FIFA World Cup 2014: Social Impacts and Policy Strategies

Bachelor in International Economics, Management and Finance
Università Commerciale Luigi Bocconi
FIFA World Cup 2014 in Brazil: Social
Impacts and Policy Strategies
Bachelor Thesis by Flavio Kleijssen
Student 1492032
Tutor: Professor Valentina Mele
ACADEMIC YEAR 2013-2014

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Acknowledgments
I would never have been able to finish my thesis without the guidance of
my advisor Professor, help from friends, and support from my family.
Therefore, I would like to express my deepest appreciation to those who
provided me the help to finalize this thesis.
I wish to express my sincere thanks to my supervisor Professor Valentina
Mele, for her excellent guidance, patience, and providing me with an
excellent atmosphere for doing my research. Indeed her contribution with
stimulating suggestions and encouragement helped me tremendously to
complete this thesis.
I would like to take this opportunity to express my deepest thanks to my
parents Jan and Stefania, which supported me both financially and
emotionally throughout my degree, and have always believed in me. I
wish to thank my two younger brothers, Claudio and Valerio for their
incredible love, support and care, as the rest of my family.
I am deeply grateful to my friends who have always encouraged me and
helped me through the tough moments.
A special gratitude I give Anna, her support, encouragement, quiet
patience and unwavering love have been essential to complete my degree.
Finally, I would like to leave the remaining space in memory of Roberta
(1964-2013), an incredible person and example.

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Table of Content
Abstract
...............................................................................................................................................
6
1.
Introduction
..................................................................................................................................
6
2.
Economic
Impact
.........................................................................................................................
8
3.
Social
Impact
.............................................................................................................................
13
4.
Sustainability
............................................................................................................................
18
5.
Risks
and
Constraints
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21
6.
Long
Term
Opportunities
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24
7.
Conclusion
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27
8.
Bibliography
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Abstract
The main aim of this study is to analyze ex-ante the likely socio-economic
impact of the 2014 FIFA World Cup that will take place in Brazil.
The recent trends of highly competitive bids to be designated host country
of a sport mega-event show us the bidders believe such events to
generate positive impacts. In this paper, we analyze through a descriptive
approach the main aspects of potential economic and social effects
through the organization of the World Cup, while contrasting it with the
major cost and risks Brazil is bearing.
Our conclusions show that organizing a major sporting event is a unique
opportunity for economic and social development, can accelerate
infrastructure improvement and it is a major factor for gaining in
international reputation, and, therefore, increasing in the long run a
country’s soft power. However, in the case of Brazil, the high cost,
widespread popular discontent, safety issues, lack of planning and
coordination may have an important negative impact, which is likely to
offset the benefits. It has been said that Brazil is the country of the future,
and always will be. The 2014 World Cup, and 2016 Olympic Games will
give a strong indication whether this still holds true.
1. Introduction
The FIFA World Cup is considered one of the largest events in the
world. The football competition between the 32 best national teams in the
world engages billions of people from all continents and cultures. Over the
last century, the growth of major sports events in general has risen,
following the increased commercialisation and the high profile of these
events. These events are also the main drivers of sport development. In
June 2014, Brazil will once again be hosting the 2014 FIFA World Cup 64
years after its first hosting, in addition to the Olympic Games in 2016. The
country that will host the World Cup is very much changed during these

