Soccer World Cup Essay

The Soccer World Cup 2014 in Brazil Will the World Cup bring economic boom or bust? 13th of June, 2012 Table of content 1. Brazil in the spotlight4 2. Current economic situation4 3. Sporting events and the FIFA World Cup6 4. Challenges and efforts for the World Cup preparation in Brazil7 5. Consequences of the World Cup for Brazil10 5. 1. Economic consequences10 5. 2. Political consequences12 5. 3. Social consequences12 6. Analysis13 6. 1. SWOT Analysis13 6. 2. Interpretation14 7. Conclusion: Will the World Cup be a success story for Brazil? 6 8. Bibliography19 8. 1. Literature sources19 8. 2. Internet sources19 List of Illustrations Illustration 1: Brazil GDP per capita5 Illustration 2: Soccer stadia in Brazil hosting the Soccer World Cup in 2014 8 Illustration 3: Official emblem FIFA World Cup 201410 Illustration 4: SWOT Analisys for the Soccer World Cup in Brazil13 List of abbreviations CFBBrazilian Football Confederation FDI Foreign firect investments FIFA Federation Internationale de Football Association GDP Gross domestic product 1. Brazil in the spotlight

The next ten years are likely to become the decade of Brazil. Last year Brazilian’s economy was upgraded to place six in the World Economy League Table, meaning that the Latin American country took over UK’s economy. Furthermore, Brazil will host a variety of extraordinary events. (ZeitOnline, 2011). The kick off is in the year 2012 with the RIO+20, United Nations Conference on sustainable development, followed by the FIFA Confederations Cup in 2013. The next year the Soccer World Cup 2014 will take places preceding the Olympic Summer Games 2016 of Rio de Janeiro.

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To round out the Brazilian decade, the country runs for the World exposition in Sao Paulo in 2020 (German-Brazilian Chamber of Commerce, 2011). These major events contain possibilities and threats for Brazilian’s economy and its political reputation. In the following, a closer look will be taken at the Soccer World Cup 2014 as it is the first mega event hosted by Brazil in the coming years. The question will be cleared up if the World Cup will be boom or bust for Brazilian’s economy. 2. Current economic situation Brazil one of the wealthiest countries – it is on place six- is far away from its former recession times.

In the year 2010 Brazil had a nominal gross domestic product (GDP) of $2,088 billion US, which is equivalent to a 7. 5% growth rate. Broken down, The GDP per capita was $10,943 US. The global slowdown hampered the economic growth rate in 2011. The GDP amounted to 2,200$ billion US, posting a slight gain of 2. 7% while increasing the level of GDP per capita to $11,000 US (World Bank, 2012). Thanks to Dilma Rouseff (the new President of Brazil since 1. 1. 2011) and her predecessor, the country records stable GDP per capita growth rates, indicated in the graph below.

Illustration 1: Brazil GDP per capita Note. Adapted from: http://www. tradingeconomics. com/brazil/gdp-per-capita-ppp Stabilization policy has been conduced over years unleasing Foreign Direct Investments (FDI). High interet rates, FDIs and demand for Brazilian commodities triggered capital inflow so that the Real, the Brazilian currency, has been under appretiation pressure (German-Brasilien Chamber of Commerce, 2011). According to the Economist the Brazilian real is the most overvaluated currency in the world. The basis of this calculation is the Big-Mac Index and the average income.

Paraphrasing, Brazil is the most expensivest country in the world (“The Big Mac index”, 2011) Another factor pushing the Brazilian economy is the growing middle class. Although Brazil has to face a multitude of poor people the domestic market is flourishing. Almost 120 million of the population belong to the middle class, comprising families earning more than 400€. However, the benchmark is quite low, taking into account that Brazil still is classified as emerging country (Busch, 2011). The actual goal is to transform the fifth biggest country in the world, the area is twice as big as the European Union, into a political super power.

