(T)he awarding of the 2010 World Cup host to South Africa by FIFA is a legacy on its own. For South Africa and the rest of Africa, the memory of that tournament will be a lasting legacy. But we cannot end there ... (We) believe that preparations for the 2010 World Cup must leverage the fast-tracking of some elements of our transformation agenda ... (We) must use this opportunity to level the proverbial playing grounds, both in respect of infrastructure and otherwise (Stofile 2007).
Macroeconomic projections
An economic argument about the potential effects of the World Cup was an important part of political leaders’ efforts to gain domestic support for the bid. Since the launch of the initial bid a number of years ago, estimations of the likely effects of the 2010 tournament on the South African national economy were to see some significant revision. In 2003, Grant Thornton, the consulting company contracted by the South African 2010 Soccer World Cup Bid Company to appraise the World Cup’s long-term consequences, produced a study on the event’s potential economic legacy. The company assessed direct expenditure by four sources: spend at the event by domestic and international spectators; trip spend by spectators, teams and their entourages, the media, sponsors and FIFA office bearers; other spend on merchandising and concessions; and capital expenditure on infrastructure and stadiums. Using cost-benefit analysis, the company projected that the tournament would produce direct expenditure by spectators of R12.7bn, that it would contribute R21.4bn to the gross domestic product and create an additional R7.2bn in government taxes, and that the event would generate the equivalent of 159 000 annual jobs (although it was unspecified how many of those jobs would be permanent or temporary/seasonal and at which levels they would be created). The study anticipated that the direct cost of the World Cup, mainly arising from expenditure on the upgrade of stadiums and infrastructure, would be (a rather modest) R2.3bn (see Grant Thornton 2003).
In 2008 and again in 2010, shortly before the start of the tournament Grant Thornton updated the initial forecasts based on revised data, their more recent analyses showing some significant variation from preliminary assessments (see Grant Thornton 2008; 2010). Table 1 details projected costs and benefits from the studies.
From the table it is clear that expectations for 2010’s macroeconomic impacts were to rise significantly, with national income anticipated from the tournament subsequently becoming more than double the volume projected in initial assessments. Yet there were some major deficiencies in these projections. The most important related to the identification and balancing of costs versus benefits. The cost-benefit methodology used by Grant Thornton is widely used in mega-event impact studies and because of its relatively easy and saleable format disseminates well in pro-event and political circles. This methodology has however been criticised by many sports economists for its potentially flawed assessment of the true costs of hosting an event, in particular its predisposition to consider money spent on infrastructure improvement (including development of stadiums) as a form of income, rather than a cost. As suggested above, construction costs for the development of infrastructure related to a sport mega-event can variously place additional strain on a national or regional economy, can drain resources from surrounding areas and, if materials or labour need to be imported, may constitute a source of revenue leakage. As such, while they may have obvious benefits, infrastructure upgrades are more appropriately considered an opportunity cost and should be factored in to impact assessments in that way (see Matheson 2008 for a lucid discussion).
From table 1 it is evident that the Grant Thornton study did not do this, projecting for instance in 2008 potential total impact of R55bn from the World Cup (which was revised upward to R93bn in their 2010 study). This is based on the misleading inclusion of expenditure on stadium upgrades (R33bn) as part of the event’s contribution to GDP and was therefore an inflated estimate of the event’s income potential. If anything, escalation in stadium construction costs was to become one of the more worrisome features of World Cup preparations. By the end of 2008, for instance, budget overruns for stadium construction – caused by a variety of factors, including high international prices for construction material such as cement – was estimated at R3.2bn (Business Day 2 December 2008). By the time the FIFA tournament took place, expenditure on the upgrade and construction of stadiums was considerably more than the money initially committed by the national government as part of its World Cup investments.
Table 1: Changes in official projections of impacts of 2010 World Cup
| 2003 | 2008 | |
| Benefits (income) | ||
| Contribution to GDP consisting of: | R21.4bn | R55bn |
| stadium & infrastructure upgrade | R33bn | |
| sale of match tickets | R6bn | |
| trip spend by spectators | R8bn | |
| sponsorship | R750m | |
| Additional tax income | R7.2bn | R19bn |
| Costs | ||
| Upgrade of stadiums and infrastructure | R2.3bn | R33bn |
| Other impacts | ||
| New employment | 159 000 | 415 000 |
| Foreign (overseas) tourist arrivals (number) | 235 000 | 480 000 |
| consisting of African tourists (number) | 45 300 | 150 000 |
| Tourism receipts | R8.5bn | |
| International media presence (number) | 10 500 | 18 000 |
| Major development projects (unspecified and unquantified) | ||
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Source: Grant Thornton 2003; 2008
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