64 years. It is now the 7th largest economy in the world and one of the
largest manufacturers of aircraft and one of the largest producers of food
in the world (Worldbank.org, 2014). It is a country with a population of
201 million who have built a consolidated economy and democracy. In
addition, it is considered as one of the biggest soccer nations of the
planet, and the ‘Seleção’, the National Team, is, uniquely, 5-time World
Champion. However, the requirements to host the World Cup have also
changed, and such a mega event needs to be meticulously planned and
organized, meeting short deadlines and high standards. Therefore, a
significant commitment is required by public authorities in order to face
these challenges. Since the host country was announced by FIFA on
October 20, 2007, a national effort has been carried out to prepare in the
best way possible this event.
The Brazilian government’s objective is to use the event as a means to
spur the country’s development and to generate jobs, to overcome
inequalities and improve the quality of life of its population. It is a unique
and important opportunity to boost Brazil’s international image and to
make investments in projects and services that will remain as a long-term
legacy. The aim of the government is to convert this significant
opportunity into a positive legacy for the country and its population.
However, in a tense context of economic crisis and instability, public
authorities must carefully assess the costs and the benefits from hosting a
mega event. By increasing investment in infrastructures and expertise,
hosting a mega event can turn out to be a strong driver for economic
development. In addition, these events reach a worldwide audience,
putting the host country’s reputation at stake. The objective of this study
is to contribute to a better understanding of a widely followed major
current event and to determine how this mega-event will be utilized as a
means for sustainable socio-economic development while paying due
attention to the costs, risks and constraints. We are going to analyze
through a descriptive approach these different impacts that a mega event
has on its host country. We will thus examine the trade-off between the
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possible positive social-economic impacts and the costs, both financial and
non-financial, of organizing the event. In the conclusions, we confront
expected benefits and costs to answer the key question: is the event
ultimately likely to enhance Brazil's reputation and contribute to its social-economic
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development?
2. Economic Impact
The potential major positive impact of organizing a mega event such
as the FIFA World Cup 2014 is without any doubt the main reason for
countries to host the event. Apart from political considerations, such as
boosting national prestige, economic considerations are an important
motivating factor for states to make a bid to host a major sporting event.
Nevertheless, the desire to be appointed the host of a sport mega-event
and the need of having to constantly develop new and upgrade existing
sports and tourism infrastructures has led cities and countries to be
“caught in a vicious cycle of having to provide larger subsidies to finance
projects that deliver even fewer public benefits” (Leitner & Garner, 1993).
Chappelet (2006) categorized the economic impact as a legacy deriving
from the organization of a mega-event. The FIFA World Cup attracts an
enormous audience. Therefore, likely high tourist inflows are an expected
economic benefit. In fact, according to the federal government forecasts,
for the 2014 World Cup in Brazil, a total of 3.7 million between national
(3.1 million) and international tourists (0.6 million) are expected
(Ernst&Young, 2011). The large amount of tourist inflow is obviously an
opportunity for the host country to generate additional revenues. In fact,
the tourist inflow is expected to generate US$ 5.9 billion for Brazil
(Ernst&Young, 2011). Tourist inflow will benefit mainly businesses in the
service sector, such as hotels, restaurants, etc., and will also generate tax
revenues. However, when considering such an event, one should bear in
mind that the measure of the real economic effects on a host city should
be compared only with the economic indicators of the city if the event

would not have taken place, the so called ‘without case’ (Hanusch, 1992).
The success factors of the World Cup are the infrastructures needed for
the ongoing of the event. The non-adequacy of the existing Brazilian
infrastructures made restoration and building necessary. First of all,
twelve cities were chosen to be the host cities (in alphabetical order: Belo
Horizonte, Brasilia, Cuiaba, Curitiba, Fortaleza, Manaus, Natal, Porto
Alegre, Recife, Rio De Janeiro, Salvador, Sao Paolo). These cities were
chosen on their ability to host matches during the competition. A further
six cities were also candidates but not selected (Copa2014.gov.br1, 2014).
Stadiums can be considered as the essential infrastructure for the
organization of a football event, and need to fulfill the strict requirements
of the FIFA to be entitled to host matches of the World Cup. Several of the
host cities did not have a stadium, which met these requirements.
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In US Dollars
Total Renovation Costs for Stadiums 2 Billion
New Stadiums (Natal, Recife, Salvador) 650 Million
Projects to improve passenger terminals,
marine and land access to terminals
574.8 Million
Improvement of Airports 3.45 Million
Source: Ernst & Young, 2011
Therefore in Natal, Recife and Salvador, new stadiums were built for a
total investment of R$ 1,471.2Million (US$ 650Million) (Ernst&Young,
2011). The other nine stadiums in the other host cities also needed
renovation to comply with the FIFA requirements. The total investment for
stadium construction and renovation is estimated to be R$ 4.62 billion
(approximately US$ 2 Billion) (Ernst&Young, 2011). Those expenses are
only related to the competition itself, i.e. the matches only. Additional
investments are required for the infrastructures needed to receive the
supporters. The expected inflow of 600 thousand international tourists and
3.1 million national tourists requires the country to up-date and expand its
current infrastructures necessary for the staying of the visitors. A major
challenge for dealing with the high inflow of tourist is the capacity of the

