From left, CONCACAF president Victor Montagliani, Canada Soccer president Peter Augruso and FIFA president Gianni Infantino pose with Canada's World Cup jerseys at the FIFA Congress in Vancouver on April 30.DARRYL DYCK/The Canadian Press
Vancouver and Toronto effectively signed blank cheques when they agreed to be host cities for the FIFA World Cup. Now, at this sober moment before the first Canadian matches kick off next month, it’s clear that while the costs have risen dramatically, the benefits will be slimmer than promised.
It’s a familiar story for big sports events: While the games will surely be fun, they are unlikely to recoup the costs that taxpayers have put in. It’s time for government officials to be honest that these types of events should be considered luxury spending, and not a catalyst for economic growth.
The costs for hosting six Toronto matches, estimated to be $30-million to $45-million in 2018, have gone up tenfold and are now pegged at $380-million. The cost for the seven Vancouver games, said to be $240-million in 2022, had risen to as much as $624-million last year. B.C. Premier David Eby is promising an update on the final cost before the event begins.
The total costs from all levels of governments is now estimated to be more than $1-billion, according to a recent Parliamentary Budget Officer analysis. That works out to a hefty $82-million per game.
Public funding to host FIFA World Cup to exceed $1-billion, PBO says
Much of the justification rests on the idea that the matches will easily pay for themselves by bringing in massive economic benefits. An assessment put out by FIFA and Deloitte Canada said the World Cup would contribute up to $3.8-billion in economic output to Canada, and create and preserve 24,100 jobs. FIFA hasn’t revealed how it arrived at those numbers, citing confidentiality.
While some travellers will come to Canada for the matches, a massive economic boost is unlikely. Academic research has shown that World Cup host countries often have high expectations for international tourism, but the impacts are limited.
The positive glow of hosting the World Cup will be further diluted this year, given there are 16 host cities. Some travellers who would normally visit Toronto and Vancouver during the busy summer tourist season aren’t coming, fearing traffic and high hotel prices.
The federal government has said one million visitors would come to Canada for the event, which seems extremely optimistic, given there are only 650,000 seats available for both locals and foreigners at the 13 matches. There have been reports that hotel bookings in Vancouver and Toronto are below expectations, with some operators blaming high ticket prices for dampening interest.
The dubious economic benefits make the deals Toronto and Vancouver signed with FIFA look even more lopsided. Local governments are stuck with the costs and a long list of hosting obligations, while FIFA walks away with the tax-free revenue from ticket sales and broadcast rights.
The reality is the cities had limited bargaining power if they wanted to host. Chicago and Montreal both walked away rather than agree to deals they deemed unfavourable, with one Quebec tourism official calling FIFA’s demands “trop gourmande.”
If governments are going to chase after international sports events, they should be transparent about what they are agreeing to. It’s not right that the deals were kept secret until journalists got a hold of them through repeated freedom of information requests.
Government officials also need to do a better job at estimating the true costs and benefits. While some wiggle room is expected when planning events years away, massive cost overruns point to unrealistic estimates. Officials also shouldn’t simply take sports officials’ word on the economic benefits that will flow from their events.
Having an accurate picture of what’s at stake will allow a more mature discussion around funding big events. That doesn’t mean officials should say no to every event that isn’t guaranteed to generate economic returns. Some may be worth it, given they bring non-monetary gains like enjoyment and group connection.
Instead of falsely branding these events as cash cows, it’s time to recognize that they are more like public fireworks displays. They are parties that contribute to residents’ wellbeing, but there are no pretenses of lofty economic returns.
Is it worth it, given the multiple pressing priorities cities are facing? That’s something city officials and residents can vigorously debate once the true costs and benefits are known. In the meantime, as the World Cup kicks off on Canadian soil for the first time, let’s sit back and enjoy the game.