Owing to the fact that Brazil is rich in natural resources, this not so far from reality. The economic structure of the country is equal to developed countries. In the agricultural sector only 5. 6% of the population are working (mining excluded). In the industrial sector 26. 8% are people employed. This number amounts to 67. 4% in the service industry (Busch, 2011). 3. Sporting events and the FIFA World Cup The hosting of major sport events is of utmost importance for the tourist industry. The FIFA World Cup is labeled as mega event or hallmark event.

In general, they are defined as a Major on-time or recurring events of limited duration, developed primarily to enhance the awareness, appeal and profitability of a tourist destination in the short and/or long term. Such events rely for their success on uniqueness, status, or timely significance to create interest and attract attention (Hall, 1992, p. 2). In other words, mega events bring to pass economically, political and social opportunities for the countries. The FIFA World Cup definitively is a first-order event reaching awareness all over the world. Together with the Olympic Games it is the most popular sporting tournament worldwide.

Soccer World Cups need a long planning phase because the locations have to host a plethora of visitors and cope with huge amounts of soccer fans. The initiator and supervisor of the FIFA World Cup is the Federation Internationale de Football Association (FIFA), it was founded in 1904 with the goal to regulate and organize the world’s most popular sport. FIFA started with seven member countries increasing lately to 208 members (FIFA, 2012). The focus of the association is to organize the FIFA Wolrd Cup, taking place every 4 years. Countries can participate in a bidding process to win the host for this mega-event.

The last three host countries were: South Africa (2010), Germany (2006), South Korea and Japan (2002). The aim of a hallmark event like the FIFA World Cup is not only to organize a tournament between different nations. The FIFA mentions that it is also to use football as a symbol for hope and integration. Their mission is to “develop the game, touch the world, build a better future” (FIFA, 2012, para. 3). On the next section the possibilities and limitations of hosting the FIFA World Cup will be outlined. 4. Challenges and efforts for the World Cup preparation in Brazil

In the year 1950 Brazil hosted a soccer World Cup for the first time. The unique opportunity to maximize the economic, environmental and social benefits due to a major sport event was granted Brazil again in 2007. The FIFA decided on the 30th of October 2007 to give the right and responsibility to Brazil again in order to host the Soccer World Cup in June and July 2014. The FIFA was coerced to choose a Latin American country due to the rotation principle (“WM 2014 FAQ”, 2011). Since the nomination Brazil is trying hard to face all the challenges the preparation of such a mega event brings to pass.

Although, Brazil is the strongest nation on this continent it is faced with difficulties concerning the preparation. The biggest challenge is to improve the infrastructure. Not only Brazil’s infrastructure fails to be up to date the physical distance, of the world’s fifth biggest country is a challenge, too. To illustrate this, Curitaba and Manaus, two host cities are separated by a distance of approximately 4016 km (Sontos & Victor, 2011). The Brazilian Tourist Organization named four action points which should be considered in order to realize a successful sport event.

First of all, the infrastructure in the host cities should be improved and major tourist points need to be revitalized. Second, tourist satisfaction should be gained by well-trained personnel in the service sector as taxi drivers, waiters, staff at the airport etc. Third, promotion of the country via marketing tools is on the agenda to enhance the image and the reputation of the country. Finally, new sustainable investments in several areas are planned. In a nutshell, the goal of Brazil is to focus on infrastructure, regional integration, marketing, training, services and the overall sustainability of tourism.

To reach this goal the country has to invest a lot of money (Ministerio do Turismo, n. d. ). Top priority has the improvement and enhancement of the infrastructure. In a huge country like Brazil proper infrastructure is direly needed to connect the host cities and to provide adequate access to public transport within the cities. Brazil has to fix the severe failures committed over years by neglecting public transport, railroads and streets. The government has planned to build connection roads as well as connections to places of interest in order to make traveling more comfortable for tourists and soccer fans.