airports. The necessary expansion and improvement of Brazilian airports
started in 2011, and the total investment is expected to be US$ 3.45
million. Nowadays some airports are already overloaded, especially the
ones of Brasilia and Sao Paolo, which are main hubs for travel to other
regions of the country. A monorail train has also been constructed to
connect the subway to Congonhas airport and Morumbi stadium in Sao
Paolo (Ernst&Young, 2011).
Not only the air transport facilities have been renovated and expanded,
the government spent US$ 574.8 million in projects to improve passenger
terminals, marine and land access to terminals. The government is in fact
expecting a high amount of cruise ships to dock on the Brazilian coast
(Ernst&Young, 2011).
The hosting of the World Cup 2014 will generate an increasing demand for
hotels in the selected host cities on the short, and hopefully on the long
term, due to two factors, the fans assisting to the event, and the tourists
visiting the country due to its global exposure as a holiday destination if
the event will result being a success. Nevertheless, among all the host
cities only Sao Paolo, Rio de Janeiro and Curitiba are prepared to meet the
tourist inflow. The other nine cities are expected to receive more tourists
than their actual capacity of hosting. Therefore an investment of R$ 3.16
Billion (about US$ 1.5 Billion) has been made in order to add 19.493
housing units to try to cover the housing deficit (Ernst&Young, 2011).
Nevertheless, the expected high amount of cruise ships could also be a
partial solution to the housing issue. Thus the organization of the FIFA
World Cup clearly does provide an opportunity for Brazil to modernize its
infrastructure.
The organization of a mega-event like the FIFA World Cup can
undoubtedly create a large number of jobs directly related with the
organization of the event itself. However, the expansion of infrastructure
and the increased volume of tourists stimulates job creation. Schimmel
(1995) noted that mega-events mostly generate jobs in the service
sector, which are often part-time rather than permanent, and/or low paid.
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Nevertheless, it is expected that from 2010 to 2014 in Brazil 394,000
permanent jobs will be created as well as 381,000 temporary jobs
(http://www.brazemb-ksa.org, n.d.). These numbers are close to the ones
announced by Ricardo Gomyde, the special advisor to Brazil’s Ministry of
Sports. In fact, he expects 332,000 permanent jobs and 381,000
temporary jobs to be created through 2014 as a result of World
Cup, mainly as the result of new hotels, airport and renovation of football
stadiums (Rapoza, 2011).
As an overall effect, the hosting of the World Cup is forecast to generate
US$ 70 Billion in the nation’s economy according to Brazil’s Ministry of
Sports (Rapoza, 2011). This takes in account the country’s public
investment into infrastructures, the private investments, the increase in
consumption and the increased activity in service related jobs, and
obviously tax collection. In fact, the hosting of this mega-event is
foreseen to generate more than US$ 30 billion in direct taxes and US$ 10
billion in indirect taxes. This can be explained by the increase in
consumption of Brazilian goods and services by an expected US$ 3 billion.
The FIFA even expects the event to generate an additional $116 billion to
the country’s GDP for the 2010-2019 periods (http://www.brazemb-ksa.
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org, n.d.).
Crompton (1995) points out that the economic impact of a mega-event, in
this case the FIFA 2014 World Cup, can be defined as the “net economic
change in the host community that results from spending attributed to the
event”. In other words, the economic growth of the host country is not
necessarily provided by the direct income such as ticket sales,
sponsorship and television rights, which are shared with the organizing
body (in this case the FIFA) and usually cover only the costs of organizing
the event itself. He claims that the economic impact of such an event is
mainly thought in terms as the possibilities it provides of increasing the
awareness of the country as a tourism destination. Increasing long-term
tourist inflows will bring additional revenues. Moreover, there is likely to
be an increase in awareness of the country’s potential for investment and

commercial activity. Therefore a host country is able to attract both
investments and tourists and, as a consequence increase employment and
stimulate the economic growth. In fact, the hosting of the World Cup and
the tourist inflow generate direct revenues on the Brazilian households.
For example, consider the income of a professional involved in the tourism
sector, the increase of income due to the inflow of tourist can contribute
to the increase of purchase of home goods (e.g. a new car), representing
an increased demand in home goods. This has a positive effect on the
purchasing power of Brazilian households as a result of the additional
generation of revenues.
Source: Ernst & Young, 2011 Source: http://www.brazemb-ksa.org
It is clear, however, that all the expected benefits have to be set against
the cost of the organization of the World Cup. According to the official
budget, the public sector is supporting the planned projects covering
85,5% of all the expenses. The remaining 14,5% is provided by the
private sector only in the building and renovation of airports and
stadiums. The federal government is the primary investor with 62,1% of
total expenditure and 72,7% of total public expenditure. Local
governments instead contribute with 23,4% and 27,3% respectively for
total expenses and total public expenses (http://www.brazemb-ksa.org,
n.d.). The two major development financial institutions of Brazil, the
National Economic and Social Development Bank (Portuguese acronym
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BNDES) and the Federal Savings Bank (Portuguese acronym CEF) are the
main funding for the federal government totaling an amount of R$ 11.1
billion (US$ 5 billion) (Ernst&Young, 2011). Most of the funds have been
spent in stadiums, touristic related projects and for urban mobility
purposes. The spending made by the federal government through its
budget is amounting R$ 7 billion (US$ 3 billion) (http://www.brazemb-ksa.
org, n.d.). The cost of organizing such a mega-event should be
balanced by public and private investments in order to increase the
benefit, and decrease public spending. A recent example is the Winter
Olympics in Sochi, Russia, where a Targeted Federal Programme for the
Development Sochi was implemented aiming at modernizing the region in
order to make the Caucusus a new destination for winter sports. This
development program was financed 60% through public spending and
40% by private investors (IOC evaluation commission report, 2014).
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3. Social Impact
As we have analyzed in the previous chapter, organizing a World
Cup has a significant economic impact on the host country. We are now
going to focus on the social effects, which, though highly interrelated with
the economic impact, merit to be dealt separately.
All the services related to the World Cup must be prepared to receive
tourists from all over the world. The increase in tourist inflow during the
World Cup raises an issue of qualification of the workers in the country. In
fact, the tourism professional Brazilian will have to deal with an unusual
increase of the tourists, and might not be fully prepared, or qualified to
assure the well-being of the national and foreign tourists.
Therefore, the Ministry of Tourism took action to deal with this problem
and will provide higher qualified professionals with the Bem Receber Copa
project, in English the ‘World Cup Well Received.’ This project aims to
train 306 thousand workers by the end of 2013 to work in the tourist

