The lost legacy of Brazil’s World Cup

The infrastructure costs for hosting the Brazil 2014 World Cup have risen to approximately 14 billion USD, more than South Africa 2010 and Germany 2006 combined.

The word ‘approximately’ defines the state of uncertainty with World Cup preparations in Brazil. In addition to a general state of nervous ambivalence, we have no idea how much is actually being spent, or on what projects.

While there are some means of tracking the projects and their budgets the transparency mechanisms are very weak, contradictory and reveal the perils of using mega-events to undertake large scale infrastructure projects.

Hosting and broadcasting football matches happens every month of every year in every major Brazilian city. Yet when FIFA evaluated Brazil´s readiness for the World Cup in 2007 they declared that there was not a single stadium in the country capable of hosting a FIFA World Cup match.

This was despite a 135 million USD reform to the Maracanã for the 2007 Pan American Games. It was clear that Brazil would have to invest in stadiums and the Minster of Sport declared that not a penny of public money would go towards financing them. Despite this promise, federal, state and city governments have spent somewhere between 3.6 and 4.3 billion USD on stadiums.

Brazil was the only host candidate for the World Cup and since the day that now-disgraced Ricardo Teixeira handed the 2014 bid book to Sepp Blatter, that document has never seen the light of day.

We know that FIFA wanted to have a regionalized tournament with eight host cities. The Brazilians, with former president Lula leading the charge, wanted as many as 17. They settled on 12 and on a schedule that would have every team playing each of its first round games in three different cities.

This has created a massive logistical problem for FIFA, teams and fans. Porto Alegre and Manaus are as close as Copenhagen and Timbuktu. Cuiabá and Natal are as distant as Paris and Moscow.

No investment in land transportation
There is no passenger train service in Brazil. The national highway system is precarious – more than 50,000 people died in traffic accidents in 2013. The World Cup was seen as a good excuse to deliver some much needed infrastructure upgrades in order to meet the particular challenges that moving hundreds of thousands of football fans between multiple regions as well as within the cities themselves.

Despite the need for regional and national integration through rail transport, Brazil has invested Zero USD in passenger rail service while laying out 3.8 billion USD in airport upgrades.

The majority of the airport projects will not be ready for the World Cup but will hopefully be completed in the coming years. The aviation industry has grown precipitously and there was need for investment here, but the absence of projects in other sectors has ensured that airline travel will be Brazil´s dominant mode of intra-city transportation for the coming decades.

Within Brazilian metropolitan regions, the World Cup was seized upon as an opportunity to invest in urban mobility projects. Unfortunately, the process of hosting sports mega-events does not allow for prolonged discussion of urban planning agendas.

Rubber wheel and petroleum
Most cities have put a parallel governance structure in place to deal with hastily approved World Cup projects. These temporary entities have very little transparency in their budgetary mechanisms and are tasked with carrying off large-scale projects that do not necessarily attend to the long-term demands of cities. In almost all of the World Cup host cities, the mobility projects have been limited to ‘Bus Rapid Transit’ (BRT) lines.

In the case of Rio de Janeiro, a 39 km BRT line was put between the airport and the residential suburb of Barra da Tijuca. The line was originally projected in the 1960s and has ripped through a dozen lower-income neighborhoods. There is no public transport between the airport and the center of town, between the city´s two airports, between the airport and the Maracanã, nor to the major tourist areas.

While BRT lines can be used effectively as supplemental elements of a larger mobility network, they are wholly inadequate as structural solutions to the already grave traffic problems in Brazilian cities.

The nearly complete absence of light rail, metro or ferry lines in World Cup host cities represents an incalculable opportunity cost. The government estimates spending of 4.05 billion USD in urban mobility, but the numbers are unclear as more than half of the projects will not be completed for the World Cup.

Regardless, the World Cup projects have ensured that Brazil will continue its dependency on rubber wheel and petroleum-based transport by investing in projects that will not attend the demands of growing cities.

The digital divide
The communications sector has benefitted somewhat from World Cup investment. In particular there have been positive investments in coordinating emergency services across sectors, and the development of robust systems to deal with public safety has happened because of the World Cup.

One of the drawbacks is that the investment has not been nearly enough, only around 200 million USD. Brazil continues to have a large ‘digital divide’ and the concentration of telecommunications investments in state capitals and in and around stadiums comes at the cost of a more broad based distribution of communications technology.

It will also be a bother to many football fans that the promised 4G networks will not be ready and that many of the stadiums will not have sufficient wireless capability to beam selfies across the world.

Within this general panorama we can add a 100 million USD investment in tourism – surprisingly little for a country of 200 million. There was also a 319 USD million investment in port facilities, which have little or nothing to do with the World Cup itself and more to do with the coalescence of political agents that agree to release public funds for particular projects.

Stadium costs more than doubled
In response to the criticisms of Brazil´s preparations for the World Cup, president Rousseff said in January of 2014 that “stadiums are relatively easy” to build. They should also be relatively easy to monitor and control costs, but it appears that Brazil has had difficulty on all fronts.

I have been keeping tabs on the rising costs of Brazil´s World Cup stadiums since the host cities were announced in May of 2009 (see Table 1).

Table 1: Rise in construction costs for Brazilian World Cup Stadia (mill. USD):

The costs have more than doubled from an initial price of 2.05 billion USD to as high as 4.244 billion USD. There are four transparency sites that I have used in my research and three of the four give different numbers for the stadiums. I have also consulted Brazilian media sites and auditors´ reports to track down these numbers. There is contradictory and incomplete information across the board.

Two characteristics that define transparency are legibility and accessibility and the Brazilian transparency sites for the World Cup accomplish neither of these. It must be noted that the World Cup has initiated transparency mechanisms in Brazil for the first time and that a potential legacy Brazil´s mega-event wave will be the continuing development of transparency mechanisms.

In their absence, however, we have seen escalating costs for projects that have questionable utility. For instance, of the nine public stadiums for the World Cup, seven were existing stadiums that were demolished and new structures put on the same site. There were very few public hearings and many projects were challenged in the courts to no avail.

With the exception of Manaus and Cuiabá, all of these publically financed stadiums are now under private management. Public Private Partnerships are effective public subsidies for private entertainment companies. Manaus and Cuiabá are desperately seeking for a private company to take over the maintenance and operation of their young elephants.

Most expensive seats in the world
To make matters worse, the Brazilian World Cup stadiums are among the most expensive in the world, both in terms of total cost and price per seat (see Table 2.). The staggering price tag for the stadiums is part and parcel of large-scale construction projects in Brazil (and elsewhere).

Table 2:  World Cup stadium prices per seat (USD)

Issues of corruption, collusion, lack of transparency and accountability have plagued the Brazilian preparations for the 2014 World Cup, just as they did in South Africa, and will in Russia and Qatar.

This is not to suggest that these places are less capable of hosting sports mega-events, just that the events bring into sharp relief the existing power structures while imposing an extractive business model that does nothing to change the status quo or to open avenues for institutional change.

While difficult to measure, the opportunity costs of hosting the World Cup in Brazil are at least as impactful as the money liberated for the infrastructure projects themselves.

The federal government recently launched an aggressive advertising campaign to justify the financial outlays to the Brazilian public. However, as we saw during the 2013 Confederations´ Cup, the general frustrations of the population are not likely to decrease with the 14 billion USD outlay for the World Cup. Even though many of these investments are intended to benefit Brazilian citizens, the cost overruns, lack of transparency and lack of dialogue that have accompanied them are all too familiar.