The enhancement of airports plays a pivotal role in the modernization of the infrastructure. Therefore, the tourism department already granted the budget for the airport projects. The airports of the host cities received in total 2. 4€ billion. To give an example the Airport Antonio Carlos Jobin in Rio de Janerio received about 309€ million. The budget for the enlargement of the waiting halls is not included in these figures (“Copa 2014”, n. d. ). Brazil is facing a shortage of hotel rooms in the host cities. Especially, in the cities where the first and the final match are located hotel rooms re by far not sufficient. The FIFA requires a minimum of 50. 000 hotel rooms in the hosting cities (“WM 2012 FAQ”, 2011). Therefore, new hotels have to be constructed while others have to be renovated. The core of each Soccer World Cup are the stations. The major sport event will take place in 12 cities with the same number of soccer stadia. CITY| STATION| VIEWERS| Belo Horizonte| Mineirao| 75. 783| Brasilia| Estadio Nacional de Brasilia| 42. 000 (reconstruction: 71. 000)| Cuiaba | Verdao| 45. 000| Curitiba| Arena da Baixada| 25. 272| Fortaleza| Castelao| 58. 300| Manau| Vivaldao| 33. 000| Natal| Arena das Dunas| 45. 00| Porto Alegre| Gigante da Beira-Rio| 58. 306 (reconstruction: 65. 000)| Recife| Arena Cidade da Copa| 46. 160| Rio de Janeiro| Maracana| 87. 101 | Salvador| Fonte Nova| 55. 129| Sao Paulo| Morumbi| 73. 501| Illustration 2: Soccer stadia in Brazil hosting the Soccer World Cup in 2014 Adapted from: http://brasil2014. fm/stadioninfos/recife-arena-cidade-da-copa/ Some stadia already exist while others have to be reconstructed or even built up from scratch requiring a lot of money. The renovation of places of interest or the establishment of fan parks and public viewing places are not so costly.

The German- Brazilian Chamber of Commerce asserts that investments amount to $80 billion concerning stadia, transport and security. Safety of fans and tourists is high on the agenda. Nevertheless it is still difficult to guarantee it in Brazil as it is a highly criminal country. In Latin America the probability of a youngster being a murder victim is 30 times higher than for a European living in their countries. According to a study conducted by a Brazilian research group Brazil is on the fifth place for youth murders and on the sixth for the overall murder rate in the world (“Latin America tops murder tables”, 2008).

One reason could be the extreme inequality existing in this country. An indicator is the GINI index measuring the degree of inequality in the distribution of family income in a country. The coefficient varies between 0, which reflects complete equality and 100, which indicates complete inequality. In 2012 Brazil has the coefficient of 51. 9 which is relatively high (comparison: Germany 27 in the year 2006) (CIA, n. d. ). A further reason for criminality in Brazil is corruption. Transparency International places Brazil on place 69 of 173 measured countries (Sontos & Victor, 2011).

The information provided signalize that Brazil has a dire need for infrastructural improvement and for safety regulations, too. The goal of Brazil’s Tourist Organization is to make the Soccer World Cup a success and includes the rise of awareness and image creation of this country. Until now a global marketing campaign is absent. However, the Latin American country has already shown marketing capabilities in the design of the World Cup logo. It is both, colorful and vibrant and presents the event as well as the host country. It conveys a unique image projected around the world.

Besides the emblem has a strong focus on the football and the cup. Illustration 3: Official emblem FIFA Soccer World Cup 2014 Note: Adapted from: http://de. fifa. com/worldcup/officialemblem/index. html The official emblem forms the cornerstone of the event’s brand identity. It is extremely fitting because the vivid representation of the trophy alludes to the outstanding achievements of Brazil in having won the FIFA World Cup five times. 5. Consequences of the World Cup for Brazil There are still more than 720 days left until the Soccer World Cup will start on the 12 of June 2014.