area. The Federal Government estimates this investment to be $280
million (Copa2014.gov.com2, 2014).
Moreover, the FIFA provides the host country with a Volunteering
Program, one of its flagship programs, where volunteers all over the world
come to help with the organization and support the tourists. This could
lead to an increase in education and training through the help of
multicultural, multilingual volunteers that will help Brazil with the
organization of the event (Fifa.com, 2014).
The World Cup can also be a factor of social inclusion (Rebelo, 2013). As
is common knowledge, Brazil is one of the biggest “Football Nations” in
the world, and football is taken very seriously. This could enhance national
unity and pride since the country is hosting the major football event.
Essex and Chalkley (1998) have put forward that sporting events are able
to strengthen national traditions and values and also enhance national
pride and community spirit. This was the case for the 2010 World cup was
held in South Africa, where for the first time in history the World Cup was
being hosted by an African country. This led to a major enthusiasm not
only in the South African people, but also in the whole continent, and the
event was seen as the regeneration of Africa led by ex-president and
national hero Nelson Mandela, who was a strong supporter of the event.
The hosting of the World Cup can be seen as a way to accomplish social
cohesion driven by the enthusiasm of the people. The final result of the
national team, if highly successful, can very much enhance this impact
(Dauncey and Hare, 1999).
This enthusiasm driven by the host of a major sport event may also lead
its people to increase their own participation in sport and as Hooper
(2001) has claimed, this increase may, in turn, enhance social cohesion
and social interaction since it provides a sense of well-being, that could
help integrating people that may feel socially excluded. The increase in
sport participation is also facilitated by the large sport facilities that are
built in order to host the event, and that could be available to the
community after the event’s occurrence. This is also further enhanced by
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the hosting of the Olympic Games in 2016, which will even further
promote the inclusion of sports, since art present Brazil lacks high
performance athletes and does not have a great diversity of sports
practiced. Access to sport is not only essential for a healthy population,
but it also promotes social mobility. In fact, the first Brazilian modern day
heroes who came from the poorest layers of the society were the football
stars.
Therefore, the increase in sport participation could have a significant dual
impact on the well being of both individuals and community as a whole.
This increase in sport participation cannot only be achieved through the
construction and renovation of sport facilities, but support of the
government is also needed in the training of public and community agents
to encourage the promotion of sport.
The local government will be supported by a number of private
volunteering and charity programs, such as streetfootballers and Ashoka
created through the Clinton Global initiative who established a social
legacy fund aimed at pooling financial resources from international
funders in order to provide support for local, football-based development
projects (Griesbeck, 2013).
Another positive effect may come from specific national campaigns
organized in the countries participating in the World Cup. The Netherlands
authorities, for instance, have launched a major awareness-raising
campaign on child prostitution for Dutch fans travelling to Brazil
(dontlookaway.nl, 2014). Fans are encouraged to report such child abuse,
which hopefully will contribute to combatting this scourge in Brazil.
But just as the hosting of a major sport event can bring positive effects
for a local community, it can also end up having negative effects. The
bidding for the tournament had emphasized the social benefits that the
World Cup would bring, which now seem to have been forgotten. Several
aspects threaten the social impact of the tournament. A first aspect is the
failure to respect safe working conditions. In fact, numerous building
works at stadiums have been interrupted such at Curutiba. These
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violations of safe working condition have reportedly led to the death of six
workers during the building of stadiums (BBC News, 2014).
The hosting of the World Cup should be seen by public entities as an
opportunity for development. In this sense, benefits arising from the
mega-event should benefit the local population. But the Brazilian
government implemented some controversial measures and policies. One
example is the displacement of Brazilians, who live on lands that are going
to be repossessed for use during the World Cup. An estimate is that up to
170,000 people will be evicted from their homes (Zibechi, 2012). The
pacifying police unit (Brazilian acronym, UPP) was appointed by the
government to evict people from the favelas (the shantytowns that
surround Brazil’s big cities) in order to present a better image of the
country when tourists will start to arrive (Brown, 2014). These measures
must comply with human rights, and the government must assure a fair
compensation for the housing repossession, if it wants to limit protests
and keep a positive international reputation for hosting the tournament.
In order to increase the safety of the tourists during the competition, the
Federal Government started a militarization of the favelas The federal
army already sent 2700 soldiers to the favelas in Rio de Janeiro, and more
are expected at the starting of the World Cup (Livewire.amnesty.org,
2014). In fact, in 2013, during the Confederation Cup, the so-called
Brazilian Spring took place (Fusion, 2013). More than one million people
protested in the streets all over the country mainly against the rise in
public transports, but grew to include other problems as the controversial
constructions and renovations, the brutality of the police, and generally,
the corruption of the government. During the riots, many people were
injured and a man died in Belo Horizonte (Usatoday.com, 2013).
Moreover, the Government has initiated strong action against weapons
and drugs smuggle, as well as illegal immigration along its borders. This
military operation is called “Ágata 8” and 30.000 soldiers are involved, as
stated by the Brazilian Ministry of Defence. The action was discussed
before with Brazil’s ten neighbouring countries. A similar mission was
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carried out already in 2013 for the Confederations Cup (Süddeutsche.de,
2014). This drastic measure taken by the Federal Government and this
kind of “civil riot” climate, due to the numerous soldiers in the streets of
the capital, will on the one hand increase the security for the tourists, but
on the other hand, have a negative aspect on the sports atmosphere.
The enhancement of public transport due to the hosting of the tournament
is an opportunity to increase community services. Nevertheless, in June
2013, coinciding with the Confederations Cup - a World Cup test event,
the price of public transport was supposed to be increased. But this price
increase has been postponed, due to the hard protest that took place in
the biggest cities of Brazil. The riots were the result of the people’s
disapproval of high fares, corruption, police violence and street crime
(Watts, 2013). These protests showed that many Brazilians do not see the
benefits that the hosting of the tournament could bring them, and feel the
government is investing more in useless infrastructure rather than
improving the average Brazilian’s living conditions. This could result in a
strong negative impact if the local community does not believe the
tournament is going to benefit them, and this could result in a loss of trust
in the national institutions. Many Brazilians oppose the government’s
investing money to renovate and build new stadiums and believes that the
national institutions should be closer to the people and focus on their
priorities. The government needs to take measures in order to justify in a
better way its investment for the World Cup, as well as for the Olympics in
2016, to avoid further and possibly escalating protests from its
population.
On balance, one can say that the social impact is a mixed picture. The
social inequalities, the poor public services and the consequently chronic
crime made the federal government take drastic methods to increase
short-term safety (until the end of the event). But this can also be an
opportunity to finally tackle this issue and propose long-term actions to
decrease the crime rate and the insecurity in Brazil. Moreover, the
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benefits generated by the event, if spent on major social projects, could
bring long-term positive effects on social cohesion.
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4. Sustainability
As Griesbeck (2014) claims “the World Cup in Brazil is going to be
the next quest to increase international awareness of football’s potential
to affect positive change. And to ensure that the costs of these events do
not outweigh their social and economic benefits, we need a strong
commitment to a sustainable social legacy.” Football is considered as the
most practiced and followed sport in the world. In this sense, football is
not only the practicing of the sport, but is also used as a window for
values and morals (e.g. fair play, fighting racism). Sustainability is also
one of those aspects that football is promoting. Thus, it is crucial that a
mega-event as the World Cup needs to conform to sustainability rules in
order to safeguard the environment and produce positive legacy for the
long term (Hall, 2012). If there is a cost for governments and for the
organizations to comply with environmental and social responsibility, the
benefits are not negligible; contribution to the good reputation of
companies and public organizations; and opportunities for investment in
the carbon market (Ernst&Young, 2011).
The most straightforward aspect concerns the building and renovations of
the stadiums. In 2012, at the United Nation Conference for Sustainable
Development in Rio, the local organizing committee presented its strategy
to organize a sustainable event. Moreover, FIFA’s head of corporate social
responsibility, Federico Addiechi, claimed an investment of 20 million US
dollars would be made in order to support the community with waste
management, and renewable energy recycling. This has resulted with the
hosting stadiums to be equipped with solar generators to generate
energy, and the water will be filtered from the rain, the water used for the
showers will be recycled for the pitch irrigation (Copa2014.com3, 2014).
Their desire is to succeed building stadiums with LEED certifications

