On October 30th 2007, wild celebrations took place on the streets of Rio de Janeiro, Sao Paulo and elsewhere across the 5th largest country in the world. FIFA had just announced that the 2014 Football World Cup would be held in Brazil.
This would be the second time that the giant country, which covers almost half the land area of South America, would host the competition, having done so previously in 1950. On that occasion they were narrowly beaten in the final by Uruguay, however they have won the competition a record 5 times and remain the only nation to have qualified for and played in every single World Cup tournament. Brazil’s then president was heard to say “Soccer is more than a sport for us, it’s a national passion”. Their jubilation knew no bounds – here was an opportunity for the most successful team in World Cup history to potentially win on home turf – football was truly coming home!
The opportunity for Brazilian society was immense – the country had severe infrastructural problems and this was believed to be restraining its economic growth. Now there would be investment in stadiums, transport and other essential infrastructure necessary to stage the World Cup which would have lasting benefits for the population at large. The “icing on the cake” was the awarding of the 2016 Olympics to Rio de Janeiro two years later providing further impetus to the restructuring plans.
Once the euphoria had settled, the reality of delivering on the promises dawned. The fact that Brazil was the only bidder for the competition (the only other entrant, Columbia, having withdrawn six months earlier) might have raised questions as to whether this was really such good news for Brazilians. Although the world economy was buoyant, with Brazil’s GDP growing by 6% that year despite its infrastructure issues, the global financial crisis of 2008 and subsequent worldwide recession was yet to take place. There were also serious concerns over the lack of transparency or accountability for large construction projects and this, coupled with the change to public funding rather than the promised private funding for the stadium projects at the expense of other initiatives such as housing, education and public health, led to increasing public outcry in the run up to the event itself in June this year. In a poll conducted just before the World Cup, only 20% of Brazilians felt the country should be hosting the event with 60% adamant that it should not be! How is it that public sentiment had deteriorated so seriously?
Looking first at the successes, the infrastructure legacy is substantial.
Stadiums: Seven completely new stadiums, a further five refurbished and updated.
Transport: New light rail and bus networks, several airport expansions and one new airport, substantially improved road system in several key cities.
General Infrastructure: Over 200 upgrades to electrical systems in the host cities, new power stations being built, improved telecommunications – especially mobile and broadband capability.
Meanwhile economic growth in Brazil has resulted in a record low unemployment rate of 4.3% at the end of 2013, and 36 million people have been brought out of extreme poverty in the last 5 years with millions more helped through new social security and assisted housing schemes. However the World Bank still calculates that 16% of the population remain below the poverty line.
By and large the World Cup itself ran smoothly and the England Coach Roy Hodgson’s comment “I can’t believe the friendliness of the people” typifies the warmth of welcome which was perceived by many of the record-breaking 1 million tourists from 203 countries who travelled there for the World Cup.
Just as the euphoria of winning the bid was followed by the reality of having to deliver the event, so the buzz and excitement of the tournament itself has now been replaced by the need to extract legacy value from the investments made. The reality on the ground is somewhat different from the headlines given above.
Some of the stadium developments were not finished on time, with a number having temporary media offices and toilet facilities and incomplete telecommunications. The Arena Corinthians in Sao Paulo had an entire temporary stand with a laughable window-cleaner lift providing access to the disabled seating area. Perhaps the first questionable decision was to hold the event in 12 widely spread cities with travelling distances of up to 3,500 km. It is rumoured that Brazil originally suggested 17 locations with FIFA pressing for 8, mainly in the south of the country, the end result being a compromise between logistical efficiency and inclusiveness of the country’s regions. In its bid Brazil indicated that the stadiums would be provided through private finance, allowing public resources to be devoted to improving infrastructure.
FIFA’s initial assessment was that none of the twelve host cities had a stadium which met the required standards and so seven were demolished and replaced by new structures on the same sites, with the remaining five being upgraded and refurbished. Very early it became clear that public finance would be required for the stadium construction after all and, initially, this was estimated at US$2bn but has risen subsequently to more than US$4.5bn, with extra work still to be done.
More worryingly, only 6 of the 12 stadiums have a reasonably assured future – Arena Fonte Nova in Salvador is home to Esporte Club Bahia who are one of the best supported clubs in the country frequently drawing crowds of 40,000 or more; Estadio Castelao in Fortaleza will be used by two clubs Ceara and Fortaleza, whose attendance at key matches can also approach 40,000; the Maracana in Rio de Janeiro will be used by the four major local teams, as well as being the location for the Olympics opening and closing ceremonies and football finals in 2016; Estadio Beira-Rio in Porto Alegre is the ground for the Internacional team, whose fan base is also large enough to make good use of the stadium going forward; Arena da Baixada in Curitiba, used by Club Atletico Paranaense, is one of the oldest stadiums in Brazil and was extensively modernised in 1999 and again for the World Cup; Arena Pantanal in Cuaiba, which will be used by the well supported local American Football team, as well as for some regional soccer matches.
Elsewhere the story is more grim. The Estadio Nacional Mane Garrincha in Brasilia cost US$900 million making it the second-most expensive football stadium in the world after England’s Wembley Stadium, yet the venue has no regular usage yet agreed to justify the maintenance costs of the 69,349 capacity ground. Two other stadiums, in Manaus and Recife (with seating capacities of 40,549 and 42, 583 respectively) will be used by minor football teams whose attendance figures can be as low as 300! Even with pop concerts and other attractions it is hard to see how these will pay their way in the future.