It is extremely difficult to anticipate all consequences of the hallmark event two years in advance. Nevertheless, some eventual consequences will be provided. In order to have a reference point some facts will be compared with the Soccer World Cup of 2010 in South Africa. The further paragraphs illustrate the steps which have already taken place and the possible consequences which are likely to happen in Brazil before, during and after the mega event. 5. 1. Economic consequences From an economically perspective the number of tourists coming into the host country during the sports event is important.

According to estimations of the tourist department 500 thousand tourists are expected (Ministerio do Turismo (n. d. ), p. 10). The total number of tourist during the World Cup in South Africa was close to 400 thousand, thus the suggestion of the Brazilian tourists department is likely to happen (SouthAfrica. Info, 2010). In the year 2011 5,433,354 tourists visited Brazil which is a rise of 5. 3% on the year (“Record numbers of tourists visit Brazil”, 2012). The number of tourists has grown over the years escalating tourist expenditure.

In 2001 these expenditure aggregated to $1,844 million while in 2011 the figure was about $6,705 million. Direct tourism employment was 1. 7 million in 2001 and got up to 2. 2 million in 2010. This upward trend is highly likely to continue as a result of the World Cup (“Brazil Tourism Report Q2 2011”, 2011). It is hardly probable that Brazil will receive vast amounts of money as direct revenues. Predominantly, the FIFA will earn money out of the selling of several rights, for instance TV rights, of the World Cup. In 2010 the revenues of the FIFA sky rocket to $1. 6 billion in the year of the Soccer World Cup in South Africa. However, the FIFA president states that the organization of a World Cup is even more expensive. To sum up, hosting a major sport event is at great cost (goal. com, 2010). Brazil has to set the stage for the World Cup, hence it has in advance high expenditures of the hallmark event. South Africa had to pay for its sport mega-event $7. 3 billion, the equivalent of 6% of this year’s state budget (“Is there a lot more to come? ”, 2010). The Brazilian Football Confederation (CFB) will pay smaller parts of the preparation costs.

The Brazilian state will not directly earn money out of the tournament but indirectly. The increasing number of tourists will consume a multitude of products and services improving the revenues of the industry and thus will enhances the earnings of the country. It is extremely difficult to estimate and measure the economic growth triggered by a Soccer World Cup. The Soccer World Cup in Africa is estimated to boost the economy by around 0. 4% (“Is there a lot more to come? ”, 2010). 5. 2. Political consequences A Soccer World Cup is by now a global happening.

More than 200 countries are reached via internet and television during the tournaments (Heyne, 2006). First of all, it will strengthen the international recognition of the country because during the world’s largest tournament Brazil is frequently in the public eye. From Statesmen, like Angela Merkel, it is anticipated to take part in the Soccer World Cup. Remembering the Germany’s 4-0 drubbing of Argentina as the German chancellor was almost dancing for joy, the Soccer World Cup in South Africa definitively was on the politicians’ agenda. Consequently, the world is not able to ignore Brazil any longer during the major event.

The Latin American country is already number 6 in the ranking of the biggest world economies, however, it is still not taken with a grain of salt. Although Brazil is categorized as newly industrializing country it gets the chance to display that the country is already economically well developed. South Africa can boost its image with high safety standards and a trouble-free performance during the hallmark event. Studies after the Soccer World Cup in 2010 draw the conclusion that negative perception of South African on safety and security issues where fading away (FIFA. com, 2010). . 3. Social consequences Domestically seen, a Soccer World Cup offers a country, where the gap between poor and rich is tremendous, feasible chances. Brazil holds the record in participating in all FIFA World Cups since 1930, hence soccer is likely to equate inequality. Rooting for a national team creates the same feelings in poor and rich people. In Germany, we have experienced that it creates a certain kind of national communal spirit. Being proud about its country and its nation leads to social cohesion. Further down the road, enthusiasm for soccer motivates kids and adolescence o do sport in general and to play football. In associations training goes hand in hand with sporting values. Social awareness in contrast to crimes can lower the crime rate in Brazil especially among youngsters. In South Africa the most delightful social consequence is the nation’s rise in self-respect. White and black are proud of their achievement. The post-apartheid six-colour national flag, once not accepted by many whites, flutters now joyfully from homes of all racial groups (“Is there a lot more to come? ”, 2010). 6. Analysis