(Leadership in Energy and Environmental Design). This certification,
created by the US Green Building Council (USGBC) is based on two
principles: the reduction in waste and employed resources, the
reutilization of the materials and the recycling of materials. Of the twelve
cities chosen to host the event, only the stadium in Fortaleza, the
Castelão Arena, which was the first to complete its renovations, received a
LEED certification. In addition, the FIFA and the Local Organizing
Committee established a sustainability-training course for all the stadium
operators. The goal is to “strengthen the participants knowledge of
sustainable operations at soccer stadiums and other sport facilities”
(Environmental Management & Energy News, 2013).
The FIFA’s objective for the 2014 World Cup is to organize a pillar
sustainable event that can be considered in the future as a model for the
next mega events, as the World Cup in Russia (2018) and Qatar (2022)
(Fifa.com, 2011).
This socioeconomic analysis cannot be dissociated from analyzing the
environmental impacts of the event. Investing in a more sustainable
event, means contributing to a decrease in inefficiencies, in social and
environmental costs, as well as waste. The United Nations Environment
Program (UNEP) claims that six crucial areas must be considered for their
economic, social and environmental indicators: ecosystem management,
environmental governance, disasters and conflicts, climate change and
harmful substances and efficient use of natural resources (Pnuma.org,
2014). Concerning the relation with the local community, it is essential to
“ensure urban quality, accessibility, security, access to information,
environmental education and usefulness of facilities, as well as urban
interventions after the event” (Ernst&Young, 2011). The government and
other private entities involved in the organization of the World Cup need
to ensure the responsible management of raw materials, as well as the
use of natural and economic resources.
One striking element is the reduction of carbon dioxide (CO2) emissions
from the combustion of fossil fuels, a major cause of the greenhouse
19

