|  | Feature | No.60 October 2010 |

Assessing the Economic Impacts of the 2010 FIFA World Cup - Lessons for Developing Countries
Kamilla Swart & Urmilla Bob
Abstract
Since South Africa`s readmission to international sport more than a decade ago, it has increasingly used sport tourism events, and mega-events in particular, as a catalyst for socio-economic development and as part of the broader transformational and development agenda. The 2010 FIFA World Cup? is used as an illustrative case study to examine the challenges of conducting economic impact assessments as well as the debates that emerged in relation to developing the 2010 research agenda. This article reflects on this research agenda, specifically with regard to the importance of formulating and undertaking research to evaluate impacts associated with the 2010 FIFA World Cup? and to inform planning and policy developments, especially for developing countries interested in bidding and hosting future mega-events.
Introduction
Sport mega-events have become highly sought after commodities for both developed and developing countries as they move towards event-driven economies (Swart & Bob, 2009). For South Africa, the allure of mega-events was especially attractive to signal international recognition at the end of the apartheid era, as well as to advance the developmental and transformational agenda. Having already successfully hosted the 1995 Rugby World Cup, the 1999 African Nations Cup and the 2003 Cricket World Cup, the South African government sought to host the 2006 FIFA World Cup? (van der Merwe, 2009). Van der Merwe notes that the 2006 bid had three main objectives; firstly, it would encourage capital construction and enhance the country`s profile to attract tourism; secondly, it would induce international pride; and thirdly, it would present local sport powerbrokers with an opportunity to consolidate their role in the “new” South Africa. However, South Africa lost the bid by one vote to Germany and FIFA introduced the continent-wide rotational system whereby only African countries could bid for the 2010 FIFA World Cup?. South African continued its bid, along similar lines for the 2010 event, and secured the right to host this event. Van Der Merwe (2009: 31) contests that South Africa`s hosting of the 2010 World Cup promises “a crowning achievement of not only South Africa`s re-entry into the international community, but also Africa`s journey to a more equitable and just global order”. Moreover, then President Thabo Mbeki in his letter to Sepp Blatter, President of FIFA, expressed that “We want, on behalf of our continent, to stage an event that will send ripples of confidence from Cape to Cairo – an event that will create social and economic opportunities throughout Africa” (Mail & Guardian Online, 2010).
It is therefore not surprising that there has been a tremendous amount of excitement (and apprehension) associated with the hosting of the 2010 FIFA World Cup™ in South Africa. In particular, it was anticipated (and publicised) that the World Cup would contribute significantly to job creation, infrastructural development and social upliftment. Therefore, the hosting of the World Cup was integrally linked to South Africa`s developmental agenda (at least on paper). It is important to consider, as underscored by Tomlinson, Bass and Pillay (2009) that economic projections of the World Cup are often flawed, with the overestimation of benefits and underestimation of costs. Moreover, there is considerable debate as to whether previous World Cups have had a positive impact on the host country`s economy (Tomlinson et al., 2009). Given the South African government`s intention to leverage the 2010 event for economic (and social) development and considering that the South African government budget for the World Cup was increased substantially since 2004 (Meannig & du Plessis, 2009), critical questions remained in relation to what extent these laudable intentions would be achieved and who would be the likely beneficiaries of the potential benefits to be accrued, especially in relation to direct and indirect economic and social gains. Therefore, it was considered imperative that perceptions, needs and aspirations of different key stakeholders (such as the local communities, business sector, public sector, etc.) be integrated into the 2010 FIFA World Cup™ processes, including the planning, implementation and post-event phases. This required critical research to be undertaken at different levels and among different stakeholders to examine key issues and impacts.
The 2010 FIFA World Cup? is used here as an illustrative case study to examine the challenges of conducting economic impact assessments, especially within developing contexts, as well as the debates that emerged in relation to developing the 2010 research agenda. This article aims to reflect on the research agenda articulated by several academics, specifically concerning the significance of formulating and conducting research to evaluate impacts associated with the 2010 FIFA World Cup?. Furthermore, it aims to inform future planning and policy developments, particularly for developing countries interested in bidding and hosting mega-events.