This part of the paper will evaluate on the efforts of Brazil for the Soccer World Cup 2014 as well as the consequences which had been derived. The SWOT Analysis shed light on both, recent situation and future prospects of Brazil as the host nation of the FIFA World Cup 2014. 6. 1. SWOT Analysis STRENGHTS| WEAKNESSES| * Strong domestic middle class demand * Propensity to consumption * Football enthusiastic country * Huge domestic market * Economic structure * Culture| * Infrastructure * Corruption * Overvaulted currency * Criminality * Emerging country| OPPORTUNITIES| THREATS| Expansion of the infrastructure * Rise in number of tourists * Image creation * Perception as holiday country * Political strength * Social cohesion * Increased consumption demand * Attraction FDI * Positive employment development| * Private indebtedness * Price increase in the service sector and in the real estate industry * Short term effect * Communication problems * Spending on unimportant projects * High investment spending * Neglected rural areas * Environmental burden| Illustration 4: SWOT Analysis for the Soccer World Cup in Brazil 6. . Interpretation The strengths Brazil has in hosting successfully a Soccer World Cup are in particular the huge domestic market and the high propensity to consumption. Although low-income Brazilian families are enthusiastical consumers. The German- Brazilian Chamber of Commerce suggests that 60% of the total GDP is generated by private households. Besides, Brazil is not only the fifth biggest market in the world it also has a huge middle class traditionally consuming a lot.

A nation which is keen on soccer and holds the record of participating in all FIFA World Cups combined with a huge domestic market is highly likely to boost the domestic economy in times of a major sports event. In Brazil soccer is the most popular sport. This, together with their culture, being open minded, friendly and cheerful will be a perfect mixture of creating a good feeling for visitors and for soccer fans all over the world. In short, a positive image of Brazil in general will be conveyed. A further strength of the country is the economic structure.

As mentioned above more than 67% belongs to the service sector. The structure is pivotal for the future economic growth as well as for the soccer World Cup. Especially, the construction industry and the service sector playing a major role in the hosting of the mega event. New jobs will be generated, the general infrastructure will be upgraded and the economy will prosper. The weaknesses illustrated in the SWOT Analysis is basically linked with the challenges the Latin American country is facing during the preparation and the hosting of the hallmark event.

Ethical aspects and safety concerns can restrain tourists and businesses due to the corruption and inequality in Brazil The extremely strong currency might be a further reason for the absence of several soccer fans as it is just expensive to live several days in a high priced country. Another argument for soccer fans to stay away from South America could be the fear of experiencing living standards of an emerging country. In line with the preparation for the FIFA World Cup the country will probably improve facilities, however, it is very likely that western standards will be achieved.

In October 2011 the construction of only 9 of 49 urban-transport schemes in host cities has started. Airport upgrades are running behind schedule, too. The president, Dilma Rouseseff says that urban-transport improvements were not essential for the tournament’s success (“Own Goals from Senhor Futebol”, 2011). Nonetheless, it is important to guarantee a smoothly run event to please tourists and to meet international promises and standards. If the infrastructure will not be significantly improved, Brazil’s image will be damaged and it also misses the chance to be seen as a partner at eye level in the international politics.

The opportunities created have basically one key effect – They give the impulse for future economic growth. The expansion of infrastructure, creation of workplace and the rise of tourist numbers will boost the Brazilian economy further down the road. Visitors who once visited Brazil are very likely to go there again. Dilma Ruseff is of the opinion that the World Cup could generate up to 730 000 new jobs (Sontos ;amp; Victor, 2011). Before and during the sport event expenditures will be higher in Brazil, owing to tourists coming to see the soccer games, and infrastructural projects.

