Prepare to be disappointed, South Africans. One of the world’s leading sports economists says you’re not going to get rich hosting next year’s World Cup.
There’ll be no economic bonanza, according to a new book, and if experience matches the last World Cup in Germany, spending by visitors will be much less than the South African government shelled out preparing for the tournament.
“The next World Cup will not be an airplane dropping dollars on South Africa,” authors Stefan Szymanski and Simon Kuper write in the book Soccernomics.
The caveat comes just ahead of tomorrow’s World Cup draw in South Africa, six months before soccer’s showpiece tournament.
Using data analysis, history and psychology, the book punctures dozens of assumptions about what it takes to win, and who makes money in soccer — and in sports in general.
“The problem for South Africa is that they have to spend quite a lot to build stadiums,” Szymanski said. “Germany could afford this, and it had stadiums anyway. But South Africa is a nation that can ill afford to fritter away a few billion on white elephants.”
Following the 2002 World Cup, for instance, South Korea’s K-League had difficulties filling the 10 new stadiums built for the tournament at a cost of more than US$2 billion.
INEFFICIENT
The book’s argument is that hosting a World Cup or Olympics is an inefficient way to revitalize a city, or enrich a nation — especially one like South Africa, where a third of the population lives on under US$2 a day. It can boost a nation’s morale or image, but not much else.
“If you want to regenerate a poor neighborhood, regenerate it,” Szymanski and Kuper write. “If you want an Olympic pool and a warm-up track, build them. You could build pools and tracks all across London, and it would still be cheaper than hosting the Olympics.”
Szymanski, an economics professor at Cass Business School in London, and Kuper, a sports writer living in Paris, challenge plenty of accepted wisdoms. They even talk of opening a consulting firm for leagues and clubs, promising to improve performance and save money.
“We are not trying to take the magic out of soccer,” Szymanski said. “But we want to understand the patterns, because they are not completely random.”
Some of the sometimes surprising declarations are:
• The huge transfer fees spent in European club soccer bear little relation to where the club finishes in the league.
• By contrast, spending on player salaries explained very accurately where a club finishes.
• Researchers predicted how Chelsea players would take their penalties in the shootout at the 2008 Champions League final.
• Teams shouldn’t buy players based on performance at big tournaments like the World Cup.
• Contrary to popular belief, the word “soccer” originated in England, not the US.
• Norway is the country that loves soccer the most.
• Tournaments such as the World Cup stop thousands from killing themselves — no one can stop watching.
• Taking into account national income and population, Honduras is the most overachieving country in soccer and Canada is the most underachieving.
RISING POWERS
The book suggests the US, Japan, and Australia are the rising powers in world soccer, while national teams in China, Iraq, Turkey and India could emerge as incomes rise and they pick up European expertise. They claim African nations struggle because they can’t afford enough European coaching.
The US, in particular, because of its population and wealth, could be the first of the nations on the rise to win a World Cup.
“The one missing link for the United States is the transfusion of European knowledge into the game, which has largely been resisted,” Kuper said, speaking from Paris. “The idea remains that an American coach can do it alone. But the best coaching is in western Europe.”
Szymanski and Kuper say many of the world’s biggest soccer clubs are not only poorly run from a purely financial viewpoint, but are small businesses dwarfed by the real titans of industry.
Last year the average club in the English Premier league had revenue of US$150 million, compared with US$100 million for a single British Tesco supermarket.
That is because clubs can not possibly capture the amount of interest they generate: newspaper stories, reports on Internet sites, computer games, fodder for radio and TV talkshows, and discussions over dinner, at work or with a few beers.
“All this entertainment is made possible by soccer clubs, but they cannot appropriate a penny of the value we attach to it,” the authors say. “Chelsea cannot charge us for talking or reading or thinking about Chelsea.”
They cite this year’s annual survey by the accounting firm Deloitte showing that Real Madrid led the “Money League” with revenues of about US$475 million. Manchester United were No. 2 at US$422 million.
However that is based on turnover, not profits, which tell a very different story.
Watford, Reading and Arsenal — the last coached by Arsene Wenger, a trained economist — were the three most profitable in the Premier League, though Watford and Reading have since been relegated.
Chelsea and Manchester United, who have shared the past five Premier League titles? Among the least profitable.
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