cup-2010-worth-it/

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