effect. The “Green Goal” program has been established by the FIFA since
the 2006 World Cup in Germany together with the Local Organizing
Committee (LOC) aiming at environmental protection and has since then
is strengthened. For the 2018 and 2022 World Cup new measures have
been considered in the bidding such as the establishment of an
Environmental Advisory Board, which deals with issues regarding energy,
water, waste, transportation, as well as climate change
(Businessgreen.com, 2014). As regarding the 2014 World Cup, Jerome
Valcke the secretary general of FIFA, announced that emissions would be
reduced through implementing verified carbon offsetting projects
encouraging stakeholders to reduce their carbon footprint (Valcke, 2014).
The carbon footprint measures how much carbon dioxide is produced by
all activities of the even arising from the combustion of fossil fuels. The
organizing body expects the Brazilian World Cup to generate over 2.7
million metric tons of CO2, of which transport alone will generate 80.1
percent of the carbon footprint (Valcke, 2014).
Nevertheless, the carbon-offsetting plan does not have a full outline of its
range of action and precise goals. Therefore a drastic improvement could
be obtained by adopting a carbon-offsetting project, which goes beyond
planting trees (which is currently the most advertised alternative) to
reduce CO2 in the atmosphere arising from the combustion of fossil fuels.
Ernst & Young specialists claim one solution could be “a carbon offsetting
program, which encourages the use of vehicles that run on ethanol or
biodiesel, the search for energy efficiency of companies, “green building”
projects and monitoring of carbon emissions before, during and after (the
event)” (Ernst&Young, 2011).
To strengthen the environmental dedication of the Brazil World Cup, the
FIFA decided, upon request of the NGO Associaçao Caatinga (committed
to the protection of the Amazonian Forest), that the Armadillo would be
the mascot of the event. This animal not only represents the biodiversity
of Brazil but is also threatened with extinction (Atlantico.fr, 2014).
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21
5. Risks and Constraints
For the country to benefit fully from the hosting of the World Cup, specific
risks and constraints must be considered.
The current turmoil before the World Cup is a symptom of the situation of
the nation: instead of an ongoing dynamic, the country apparently faces
only doubts and gaps. The mass protests in summer 2013 showed that
the growing middle class does not let things happen against their will and
without their agreement. The tax burden for the people, and for the
entrepreneurs rises constantly and represents now up to 36 percent of the
Gross Domestic Product (GDP) (Rüb, 2014). The underperformance of the
inefficient administrative organization is on all levels significant. Only a
small number of public schools reach their educational mission, therefore
private educational institutions are in a boom. The governmental health
system is not financed enough and is overstrained; and cannot
sustainably get better through the import of thousands of doctors from
Cuba (Lehman, 2014).
The inadequate public transport in Brazil’s agglomeration is the result of
the growing urbanization - almost 90 percent of the 200 million Brazilians
live now in the cities. Meanwhile, more and more cars choke the
metropolises and the transport of goods goes over old and ill-maintained
railways. Brazil’s investments into the infrastructure are only around two
percent of its GDP, a low amount compared to the more than five percent
of developed countries (Rüb, 2014).
The Brazilian government tries to increase its income through
unproductive measures. In addition, 90 percent of violent crime in the
dangerous cities of the country remains unsolved (Rüb, 2014). This is the
reason for the boom of private security companies: which represent
almost one percent of the country’s economic activity (Rüb, 2014). Over
one hundred thousand men in Brazil spend their best working years as
upper-and middle class security guard, who live behind tall walls in the
main cities. Of course, the security guards and their families have a