The 2010 Research Agenda and the importance of the “bottom-up” approach
The 2010 research framework or model was developed during two workshops and in consultation with several academics and stakeholders to maximise benefits to key stakeholders in terms of World Cup legacies and ensure participation at all levels. The workshops (the first was held in July 2008 and was the 2010 Research Agenda Workshop hosted by the 2010 Organising Committee (OC) South Africa while the second was held in December 2009 in conjunction with the Sport Mega Events and their Legacies Conference) were attended by a range of research stakeholders, including academics and individuals from the government and private sectors. In both workshops, attendees reinforced the importance of systematically undertaking research in relation to the 2010 FIFA World Cup™. This was deemed to be particularly important given the unique opportunities and challenges faced in relation to Africa hosting its first mega-event. From a research perspective, the 2010 FIFA World Cup™ provided an opportunity to examine whether trends and patterns emerging from research on previous mega-events (specifically the FIFA World Cup™) would be discernible in 2010 and how these related to development efforts in South Africa specifically and Africa more generally.
The initial 2008 workshop identified a range of research areas and supported the continued relevance of the research agenda in order to maximise limited resources and engender collaboration. Some of these included:

- Baseline research to determine stakeholder needs, expectations, challenges and opportunities relating to the hosting of the 2010 FIFA World Cup™.
- The identification and evaluation of previous research initiatives and best-practice case studies (local and international) that could be relevant and which could provide a frame of reference for planning, decision-making and further research relating to the hosting of mega-events.
- A strategic audit and evaluation of infrastructure and facilities, with a view to identifying gaps, challenges and opportunities.
- A survey of current and potential key stakeholder roles, relationships and current and potential co-ordination mechanisms.
- A strategic audit of the reality and perceptions of key enabling environmental factors (for example, safety, security and health issues) from a destination and community development perspective.
- A comprehensive review and systematic monitoring of relevant policies, strategic planning frameworks and guidelines.
- Identify relevant benchmarking, monitoring and evaluation guidelines and criteria.
- The development of guidelines and criteria to determine capacity levels, gaps and opportunities in host cities.
- A strategic assessment of sponsorship opportunities and challenges related to the hosting of mega-events.
- A strategic assessment of the skills development needs and training offerings related to the hosting of mega-events.
- A comprehensive evaluation of the event (for example, socio-economic impact assessment, service quality, residents` perceptions, marketing and media impacts, business leveraging etc, as well as post-event impacts, including long-term impacts).
- Develop systems to secure the learning which the event engenders so that it can be built into the management of local enterprise and the governance of host communities.

However, given the timeframes and the lack of political will to allocate the necessary resources to implement a coordinated research agenda that emanated from the OC workshop, the participants at the December 2009 workshop focused on highlighting key research priority areas for 2010. The two main research thrusts related to the economic and social/ political issues or impacts. This article focuses on the economic aspects.
While there is a bias towards economic impact assessments of sport mega-events, there is no doubt that this aspect is central in relation to examining whether the key objectives of bidding for and hosting a mega-event have been met. The main aspect identified that required research was to ascertain economic impacts in relation to initial and current forecasts. Several critiques of economic impact forecasts reveal that they tend to over-estimate benefits and under-estimate costs, as mentioned previously. Forecasts on the 2010 FIFA World Cup? in South Africa is a case in point. Du Plessis and Maennig (2009) indicated that US$1.35 billion invested by government on stadia was much higher than the initial US$105 million budgeted for at the time of the bid in 2004 (cited by du Plessis & Maennig). Moreover, Grant Thornton, forecasted an economic gain of US$3 billion for the South African economy, based on 230 000 foreign tourists staying in South Africa for an average of 15 days. While the OC did not officially update its forecasts in the years leading up to 2010 given that there were so many changes in the plans (eg. 13 stadia were proposed in the bid book and a new stadium in Cape Town was never part of the initial plans), Grant Thornton revised their forecasts in 2008, with even more optimistic direct expenditure figures of US$3.9 billion (cited by du Plessis & Maennig). In April 2010, Grant Thornton noted that they revised their figures down from 483 000 visitors (2007) to 373 000 visitors (2008) but with an extended length of stay from 14 days to 18.7 days. They further noted that the gross economic impact was projected to be higher, however government spending had also increased substantially. Tolsi (2010) further underscores that the 2010 bid book was not in the public domain until recently and “is a curious mélange of hyperbole and underestimation” and argues that the figures represent gross miscalculations of taxpayers` money on infrastructure such as stadiums.
