The 2022 World Cup – the world’s most popular, well-attended and watched sporting event – kicked off last weekend in Qatar and runs for four weeks. Many have questioned whether the host country should have received the honor because of its long history of migrant workers and human rights abuses, including, apparently, during the construction of the various World Cup venues in across the country.
Skeptics have also speculated that members of football’s governing body FIFA may have received substantial inducements during the bidding process to host the tournament, which in turn influenced their final admission decision.
Qatar will receive media attention from around the world during the games, resulting in significant tourism spending. Furthermore, this attention could result in a longer-term boost for tourism. However, a giant question is why Qatar or any small country would seek to host the World Cup, as the cost to do so is enormous, creating potentially crippling long-term debt.
Specifically, the cost for Qatar to host the sporting event is close to a staggering 230 billion US dollars, which includes US$6.5-10 billion to build the new stadiums. Most of the expenditure is related to the construction of infrastructure. In all honesty, this spending is also part of the larger framework of the “Qatar 2030” plan (hotels, airports, telecommunications infrastructure, transit system, etc.) to make the country more internationally relevant.
To put Qatar’s record spending in perspective, consider that the country’s GDP for the year 2021 was around $180 billion. Thus, construction costs related to the World Cup, incurred over a ten-year period, will total approximately 130% of the country’s annual production of goods and services. Also worth noting: when Germany hosted the World Cup in 2006, its costs were only around $4.3 billion. Brazil’s accommodation tab in 2014 was US$11.6 billion and Russia’s spending in 2018 totaled just over US$14 billion.
It is equally difficult for the host country to understand that FIFA retains all international television revenue related to the World Cup, more revenue from ticket sales, hospitality events and corporate sponsorships. Together, these products are expected to total US$4.7 billion. About $1.7 billion of that will cover the tournament’s operating expenses, including $440 million in prize money to be paid to World Cup teams.
Thus, FIFA is expected to earn around $3 billion from the World Cup, the majority of which is shared with football organizations around the world. Qatar, for all its spending on World Cup venues, receives none of these benefits.
Hosting the World Cup will put Qatar in the spotlight of the world for four weeks in November-December 2022, but it is very difficult to understand Qatar’s hosting decision. The costs associated with this decision seem too high to attract such intense media attention in a relatively short period of time.
Information for this briefing was found via FIFA, Bloomberg and the sources mentioned. The author has no security or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author holds no license.