medium-high income through this business and it is a support to keep the
unemployment rate low. But the productivity is significantly low and
security guards only fill a gap that the authorities left open (Rüb, 2014).
Furthermore, as mentioned above, general taxes and excise taxes, but
also the burden of bureaucracy and corruption is as high as nowhere else,
and are summarized in the notorious term “Custo Brazil”, Brazil Cost
(Leahy, 2014). The strong economic growth from 2003 until 2011 was
mainly because of the domestic consumption of the lower and middle
class that received multiple transfer payments from the leftist government
under president Luiz Inácio Lula da Silva. But Brazilian society is in poor
shape since the assumption of office of president Dilma Rousseff. The
economy is growing slowly, the inflation pulls, investments and loans
decrease, bankruptcies rise (Hughes, 2014). The national economy of
Brazil cannot protect itself behind protective barriers and arm for global
competition, which will overtake the country soon.
The needs of Brazil can be categorized in “small needs” and “large needs”.
Those can be satisfied by means of “bottom-up” or “top-down” public
policies and actions (Ernst&Young, 2011). These two different approaches
present different positive impacts and as well as weaknesses; but the
risks are identical, as are the costly interventions and bureaucratic
inefficiency. Brazil’s long tradition of vertical planning, where the decision
making process is made by the government and spread out to the
different local public institutions and authorities remains a problem. There
is often very little local autonomy, and consequently very little control
over the agents responsible for the policies, and therefore very little
feedback on the efficiency or effectiveness of policies and actions on a
local level. These issues are present in all the relationships within the
public institutions, more specifically between the central government and
the other entities, but also at state and municipal level. These risks are
increased by implementing a “top down” public policy, because due to the
imperfections in the decision making process, the actions can result
ineffective, highly costly, or simply do not have any effect.
22

Regarding the central planning issues, one can observe the “crystallization
and political takeover of public administrations at various levels, which
represent a significant obstacle to the implementation of bottom-up
policies” (Ernst&Young, 2011). In Rio de Janeiro for example, attempts
such as the subdivision of in sub-city halls (“subprefeituras”) crashed into
coordination issues, more specifically between the shared and individual
responsibilities of the community (Grin, 2011). This lack of organization
and coordination also resulted in delays in the construction of the
stadiums, which worries the organizing body, and is putting Brazil’s
international reputation at stake.
The major risk that Brazil is incurring concerns the significant investment
it has made for the hosting of the World Cup, making use of private and
public resources that could, and according to many Brazilians should, be
used for different purposes – such as for hospitals, schools, etc. This
trade-off carries an opportunity cost. This opportunity cost is significant,
since most of the positive impacts are temporary, and the legacy depends
on how much the host country capitalizes on its investments
(Ernst&Young, 2011).
Some constraints are represented by the bargaining between the host
country and the FIFA. A controversial aspect of hosting a World Cup is
that the FIFA requires a country to temporarily change their laws to
comply with its requirements. Those requirements enable FIFA to
decrease country tax payments and prevent other than sponsor-businesses
to be associated with the tournament, and in the case of
Brazil, allowing the selling of alcohol inside the stadiums, which are
currently banned in Brazil. A key point comes from the sale of the tickets,
which will mostly benefit the FIFA. In addition, the high prices of tickets
increased the dissatisfaction of Brazilians. The Brazilian sport minister
Aldo Rebelo has managed to negotiate a 50 percent discount for the
elderly population and for students, claiming that the initial price was
unacceptable for Brazilians. Rebelo insisted explaining that the World Cup
should be a celebration of the Brazilian people, and high prices would
23

prevent most of Brazilians from attending the matches (FoxSoccer, 2014).
The fact that the prices are so high, due to inflation, and the major
security issues that Brazil is facing, could also result in a decrease in the
number of expected tourists.
24
6. Long Term Opportunities
As set out in the previous chapter, the hosting of a World Cup carries a
significant opportunity cost. Nevertheless, the bid to hosting the World
Cup is highly competitive because countries believe they can benefit of
long-term opportunities. Of course, to obtain the greatest returns on the
hosting of the event, Brazil’s actions and investment must be carried out
efficiently. This means, carrying them out at the lowest cost possible (in
terms of time and of resources) to obtain the planned results. Generally,
the success of a project can be summarized by three major objectives, the
meeting of the deadline, the required quality, and finally, meeting the
estimated cost. This is the so-called triple constraint triangle of project
management (Dobson, 2004). Concretely, this supposes the performance
of the actions to achieve the project within the deadlines and the budget,
while ensuring the quality.
The World Cup does not only bring investments in infrastructure, but more
importantly, it mainly brings media attention together with an increased
economic activity and numerous opportunities for the federal government
as for the whole society itself (Pauw & Witteman, 2014).
The World Cup offers an opportunity to its host cities, which goes beyond
the single event. In fact, it can be considered that the hosting of such an
event becomes a landmark for the history of these cities. These locations
can benefit of an increase of revenues, which can be reinvested and are a
huge opportunity to improve the quality of life of the citizens (2014 FIFA
World Cup and 2016 Olympic Games: Brazil’s Strategy ‘to Win Hearts and
minds’ Through Sports and Football, 2013). In addition, the benefits for
the country as a whole can be observed by the rapid growth of

