Written by Aileen Ionescu-Somers
At the start of the new millennium, it looked as if there was no stopping Brazil’s trajectory towards prosperity. Hosting the World Cup now, and the Olympics in 2016, was meant to be a reflection of Brazil’s role in a new world order increasingly shaped by the BRICs. The games would showcase the country as well as attract tourists, trade and investment. Infrastructure would benefit; a win-win all around. Seven years after the decision to hold the event in Brazil, optimism has waned. The country’s 6% GDP growth in 2007 is a distant memory. In 2013, hundreds of thousands of protesters took to the streets, demonstrating their ire against rising costs, corruption and lack of investment in public services whilst Brazil’s World Cup is the most expensive in history. There have been construction worker deaths, threats of strikes and increasing social discontent.
Are the benefits overstated?
The dream is not becoming reality because the benefits of these events are almost certainly overstated. Ever since the US stated a profit of US$225 million from hosting the 1984 Olympics, there has been a mistaken pipe dream around the “win-win”. Owing to broadcasting rights and corporate sponsorships, sporting events are hugely profitable for FIFA, the International Olympic Committee (IOC) and other such organizations. But the benefits do not necessarily accrue to local people. Brazil’s GDP is still the seventh largest in the world, but while the country produced 19 new millionaires every day since 2007 according to Forbes, inequality is at its highest ever. A full 21.4% of the population lives below the poverty line, with 4.2% living in extreme poverty. When people see expensive stadiums go up, they believe this comes at the expense of education, health care and infrastructure needs that will improve their quality of life. They see themselves inheriting a bunch of “white elephants”. The experiences of Athens, Beijing and South Africa in hosting large sporting events suggest they may be right.
Can Brazil do better?
Probably not, given the location and restricted future of the stadiums built at an estimated cost of US$3.6 billion. There is little proof that tourism and investment benefits materialize when the crowds disperse. Then there is Qatar – a controversial location for the 2022 World Cup both because of its extremely hot weather and human rights issues, and now the focus of an investigation into bribery and corruption. There have already been more deaths on its construction sites than in Brazil’s entire World Cup preparation: one per day, to be precise. At this rate there will have been 4000 by the time the event actually happens. Let us consider investment in such events from a business risk perspective. The escalating cost (Russia spent more than US$50 billion on the 2014 Sochi Olympics) has meant that in democratic nations, there is increasing unwillingness to stage events such as the World Cup. More autocratic nations, where fewer questions are asked by civilians, and where there may be human rights abuses and social inequity, are bidding for the events. This in turn is risky for the reputation and license to of organizations like FIFA and the IOC. For now, global passion for sport is helping organizations to weather the storms – but it is also risky to think that this will last forever. There is also opportunity in showing a clear leadership role in leaving behind legacies, not only of buildings and roads, but more lasting intangibles such as total respect for human rights and the environment.
How can this be avoided?
Only by making decisions holistically based on a range of factors such as the environment, society and state capacity can a sporting, corporate or any other organizations contribute to the sustainability of events or operations in complex, fragile social contexts. They must identify potential issues related to sustainability, thoroughly assess the possible impact and risks of their activities, and have a workable plan for sustainable solutions. So far – in Brazil – the case has not been convincing.
Dr Aileen Ionescu-Somers is the director of IMD’s Global Center for Sustainability Leadership (CSL) Learning Platform