Another concern raised with economic impact studies is that they tend to adopt the “top-down” approach that uses national economic data. While this approach is likely to be less costly, the quality and accessibility of South African data is important to consider. In addition, the “top-down” approach uses aggregated data, and only identifies additional visitor nights, which are statistically counted (Preuss & Kursheidt, 2009). To address this limitation, it is imperative to also use the bottom-up approach to assess the event`s economic impacts which include the administration of questionnaire surveys to spectators during the event. Preuss (2005) contends that while there are many models to assess the economic impacts derived from event spectators, their limitation is that they consider the consumption of tourists as a part of the overall economic impact. Moreover, he argues that the consumption patterns of these tourists are not often precisely evaluated and concludes that the accurate determination of money streams from event-affected persons are the basis for reliable assessments of economic impacts of events.
A brief outline of the different consumptions patterns of event visitors as identified by Preuss (2005: 287-288) are detailed next. Casuals, time-switchers and residents represent a redistribution of economic impacts. Casuals are visitors who attend a sport event but were in the host community primarily for other reasons i.e., visiting friends and/or relatives, business, etc. Time switchers are those who purposely schedule their visit to coincide with the sport event but who would have visited at another time anyway. Residents are sport event attendees in their home community. Resident spending represents a switching of transactions from one local business i.e., dining out, cinema, theatre, etc. to another, in this case the sport event. Event visitors, extentioners and home-stayers represent additional economic impacts. Event visitors are those visiting the host community specifically because of the sport event in question. Extentioners are visitors who would have come anyway but extended their stay due to the event. Homestayers are residents who purposely stay in the host city during the event due to the event. Runaways are residents who purposely leave the host city during the event due to the event. Avoiders are tourists who stay away but would have come without the event. Avoiders can either be “cancellers” - tourists who totally cancel their trip or they can be “pre/post switchers” - tourists who will come earlier or later. It is thus evident that event attendees` places of origin and local spending influence the economic impacts of the event.
This “bottom-up” methodology was used for the 2010 FIFA World Cup™ study and builds on the model developed by Preuss for the 2006 FIFA World Cup™ in Germany and EURO 2008 in Austria (visitor surveys only conducted in Austria). While the bottom-up approach is more costly since primary data needs to be collected and analysed; it is extremely useful since it allows for more precise assessments. The spectator surveys, as well as the resident surveys although not the focus of this article, were highlighted as being priority areas, especially given the level to which it entails the collection of primary data and the logistics involved in collecting and analysing the data. The lessons from developing the research agenda clearly reflects the importance of critically thinking about what aspects need to be studied, what methodological approach should be used and who should be involved in undertaking the research.
Additionally, to ensure that economic assessments are undertaken rigorously, academics from South Africa worked with (and are still working with) colleagues (specifically sport tourism specialists and sport economists) from the USA and Germany to develop the survey instruments, formulate the sampling framework and analyse the data collected. In order to ensure that comparative analyses can be undertaken with the 2006 studies, the German approach was adopted and similar surveys (with changes to ensure that unique South African aspects were included) were implemented in South Africa. In addition, researchers (both academics and consultants) teamed up with partners in their respective cities and regions to deliver research in 5 host cities, viz. Cape Town, Durban, Johannesburg, Port Elizabeth and Pretoria in order to assess city level as well as national impacts. In total, about 10 000 visitor surveys were conducted across these host cities, in the stadia precincts and official FIFA Fan Parks. Key aspects included in the survey were visitor information, consumer behaviour, previous attendance/visits, perceptions of the host destination and demographic profile. Surveys were conducted primarily in English, however surveys were also available in Dutch, French, German, Italian, Korean, Portuguese and Spanish. It is anticipated that the national and city level economic impact analyses will be completed by the end of 2010/ early 2011.
It is significant to note that this methodology also allows for comparative research to be extended to the 2014 FIFA World Cup™ in Brazil. This is an important consideration since a major limitation of mega-event research is that comparisons cannot be made due to the different methodological approaches used. This is significant as Brazil is also a developing country and comparisons are likely to be more relevant. Identifying best practice and learning from the South African experience is therefore critical.
Lessons Learned
The South African researchers experienced major challenges in terms of coordinating the 2010 research agenda and partnered with host cities and tourism organisations who recognised the value of the study. It is unfortunate that national endorsement could not be achieved and this can be perceived as a missed opportunity to conduct comparative research across the host cities using the same methodology. Our experience reflects that key event stakeholders (host cities, national governments, organising committees etc.) do not always understand the importance of undertaking research and are often hesitant to share information or allocate the necessary resources for research. This is extremely short-sighted since it is rigorous and consistent research that permits monitoring and evaluation to take place. The lack of buy-in and support for a national research agenda is also reflective of the poor research culture that prevails in South Africa.
