South Africa: Economic Benefits of 2010 World Cup

It is always the fun bit that we focus on when thinking about major world tournaments. There is the other side, which has corporate gurus and the business world talking. The opportunities and benefits of hosting the 2010 World Cup have been highlighted by a couple of bloggers from across the continent; mainly from South Africa – the host of course.

Football Fans in South Africa

We start by quoting TheSportsEconomistwho puts monetary figures related to the World Cup into perspective:

This BBC story has a number of figures on the costs and revenues of staging this year’s World Cup in South Africa. Among them (in British pounds):
• FIFA’s expected revenue: £2.1bn
• FIFA’s budget: £800m
• Recent increase to ensure training camps are in good condition: £67m (included above)
• South Africa’s budget: £3.5bn, or 1.72% of GDP
The expense incurred in South Africa is for building and renovating 10 stadiums, improved transport infrastructure, and security. You can learn a bit about the stadiums here; they appear to be smartly designed…

But how much money will South Africa generate?:

No figures are given for the anticipated revenues that the country expects to generate. But let’s do some work on the back of an envelope. A total of 48 group games, 15 knockout games, and the third place game are to be played. The ten stadiums have an average capacity of just over 56,000. The average ticket price looks to be in the range of $200 (that’s using the median of the category two bracket, which is a bit generous). If all games were to sell out at an average price of $200, that would total $717m in ticket revenue…. The story notes an accountant from the firm Grant Thornton believes that the 1.72% of GDP in direct expenses is “affordable” because it provided an economic stimulus for the country in the midst of a global economic downturn. The story also states that FIFA’s general secretary “was confident the event would leave a lasting legacy on the country and the African continent.

The and MoneyMorning go deeper and look at the economic prospects both from within and from beyond the South Africa borders in their posts:

We have said continuously that this is an African World Cup,” South African President Jacob Zuma told parliament last week. “We have an opportunity to promote foreign investment, tourism and trade.”South Africa spent a total of $3.7 billion on infrastructure improvements, including a new international airport in Durban and a high-speed train between the Johannesburg airport and the city center, the Miami Herald… Analysts estimate that the World Cup will rake in $2 billion for South Africa’s tourism industry, and $1.1 billion for retailers. But the real hope is for longer lasting effects to emerge.“We all need to grab this opportunity to show our visitors what South Africa is all about. We need to work together with creative insight and energy after the World Cup to maintain arrivals to South Africa,” Thandiwe January McLean, CEO of South African Tourism told the Economic Times. “This World Cup offers our industry and nation a rich legacy. We should not see World Cup as one event that solves all economic issues, but rather an opportunity to refine the way we do things and create a legacy for the future.

Nigeria is set to capitalise on the event:

Nigeria, which is competing at the World Cup, plans to open an exhibition on the sidelines of the tournament to promote investment in the oil-rich nation. “We wish to showcase Nigeria and its enormous potentials via a Nigeria village at the World Cup,” Sani Lulu, head of the Nigeria Football Federation, told AFP.

Puma's Blog, one of the main apparel sponsors of the tournament talks about marketing and advertising:

World Cup marketing, business marketing is usually taken to have the World Cup sponsorship, naming, please football star for product spokesperson, introduced the concept of product design as well as the World Cup jersey to buy advertising, stadium advertising and other forms. Sports Marketing from input-output ratio of view, by sponsoring the World Cup and soccer star hired as a spokesperson to enhance cat puma shoes brand image, at least three to five times the investment in sponsorship. In order to make huge investment value for the enterprise marketing platform in the World Cup must find the right market opportunities, through appropriate media platforms, will be the right message to the appropriate audience.

An older post written by one of Kenyan’s leading business bloggers, Bankelelelooks at how Africa, particularly Kenya, can benefit from the World Cup:

Tourism: The World Cup will draw thousands of people making their first or a rare trip to African continent, which can yyield opportunities for locales outside South Africa
– Beach tourism: The World Cup is associated with summer, but takes place in winter in SA (southern hemisphere), and while the weather will be relatively mild compared to Europe and US winters, its not beach strolling weather like you could get in Mombasa, Zanzibar or Seychelles.
– Regional packages: Ethiopian Airlines has travel packages that cover more than one country e.g. see the attractions of Ethiopia, Tanzania, Egypt, and Kenya and will probably sell those in SA. Likewise Kenya Airways (or local agents) who will probably have travelers from Thailand and China can draw on the same to entice people on the way back e.g. also tour the Great Rift highlands of Kenya and Ethiopia and visit athletic camps to see where world beating Olympic athletes hone their skills.

He discusses the role of governments:

Governments: there are opportunities for proactive governments to get involved and promote their countries with marketing campaigns, or with travel advice for locals, expedited transit visas (JKIA) or passport renewals. See what UK government is doing.

On a lighter note though, a blog appropriately named BeerBeer, says that there shall be enough alcoholic drinks to take care of the football fans who may seek a way of having fun. “World Cup fans need not fret, South Africa will not run out of beer during the month-long tournament…,” says beerbeer:

World Cup fans need not fret, South Africa will not run out of beer during the month-long tournament, its biggest brewer says. There’s no need to worry, guys. There will be plenty of our beer for all the fans during this period,’ said Norman Adami, managing director of South African Breweries, the local arm of global drinks giant SABMiller. The company, which produces roughly nine of every ten bottles of beer drunk in South Africa, is predicting a 5 per cent increase in sales during the tournament starting on June 11. However, it will be able to meet the extra demand – equivalent to 30 million bottles – because the southern hemisphere winter is normally its slowest sales period, Adami said… Budweiser, owned by SABMiller rival Anheuser-Busch InBev and an official Fifa partner, is the only authorised supplier inside stadiums. SAB will be allowed to sell beer at 10 Fifa fan parks in the World Cup cities, but only in unmarked bottles to avoid breaching Fifa’s jealously guarded rights rules.

Finally the SouthAfrica.Info blog, says though the projections have been reduced, the estimates still indicate a ‘massive impact’ by the tournament,

Indications are that overseas tourists will stay an average of 18 days compared to the 14 days used in the original projections,” said Saunders. “Average overseas tourist spend per trip is also forecast to be up, at R30 200 compared to the R22 000 used before…. The gross economic impact will be R93-billion, with 62% expected to be generated pre-2010 and 38% during the course of the year. Foreign tourism will account for 16% of the gross impact… “We continue to be upbeat about the impact of the World Cup,” said Saunders. “The stadia will be full and it will be great event; the profiling of South Africa and future spin-offs have always been the real benefit of hosting an event of this magnitude.


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