A number of the stadiums remain unfinished and questions are being asked as to whether they will ever be completed or whether other, more pressing, needs will be found for available funds. Experience from the 2010 World Cup in South Africa is not encouraging – several stadiums there are struggling financially. For example the Cape Town stadium, which cost US$ 420m to build, has annual running costs of over US$ 5m but raises only a quarter of this in revenue. Options being considered are conversion into affordable housing or demolition.
Brazil is a country of 200m inhabitants and a little over 4000km long in both North-South and East-West directions, yet it has no national passenger rail system. Whilst investment in high speed rail would undoubtedly bring significant benefits to the country, these could not have been completed in the time available. Therefore the funds available were focused on improving air travel and road networks with some investment in light rail systems.
One new airport has been built at Natal, and others upgraded at a total cost of US$3.8bn. During the tournament, a daily average of 485,000 passengers passed through 21 airports in the 12 host cities – higher than that recorded during the 2014 Carnival, at 365,000 passengers per day, and higher than the previous Christmas, when 404,000 passengers per day were handled.
Although the road system has been significantly improved in key cities, severe congestion is still apparent in many areas at peak times. In almost all the host cities the most significant change has been the introduction of BRT (Bus Rapid Transit) lines. Despite a total spend of over US$4bn in total for urban mobility, half of the BRT projects were not completed for the World Cup.
A high speed rail link was promised between Sao Paulo and Rio de Janeiro, but this has not materialised due to difficulties in creating a consortium involving Brazilian and foreign companies (a requirement of the tender) and it is not clear when this will now be built. Reasonably comprehensive light rail (Metro) systems can be found in Sao Paulo and Brasilia, Rio itself having just a 2-line system with 35 stations. There are limited metro systems in Belo Horizonte, Porto Alegre and Recife while those in Fortaleza and Salvador are still under construction.
A number of new power stations have been built, providing an extra 8,500MW capacity in 2013 alone. A new substation was built specifically to power the Mane Garrincha stadium in Brasilia and some 200 projects to improve electrical distribution in other cities have been carried out. Although significant improvements to telecommunications systems were promised, including 4G mobile and fast broadband, these improvements have tended to only be in transport hubs and near to the stadiums, and 4G has not happened yet.
Brazil aims to use a successful World Cup to help double incoming tourist numbers from 5.2m in 2010 to more than 10m by 2020. Taking long-term action to permanently cut high crime levels to provide a safer and more secure environment is key to achieving this.
In total the World Cup has cost Brazil approximately US$14b, more than South Africa 2010 and Germany 2006 combined. However the 3.7m total visitors, domestic and international, are believed to have injected about US$11bn back into the economy. Further infrastructure investments are taking place in Rio in advance of the 2016 Olympics
FIFA World Cup Legacy fund
Started in 2010, FIFA now provides a legacy fund for each World Cup host country. The eventual total amount depends on a number of factors but is expected to reach US$100b for Brazil. This fund is being used in 2 ways – 1) to develop resources e.g. new all-weather pitches to help promote grassroots football, especially the women’s game, in the 15 states that were not home to host cities for the tournament; 2) the development of preventative healthcare, public health and social programmes for underprivileged communities across the country.
Clearly much progress has been made in the last 7 years and the infrastructure improvements which have been made will bring ongoing benefits to businesses and the population generally. The very large sums spent on the stadiums may prove to have been a poor investment, taken as a whole, but the other infrastructure improvements, together with advances made in improving the situation of some of the poorest in Brazilian society and broadening the middle class to include a further 40m people, the continued move to transparency in the management of public funds and improved revenues from tourism should position the country well to continue the expansion seen in previous years which does appear to have stalled at present. Brazil’s GDP has remained flat this year, whilst inflation has risen to 6.5%. However Ernst & Young and the Getulia Vargas Foundation have predicted that the World Cup and the Olympics together should create an estimated 3.6 million new permanent jobs in Brazil and would add 4% a year to the country’s economic growth. These initiatives are also expected to raise the profile of Brazil as an attractive place to do business and thus encourage further inward investment.
Surprisingly, several commentators have come to the conclusion that the principal legacy of the World Cup will be in politics – the public demonstrations of the last two years have shown widespread popular discontent with the way in which publicly funded projects have been commissioned without proper consultation and without proper controls on spending. Hundreds of thousands of the poorest residents were forcibly moved and resettled miles from their old homes to make way for new transport lanes and also for facilities around the new stadiums fostering an atmosphere of distrust of the authorities. Understandably people are asking why, if the country can afford world-class stadiums, it cannot also afford world class health, education and other public services. There is considerable public momentum to continue with the transparency initiatives on public projects put in place by FIFA but clearly of benefit to society at large, and also to maintain the police presence and actions which were in place during the World Cup to ensure safety and security of visitors, again for the continuing benefit of the local population. The tournament, and all the issues surrounding it, has provided protesters with a focus and cohesion which is growing into an important social movement. At the time of writing, the presidential elections are about to take place. Whoever wins, and opinion polls suggest that it is a close race, will need to address the issues in Brazilian Society which have been present for some time, but which have surfaced and gained attention, both within Brazil and from outside, as a result of the World Cup.