infrastructure building and renovation that would take much longer if the
event would not take place. In fact, the large investments of the
government in infrastructure for their improvement and expansion,
regarding the stadiums, urban mobility, and airports and ports, clearly
benefit Brazil. These effects may not be immediate, but will be
measurable in the long term.
The development of communications and the investment of the media in
the World Cup are also a key long term opportunity, and plays a
fundamental role in what can be considered the more striking impact of
the hosting of such an event, the reputation of the organizing country
(Pauw & Witteman, 2014). Brazil can benefit of an advertisement of its
country, showing the world, besides the World Cup events, that it has
centers of excellence in innovation, a strong economy and multicultural
and modernly developed cities (Ernst&Young, 2011). The federal
government will need to take advantage of these opportunities by
implementing efficient planning, control, monitoring, without neglecting
reputation management, transparency, sustainability and legacy. The
revenues generated by the event in its various sectors as we analyzed in
our previous chapter is without any doubt significant. Yet the country’s
reputation gain provided by the success of the event can be more
significant than the gain in revenues. As explained previously, the self-esteem
of Brazilians in general can be positively affected (Ernst&Young,
2011).
The event itself is of course not only a sporting event, but can also be
considered as political. It is the consecration of a country on the
international scene. In fact, studies have showed that mega events are
vehicles used to strengthen the soft power, i.e. international influence, of
its host countries (Black and van der Westhuizen, 2004; Cornelissen,
2012). For former president Lula Da Silva and current president Dilma
Rousseff the hosting of the World Cup in 2014 and the Olympic Games in
2016 will make the international public opinion think that Brazil is non
only becoming a global actor, but a giant economic power (2014 FIFA
25

World Cup and 2016 Olympic Games: Brazil’s Strategy ‘to Win Hearts and
minds’ Through Sports and Football, 2013). Thus, the tournament can
contribute with great impact to improve the country’s image abroad as it
awards a certain prestige on the international scene. Indeed, sport has
always permitted countries to show their strength and power. This is a
real political tool to legitimize itself in the international arena and to
obtain recognition. The success of the event is thus more than necessary
and the way the country is going to take advantage of this positive image
will result in long-term impacts on its reputation (2014 FIFA World Cup
and 2016 Olympic Games: Brazil’s Strategy ‘to Win Hearts and minds’
Through Sports and Football, 2013). Moreover, a good reputation leads to
positive effects deriving from it. As examples, one can think of an increase
of foreign investments, a greater flow of tourism, as well as a higher
credibility and visibility of Brazil (Pauw & Witteman, 2014).
The success of the event is also linked to what involves the planning, the
sport efforts, the cultural activities and all the supplementary activities
that will be organized that create a certain “World Cup atmosphere”. An
atmosphere where people get engaged, such as cultural events, artistic
events, or festivities, that represent the country’s identity and sponsors it
in a strong way (Ernst&Young, 2011).
In the long term, we can also say that the reputation gain derived from
the host of the World Cup is also related to the legacy that will remain. If
at the end of the tournament, the feeling is that the event was a success,
and that it left a positive legacy to the local population, Brazil will gain in
reputation. Consequently, it is vital that the Federal Government avoids
leaving a huge debt or building costly infrastructure that will become
useless at the end of the event (Ernst&Young, 2011). This, will result not
only in savings the public budget, but will also avoid that the World Cup
becomes an exponential trigger for further massive social protests and an
increase in the general dissatisfaction of the Brazilian people.
26

27
7. Conclusion
The organization of a World Cup is very challenging for its
organizing country. The event is highly costly and the repercussion on the
local population may be not favorable, especially during times of economic
crisis, as is clear from the widespread social unrest that developed. In
fact, the public budget that is spent for the event could, in the views of
many much better, be spent in order to improve education, healthcare,
housing etc. However, as we have seen, organizing such a mega-event
can be a significant opportunity for progress. Therefore, a key question is
whether the organization of the 2014 FIFA World Cup can be welfare
enhancing for Brazil? Firstly, it can improve the economic situation not
only temporarily, but also in the long term. Furthermore, this sport event
can contribute to the social inclusion of the underprivileged, and improve
people’s self-esteem, along with gains in education through the
experience of the tournament. On top of this, some sustainability aspects
have also been considered, with the construction of “green”
infrastructures, which will result in savings of waste and money in the
long run. Of course, the mega-event’s ultimate success will be measured
in different ways by the various stakeholders. From the point of view of
the visiting tourists, success will be characterized by enjoyable, accessible
events associated with quality of service, and safety. For most Brazilian
people, it will be measured by their enjoyment of the economic and social
benefits, especially in the longer run. On the other hand, for the
government, the success of the event will be measured by a generation of
revenue, the reputational gain, credibility and visibility.
Nevertheless, with the World Cup not even started, the important social
tensions and already significant delays in the ambitious infrastructural
projects show Brazil’s limitations in planning and coordination, as well as
in effectively communicating the expected benefits. Combined with the
already high costs, the event could thus result in significant overspending,
and increase Brazilians’ already critical attitude towards the event. The

government’s strong emphasis on repressive measures, apart from being
costly, could also backfire and provoke even more violence. The World
Cup will also certainly dominate the forthcoming presidential elections in
October 2014 when Dilma Rousseff's policies will face a severe test.
Brazil’s ability to manage the FIFA World Cup 2014 will be a clear
precursor for its performance as regards the 2016 Olympic Games. Both
will very much shape Brazil’s immediate future, as well as its image in the
world for many years to come.
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