The Economy of the World Cup

June 14th marks the start of the 2018 World Cup, hosted by Russia, and is expected to be the financially largest World Cup in the history of the competition. As approved by the FIFA Council in October 2017, the total payout for the participants of the 2018 World Cup will amount to $791 million, a 40% increase compared to Brazil 2014.

Of this $791 million, $400 million will be allocated as prize money for the 32 participating teams. The minimum any team will receive is $8 million, which will be given to the teams eliminated at the group stage. In addition to the prize money, each team will receive $1.5 million to cover preparation costs, which the teams will receive prior to the tournament commencing. This means that each team will receive a minimum of $9.5 million for their participation in the 2018 FIFA World Cup.

World Cup prize money history
History of the money distributed to World Cup participants – Source: TOTAL SPORTEK

If a team progresses from the group stage but is eliminated at the round of 16, they will be rewarded with an extra $4 million. Teams eliminated in the quarter-final stage will receive a further $4 million. The losing members from the semi-finals will contest in a third-place play-off with $24 million going to the winner and $22 million going to the loser. Teams in the final of the 2018 World Cup will share $66 million; with the winners receiving $38 million and the runners-up awarded $28 million.

$209 million of the $791 million has been allocated for the Club Benefit Programme, which was established in time for the South Africa 2010 World Cup. The money will be distributed through the national football associations and then to the clubs releasing players to the participating teams in this year’s tournament. Finally, $134 million has been set aside for the Club Protection Programme, which compensates clubs for any injuries incurred to players whilst on international duty.

Every national side will receive these initial contributions; however, one nation usually benefits financially in the short-term more than any other country. The host nation of the tournament largely benefits from hosting and creates a positive economic impact; usually ranging from $3 billion to $14 billion.

Vladimir_Putin_FIFA_World_Cup_Trophy_Tour_kick-off_ceremony
How will Russia benefit economically from the 2018 FIFA World Cup? – Source: Wikipedia

The previous edition of the World Cup was held in Brazil and managed to provide $13.2 billion to the economy, however, the country had spent a similar amount in preparations for the event. The aftermath of the World Cup in Brazil meant that it actually had an adverse effect on the country’s economy, similarly to that of South Africa in 2010. There were significant investments made in the public sector, yet this failed to attract as many tourists as expected which lead to businesses not reaching expected profits and in turn, lead to less hiring of staff and fewer working days.

The future host nations of the World Cup can learn from the mistakes made in South Africa and Brazil and the successes of other international sporting events. For example, the Olympic Games held in London 2012 significantly increased the country’s economy because workers didn’t take the same level of time off as those in Brazil and South Africa. The long-term effect that the World Cup has on a host nation’s economy is a by-product of the awareness of the opportunities at the capitalisation of them, rather than getting too indulged in the event itself.

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