The economic value of the 2010 Soccer World Cup

Abstract

Purpose: The purpose of this article is to estimate the potential economic value of the 2010 Soccer World Cup for South Africa.

Problem investigated: The Soccer World Cup (SWC) is regarded as the largest sporting event to be hosted and South Africa is investing billions of Rand in the hosting thereof. Based on this the question that comes to mind is, what is the potential economic value of such an event? Previous research attempts to determine the economic value were limited in their focus on what should be included when economic modelling of events is conducted. Most of these studies were done by consultants on behalf of various government departments and consequently, the results of these attempts are criticised for their over-inflating and overestimations by various other researchers.

Methodology: The literature review identified many aspects that need to be taken into account when modelling the economic impact of such an event together with aspects identified in the literature review. Lessons from the 2002 Korea/Japan and 2006 Germany Soccer World Cups were used as premise for our estimations. In this article, Computable General Equilibrium (CGE) modelling is used to estimate the potential economic value.

Findings: The results showed that the 2010 Soccer World Cup would in all probability have positive impacts on the economy of the country in terms of GDP growth and employment, with possible negative effects that include higher inflation and net export losses.

Value of research: The value of this research lies in the approach that was followed firstly, by introducing lessons learned from previous World Cups as well as aspects not taken into consideration previously in economic modelling and secondly, by using CGE modelling in determining the economic value.

Conclusion: The hosting of the 2010 Soccer World Cup is a major achievement not only for South Africa, but also for the rest of Africa, especially from a marketing point of view. From an economic point of view, this study shows positive results. However, compared to other studies conducted on the 2010 SWC, the findings are more conservative. The latter is supported by the results of a similar study conducted one year after the 2006 Soccer World Cup in Germany supporting the notion that various variables have to be taken into account when economic modelling for hallmark events is done.