World Cup | Financial Buzz

Brazil Gambles on FIFA World Cup

It’s that time again. The 2014 FIFA World Cup is right around the corner. This is the largest single-event sporting competition in the world, involving 32 different countries competing against one another at various venues within the host country. Being the host country is widely coveted, as it is a wonderful opportunity and a great honor. Countries, such as France and Germany, may host the World Cup as a way to celebrate the world’s favorite sport, football (soccer) and generate profits at the same time. For countries such as United States and Japan, where the sport is not as prevalent, the World Cup can boost the enthusiasm and popularity. And for developing countries, such as Brazil, hosting an event of this magnitude is a big gamble but high risks can yield high rewards. In this case, international prestige can be achieved as well as economic development.

 Will Brazil Reap The Rewards?

Brazil was awarded the opportunity to host the FIFA World Cup in 2014. It is a country of desire, exquisiteness, and flashiness. Its mystique captivates the world. And it has dominated the soccer world over the past 70 years. It is the ‘perfect’ host. But should it have been awarded such an opportunity?

 Over the past few years, Brazil’s living standard and GDP has risen sharply. In fact, the country’s purchasing power increased by more 50% since 2003. Still, Brazil is considered to be one the most economically uneven countries in the world. It is in the bottom 10% of the world in income inequality (121st out of 133 countries). The country has the 9thlargest amount of billionaires, yet 20% of the population is still living under the poverty line. The infrastructure of Brazil is collapsing, as there are problems with their ports, airports, public transportation, health and education. In addition, there are several scandals that still have yet to go to trial.

With the relative poverty increasing as the gap widens between the rich and poor, failing infrastructure, and corruption, Brazil is nowhere close to being at a healthy and sustainable level.

Despite all these problems, a total of $18.7 billion will be invested in the infrastructure of Brazil for the 2014 FIFA World Cup. About 78 percent of the investment will be funded by the public sector; the remainder will be from the private sector.

As a result, Brazil is ridiculed with protests. What began as a protest against rising bus fares in São Paulo to pay for the World Cup arenas, has evolved into an all out protest against government corruption, income inequality, and wealth distribution. Tens of thousands of people are taking to the streets to express their displeasure, carrying signs that range from “Lower the bus fare and send FIFA the bill” and “If your child is sick, take him to the nearest stadium”.  At the same time, protestors are getting shot with rubber bullets, pepper sprayed, and tear-gassed. The country is in chaos and it is seemingly unsafe.

Give Them a Chance

The FIFA World Cup was a way to help the country create a positive impression for the world to see as the World Cup is viewed by billions of people. But it is doing quite the opposite right now. This was similar to situation in South Africa in 2010. Prior to the FIFA World Cup in South Africa, there was a lot of negativity and questions surrounding it. Johannesburg, the capital of South Africa, had one of the highest crime rates and considered to be dangerous. Also, due to strikes and the workers as well as corruption, the country’s infrastructure was not suppose to finish in time either. The tournament fortunately ended without hiccup and the nonbelievers became believers. The 2014 FIFA World Cup, could be the break that Brazil needs to improve. Come 2014 as little as 3.2 billion people will be tuning in to find out.