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Analysts weigh costs and rewards of hosting World Cup

posted 3 Dec 2010, 05:49 by Mpelembe   [ updated 3 Dec 2010, 05:51 ]

As Russians bask in the glow of the World Cup decision, financial analysts weighs the costs and economic benefits of hosting the championship.

MOSCOW, RUSSIA (DECEMBER 1, 2010) REUTERS - A day after FIFA, the international governing body of football, announced Russia will host the 2018 World Cup, analysts and the media are speculating on its costs and benefits for the country.

Andrew Cranston, senior partner at KPMG said sports aside, the benefits to the country overall will be


"It is definitely a real positive. The fact that there's going to be a World Cup means clearly that there is going to be a boost to modernization, there's going to be more investment in infrastructure, there's going to be more tourism around that, it's a real positive," Cranston said.

Hosting the World Cup will require the complete construction or extensive renovation of stadiums in 16 Russian cities, from Moscow to Kazan and Ekaterinburg. Official estimates have put this cost alone at $3.8 billion USD. Other costly improvements, such as airport upgrades, enhanced rail and hospitality services and road repairs will bring the costs much higher, but, Cranston said, it will boost the economies of regional Russian cities and towns.

"It's very positive for the Russian regions, because as we know, a lot of the games will be played, not in Moscow, but in the regions. So that is gong to have a direct positive impact on the economies of the regions," Cranston said.

Cranston said private companies along with the government will bear the costs of preparations and profits, while citizens will also be positively affected.

"All sectors will benefit. It tends to drive consumer confidence, it tends to drive tourism opportunities, so I think you'll see effects throughout. And there will be a lot of jobs created just around the preparation and carrying out the World Cup itself," Cranston said.

The World Cup decision comes as Russia prepares to hold the 2014 Winter Olympics in Sochi, where many projects are nearing completion. Sochi will also serve as a World Cup match city.

Russian Prime Minister Vladimir Putin has said that the country is ready to spend $10 billion on the cup, but that figure has been questioned and multiplied in the press. Cranston said it is too early to estimate the total cost of the event.