This will spur the economy up to 1% of the GDP. If Brazil is astute and utilizes the global awareness to present itself as an economic world power with a stable economic growth and potential for further development it is possible that Brazil will take part in further critical global decisions. Brazil could become the focus for foreign direct investments (FDI), thus serves the country to grow in the future. FDI are even faster achieved in a favorable business environment and diminishing criminality.

Besides, shrinking inequality and fewer crimes are also beneficially for the country’s image and the living quality of Brazilians. The threat a single mega sports event always contains is the fear of having invested vast amounts of money only for a limited economic benefit. High investment spending should lead to sustainable economic growth after the soccer World Cup. Therefore, it is crucial to elect the projects carefully on which money is spent. Plenty of fun parks and public viewing places will probably be useful during the tournaments but will be mostly obsolete further down the road.

An additional risk contains the rise in cost and prices. Prices are likely to skyrocket if there is a huge demand for the product. Consequently, the already high priced goods in Brazil will become even more expensive so that a great number of households cannot afford them anymore. This argument goes hand in hand with the Brazilians’ high propensity to consume. Several families have accrued debts by now and pay high interest rates. If they will consume more during the sport event without having the financial means, these Brazilian households are likely to collapse.

The official language could be problematic, too unless the Brazilians do not train their language skills. To illustrate this, it could annoy tourists willing to get information or want to tell the taxi driver the way and the people employed in the service industry cannot speak English. It is vital to train people in advance because Portuguese is not a language frequently spoken. Finally, a hallmark event can cause severe damage to nature. On the one hand, rural areas are left behind because no tournaments take place. On the other hand, cites are going to be overcrowded of new buildings and bunches of people.

As a result, environmental pollution takes place. All in all, the FIVA soccer World Cup in Brazil contains the four facets of the SWOT analysis. It depends on the country which part will take the upper hand. 7. Conclusion: Will the World Cup be a success story for Brazil? Mega sport events with its extensive media coverage are considered to provide benefits and opportunities for the host country. This will definitively be the case of the World Cup in Brazil 2014. If the event leaves a positive and lasting development impact still depends on Brazil.

Nonetheless, the indicators are excellent that the economy will grow before, during and after the tournament, owing to the results of the Soccer World Cup. Brazil has to achieve major improvements in infrastructure and cope with other challenges in advance of the mega-sports event. If the government brings to fruition the promises, the country will provide an extraordinary sports event for soccer fans and tourists. The cultural Brazilian background will create a positive image in the world so that the country will be perceived as tantalizing tourist nation. Politically, Brazil could gain political clout during the hallmark event.

Only the global political awareness is missing, all other economic factors are already given. If Brazil sticks to its plans of the preparation of the World cup, it definitively will crank up the Brazilian economy. Although, the Latin American country has high preceding investments, lasting benefits may accrue. Especially, a state of the art infrastructure is part and parcel of a flourishing economy. In a nutshell, Brazil is not only investing for the host of the Soccer World Cup or the Olympic games, it upgrades crucial parts of the economy and sets the stage for diminishing criminality and social inequality well beyond the end of the games.

I hereby declare that the work (The Soccer World Cup 2014 in Brazil – Will the World Cup bring economic boom or bust? , 20 pages) submitted is my own and that all pages and ideas that are not mine have been fully and properly acknowledged. I am aware that I will fail the entire course should I include passages and ideas from another source and present them as if they were my own. __________________________ ___________________________ SignatureDate 8. Bibliography 8. 1. Literature sources Busch, A. (2011). Wirtschaftsmacht Brasilien. Munich: Carl Hansen Verlag. Hall, C. (1992). Hallmark Tourist Events: Impacts, Management and Planning.

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