Stadium investments in football World Cups have often been sunk costs. Like in 2002 and 2010, they have generated multi-million dollar losses each year through high maintenance costs and low revenues. Developed sporting nations like the USA, France and Germany mostly refurbished existing grounds and made money back through high usage after the tournament. Germany, for instance, spent a reported €3.7 billion to develop infrastructure for the 2006 event, and recovered over two-thirds through the course of the tournament itself. But lesser footballing nations like Japan, South Korea and South Africa have often been left with white elephants. According to CNN, eight of the 10 stadia built or renovated in Japan for the 2002 World Cup lose between $2 million and $6 million every year.
How does 2014 host Brazil stack up? Tourism minister Vinicius Lages expects that the soccer extravaganza will add $13.6 billion to the sluggish economy. But ratings agency Moody’s said in a March report that while “$11 billion in planned spending on football stadiums and airport, port and urban mobility upgrades is positive for local infrastructure providers, it accounts for only 0.7 percent of overall planned investment in Brazil in 2010-14”.
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(This story appears in the 27 June, 2014 issue of Forbes India. To visit our Archives, click here.)