Who's to Blame for Brazil's White Elephants?

Though its national soccer team seems to have recovered from the humiliating exit suffered last summer from its own World Cup, Brazil has seen its GDP growth all but slow to a standstill in the past year. And by several accounts, the world’s seventh-largest economy looks to be headed back into recession in 2015.

Since politics and economics often go hand-in-hand, you might not be surprised to hear that barely two weeks ago, newly re-elected President Dilma Rousseff faced a demonstration of hundreds of thousands demanding her impeachment. Their reasons were many: high inflation, gloomy economic news, as well as reports linking key members of her coalition government to widespread corruption at state-owned petro-giant, Petrobras.

Now, Off The Post is no economist, but he certainly gets the gist of what’s happening here: things in Brazil are bad, and it looks like they’re about to get worse.

It follows, then, that now might be a particularly sensitive time (for Rousseff & Company, anyway) for a major news pub to assess the aftermath of the country’s decision to host the 2014 FIFA World Cup.

But that’s exactly what BBC Sport reporter Bruce Douglas has done -- and as you might guess, it doesn’t make for happy reading, particularly if you are Brazilian citizen. 

Close to 10 months after Germany lifted soccer’s biggest prize, six of the 12 stadiums built or renovated for the 2014 World Cup are already in financial difficulty, while local governments across Brazil are scrambling to find productive uses for these newly built state-of-the-art sports arenas.

For anyone who takes even a passing interest in following the economic aftermath of hosting a World Cup, this is a story we’ve heard before. Today, in South Africa, host of the 2010 tournament, nine of 10 World Cup stadiums are firmly in the red. As The Globe and Mail’s Geoffrey York writes in an article published last year: “It’s a perennial problem. Eager to win the rights to the prestigious tournament, the host countries agree to FIFA’s terms – and then they are burdened with massive costs and perennial operating expenses for the stadiums.”

But just what, exactly, are FIFA’s terms? While soccer’s world-governing body doesn’t explicitly say it requires billions to be spent on new stadia and infrastructure projects in order to win the rights to a World Cup, the past several winning bids have gone to countries that have done exactly that: South Africa spent $1.8 billion on its stadiums in 2010, Brazil spent close to $3.7 billion for 2014, Russia is projected to invest about as much as Brazil for 2018, and Qatar, the 2022 host which has almost no stadiums to speak of, projects its spending to be a relatively modest $3 billion.

After a country hosts a World Cup or Olympics, the question of what happens to the newly built stadiums always comes up. To answer that question, Michael Zimbalist, author of Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup, goes on a tour of the many “white elephant” stadiums littered across the globe following these major events. He finds, for example, a volleyball stadium in Athens now inhabited by squatters, a weed-infested cycling racetrack in Beijing, and a brand-new 40,000-capacity soccer stadium in Brazil that now draws 1,500 fans for local games.

You have to wonder who signed off on the economics for building these things. Of the many sources used to build today’s OTP, the most egregious example is the Estadio Nacional Mane Garrincha in Brasilia, scene of Brazil’s 3-0 loss to the Netherlands in the third-place game last summer and a stadium which cost taxpayers close to $900 million to renovate. BBC’s Douglas reports that on an average game day, operation costs are close to $92,000, while a derby match between local rivals Brasiliense and Gama generates at best $7,500 in ticket sales. The result: the stadium has been unused for any official matches in 2015 (no one can afford to use it) and it has already cost taxpayers close to $2 million.

"We knew this would happen," says Juca Kfouri, one of Brazil's most respected soccer columnists tells Douglas. "I think it was the fault of the Brazilian authorities, not FIFA. Brazil accepted the conditions."

Of course, the Brazilian authorities might beg to differ with Kfouri. FIFA, it seems, has a funny way of strong-arming countries into doing what it wants. Case in point: Cape Town Stadium, South Africa’s biggest white elephant, which hosted games at the 2010 World Cup through the semifinals and now boasts losses estimated at $6 to $10 million annually. According to York, local authorities wanted to renovate an existing stadium in a poor area to host its matches, but FIFA insisted they construct a new stadium on Cape Town’s spectacular waterfront, instead. Why? Because “a billion television viewers don’t want to see shacks and poverty,” as one FIFA delegate was quoted as saying.

Indeed, unnamed FIFA delegate. OTP supposes that it’s to the illusion of these stadiums as always being filled with their cheering thousands that we owe our white elephants. Meanwhile, back in the real world Brazilian citizens continue protesting for better education, health services and infrastructure. Perhaps the South Africans should join them. 

5 comments about "Who's to Blame for Brazil's White Elephants?".
  1. ROBERT BOND, March 31, 2015 at 3:07 p.m.

    & bladder does it to build up soccer? how does wasting scare resources in the host nation do that? & i am not going to pootinland......

  2. Jeffrey Organ, March 31, 2015 at 4:25 p.m.

    In the future, these kind of huge events like the World Cup and Olympics are only going to be held in locations where the infrastructure is already in place (US, Germany, etc.) or places where the government can spend whatever they want so the leaders can fuel their ambitions or egos (Russia, Qatar, etc.). Unfortunately, there are enough of those countries that are willing to spend lavishly for (what they perceive as) strategic reasons to ensure this trend continues. Get ready for World Cups in India, Dubai, China and Nigeria. Brazil had a big celebration when they were awarded the World Cup and the Olympics because this was proof of their "legitimacy" on the world stage. They then doubled-down letting politics dictate that everybody should share in the spoils, no matter how absurd it was to play games in Manaus. FIFA laughed all of the way to the bank because of their stupidity and the problems left behind are now Brazil's to sort out.

  3. Gus Keri, April 1, 2015 at 10:01 a.m.

    Ross, I don't think it's a good idea to keep referring to yourself inside the article as "off the post" when you are the only writer on it. The simple word "I" suffices.

  4. Bruce Moorhead, April 1, 2015 at 2:35 p.m.

    Gus, I agree, but I don't think he will do it. Journalists always speak of "we" or the collective even if there is only one writer. It just seems to be an unwritten rule for them, the editorial "we".

  5. Rafael Royett, April 1, 2015 at 4:57 p.m.

    When such high budget projects take place it is inevitable that governments try to use those events to cover or enhance their actions but it is clearly a model that is not working and creates more problems than solutions in the long run. There are successful cases that should be used as examples where investment is kept to reasonable levels, with realistic goals and including the private sector as main actors to look after economic profits and sustainability rather than just political capital.
    I think in the future instead of more “rich” or "developed" countries hosting the world cups we will see more of these events taking place in 2 or more countries at the same time time aiming at each nation committing to only what they are actually capable of doing.

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