Friday, June 21, 2013

Does Brazil need the World Cup and the Olympics?

Demonstrators in Brazil recently showed a banner wondering whether Brazil needs a football (soccer) World Cup. The country will host it next year, and it will also host the Olympic Games two years later, in 2016. Meanwhile, some of their most famous footballers debate in public what is the trade-off between sports and welfare. Former football star Pelé has asked the demonstrators to stop their protest and focus their energies on supporting the national team in the Confederations Cup (a rehearsal of the World Cup), which is currently under way. Former footballer and politician Romario has replied that "Pelé's silence would be poetry," and even another footballer, Rivaldo, has also said that Brazilians need more social policies and less sports tournaments. This has re-opened the debate about the social value of big sports events, which has been raised by a large economics literature in the last 20 years questioning the net social benefits of them, as has been explained for example in an international Handbook. Olympics and world cups are bidding auctions where the organizing bodies have much more bargaining power than the host cities. Once the games are awarded to a city, the latter becomes a hostage, and typically costs escalate as the event approaches. Money is spent in facilities and infrastructures that are needed for a one month event but not for daily life. There is usually an industry of self-interested people supporting the expenditure in any case, but perhaps thanks to the above mentioned literature, their arguments have today to confront a well organized opposition. Twenty-one years ago, the Olympic Games in my home town, Barcelona, received a large public support and were deemed a big success (I know, I was marginally involved). What was the difference? Perhaps that literature did not exist yet, perhaps the administration of the games was not suspicious of corruption, perhaps the historical timing for Barcelona was better than for Brazil. I don't really know...

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