Qatar’s Expense on the World Cup, 2022
To put things in context, to understand how these expenses work for economies, Russia spent $16 billion in 2018, Brazil brought in almost $20 billion in 2014 and to put things in order, and South Africa spent $7 billion in 2010.
What was Qatar’s spending?
USD 200 billion!
That amount of money is thought to have been spent by Qatar in the lead-up to the World Cup. They constructed extensive motorways, underwater tunnels, cutting-edge medical facilities, opulent hotels, and improved their airports. the whole nine yards!
Therefore, the first query is: Why on earth did Qatar spend ten times as much as other nations appear to have? It’s complicated. Because, even though the World Cup generates large sums of money, none of it goes to Qatar.
For instance, the estimated value of TV broadcasting rights was $2.64 billion. But Qatar did not receive the money. Awarded to FIFA. How about ticket sales, then? Since FIFA owns that business entirely, Qatar won’t make any money from it either. The tournament’s operating costs are another consideration; they total around $1.7 billion. Qatar receives the money, while FIFA suffers the burden. The nation must nevertheless budget 450 million dollars simply for awards. Thus, this also isn’t a way to make money.
The Not-so-Obvious Benefits of Hosting the World Cup
Qatar estimates that the World Cup will boost its economy by $17 billion. That’s a respectable amount of cash. However, it is insignificant in light of the reported $200 billion sum.
There is, however, a bigger objective in mind here, which is Qatar’s broad national vision for 2030. Qatar became aware of the harsh reality of managing an economy based on oil revenue during the global financial crisis of 2008. They will eventually run out of reserves. Or maybe nations will switch to cleaner fuels. Therefore, they had to improve the country’s appeal. Make yourself a global destination by taking a page from Saudi Arabia or the UAE’s playbook. Spend a lot of money on infrastructure to attract more foreign tourists and businesses.
An occasion of this magnitude is expected to generate positive word-of-mouth and goodwill for many years to come. Everything is a hefty marketing expense.
And unlike other previous hosts, Qatar isn’t reliant on public dollars to pay for all of this. The nation relies on oil revenue to pay for excessive expenditures because it does not tax people who are employed. It also need not be concerned about people whining about their wasted money.
For the time being, the hotels and the additional infrastructure will probably be valuable. However, there are a few pricey assets that won’t be very useful, such as the seven brand-new stadiums that cost an astounding $6.5 billion to build.
Consider South Africa, which hosted the 2010 FIFA World Cup. In Cape Town, one of the stadiums costs $250 million (based on current exchange rates). But what happens after the world cup’s gloss and glamour fade? The stadium still needs to be maintained, don’t you think? So, from 2010 to 2020, Cape Town has to spend more than $2 million annually merely to maintain itself. You know, trim the grass, water it, check that the lights are on, and make sure the seats aren’t rusting. However, the sum it earned from holding sporting events was a pitiful $500,000.
Conclusion: So, now, what next?
A country’s governing body would probably reply, “Thanks, but no thanks,” if they were considering bidding for the opportunity to host the World Cup after reading this and taking into account the economic waste. That, however, might not be the best course of action.
The minor secret in this situation is to “bid.” A couple of economists ran the calculations and discovered that even just submitting a bid for a competition benefited the country in question. They didn’t even have to prevail. They didn’t need to push for it very hard. Just the bid would let businesses realise that this nation is serious about hosting a major competition. Perhaps this will grow to be a popular travel destination. Perhaps we could open a location here as well.