Furthermore, our experience with developing the 2010 research agenda shows that an important aspect is to identify existing institutional, infrastructural and resource issues that are likely to impact on related research efforts. To this end, identifying appropriate partners is critically important and it is this broad network that is enabling research to be conducted across the country, despite research funding not being available nationally. In fact, the main funding is from the researchers themselves, with additional support from a few host cities and provincial tourism organisations.
Post-2010 it is hoped that this collaborative endeavour will result in the development of a database of research relevant to the 2010 FIFA World Cup™, including international best practice and current research being undertaken in relation to the 2010 FIFA World Cup™. This will permit a critical examination of the advantages and disadvantages of hosting the 2010 FIFA World Cup™ and prospects for bidding for future mega/major events.
Lessons from the 2010 FIFA World Cup™ research agenda indicates that the research required for mega-events of this nature research necessitates partnerships and interdisciplinary capacity from a range of stakeholders. Furthermore, the mobilisation of necessary resources to undertake the research needed and attempt to leverage buy-in at a national level and among host cities to ensure consistency in the research approaches and data collected is required.
It is asserted that a coordinated and integrated approach to research pertaining to the 2010 FIFA World Cup™ is well-suited for collaborative and interdisciplinary research and critically important to ascertain developmental impacts. The 2010 research agenda is intended to draw from a wide range of experiences and perspectives. Focusing on bringing researchers together from different sectors and institutions will facilitate the field research component as well as allow for a more substantive analysis of the issues under consideration. Additionally, capacity building and empowerment of younger researchers, especially from historically disadvantaged backgrounds will contribute significantly to skills development in the areas of research, sport tourism and sport management in the country. The successful hosting of a mega-event, and more importantly achieving a positive legacy, is grounded in the acquisition, production and dissemination of information and knowledge and should not be overlooked.
References
Du Plessis, S. & Meannig, W. (2009). South Africa 2010: Initial dreams and sobering economic perspectives. In Pillay, U., Tomlinson, R. & Bass, O. (Eds.), Development and Dreams: The Urban Legacy of the 2010 FIFA World Cup (pp. 55-75). HSRC: Pretoria.
Grant Thornton (2010). Updated economic impact of 2010.
Preuss, H. (2005). The economic impact of visitors at major multi-sport events. European Sport Management Quarterly, 5(3), pp. 281-301.
Preuss, H. & Kursheidt, M. (2009). How crowding-out affects tourism legacy. Sport Mega-events and Their Legacies Conference. 2-4 December 2009. Stellenbosch: South Africa.
Swart, K. & Bob, U. (2009). Venue selection and the 2010 FIFA World Cup: A Case Study of Cape Town. In Pillay, U., Tomlinson, R. & Bass, O. (Eds.), Development and Dreams: The Urban Legacy of the 2010 FIFA World Cup (pp. 114-130). HSRC: Pretoria.
The bid book for our bucks. Mail & Guardian Online. Downloaded June 2010, http://www.mg.co.za/article/2010-06-11-the-bid-book-for-our-bucks.
Tomlinson, R., Bass, O. & Pillay, U. (2009). Introduction. In Pillay, U., Tomlinson, R. & Bass, O. (Eds.), Development and Dreams: The Urban Legacy of the 2010 FIFA World Cup (pp. 3-17). HSRC: Pretoria.
Tolsi, N. (2010). The World Cup bid book fiasco. Mail & Guardian Online. Downloaded June 2010, http://www.mg.co.za/article/2010-06-13-the-completely-miscalculated-world-cup-bid-book-that-cost-us-a-bundle.
Van der Merwe, J. (2009). The road to Africa: South Africa`s hosting of the “African” World Cup. In Pillay, U., Tomlinson, R. & Bass, O. (Eds.), Development and Dreams: The Urban Legacy of the 2010 FIFA World Cup (pp. 18-32). HSRC: Pretoria.
Contact
Kamilla Swart
Associate Professor
Centre for Tourism Research in Africa
Business Faculty
Cape Peninsula University of Technology
Cape Town, South Africa
Email: swartk@cput.ac.za
Urmilla Bob
Associate Professor
Department of Geography and Environmental Studies
University of KwaZulu-Natal (Westville Campus)
Durban, South Africa
e-mail: bobu@ukzn.ac.za

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