Huge challenges await to make the legacy last {writer: Fanie Heyns}

South Africa will directly recoup only a fraction of the billions of rands spent on the staging of the 2010 Fifa Soccer World Cup, but should reap long-term economic benefits through the re-branding of a nation noted for violent crime.

“The strongly positive view about a change in outside perceptions is especially relevant as South Africa moves into the post-World Cup phase,” said Joanne Bushell, Regus vice president for Middle East and Africa, in a reported interview.

“Some believe the big win is yet to come as business builds on South Africa’s new image as a reliable organiser with modern infrastructure and a can-do attitude,” she told the Sunday Times.

The Treasury has previously predicted that the World Cup would add 0.5 percentage points to gross domestic product this year, with a lasting positive effect seen on the South African economy through infrastructure development, investment and tourism.

Businesses in Africa’s largest economy have reported booming trade since the start of the soccer spectacular on 11 June, including increased hotel bookings, car rentals and sales of World Cup memorabilia.

Visa says spending by foreigners using its credit cards has topped $128 million, up 54% compared with the same period last year.

But analysts estimate foreign spending only injected R13 billion ($1.7bn) into the local economy, far short of the approximate R40bn that the government has ploughed into new stadia and upgrading roads and airports, according to a News24.com report.

Economists are not unanimous in their verdict on the injection into the local economy. Jeremy Sampson, head of InterBrand Sampson South Africa, said the World Cup will add $13bn to the economy, partly offset by the $2.6bn spent by the government on stadia, transport, infrastructure and ceremonies.

South African Tourism expected that the country would earn R27bn from the World Cup tournament.

Thandiwe January-McLean, head of SA Tourism, said this World Cup offered the South African industry and nation a rich legacy. “We should not see the World Cup as one event that solves all economic issues, but rather an opportunity to refine the way we do things and create a legacy for the future.”

In economic terms, there were projections that as much as $2bn would flow into South Africa’s tourism industry. An additional $1.1bn was expected through the retailers in and around the various match venues and city centres, she added.

“In the short term, the economic benefits will be to a very minor extent, if there is a benefit at all,” said Econometrix analyst Tony Twine, adding that more costs would come from lost production while workers watched soccer matches. (Source: News24.com)

“But I think in the longer term, we will see definite assistance to economic growth simply because of the global market exposure that the South African economy is enjoying at the moment,” he told Reuters.

At the G20 summit in Toronto, President Jacob Zuma said preparations for the World Cup over the last few years had already boosted South Africa’s economy. “Additional spending by World Cup visitors and residents should boost economic growth this year alone, by at least 0.3 percentage points.

“The marketing benefits, including tourism spin-offs, will no doubt be felt for many years to come,” he added.

Money well spent

Although some tourists have been robbed, the world’s greatest sporting event has gone smoothly, dousing initial fears of attacks on foreigners in a country with one of the world’s highest rates of violent crime outside a war zone.

“Most important is the global profiling of South Africa, more positively. We were very misunderstood as a destination, both for tourism and even for FDI [foreign direct investment],” said Gillian Saunders, director at Grant Thornton Advisory Services.

“The stories that finally went out were largely that the event went well, the fans had a great time. It’s a welcoming and friendly country and there’s nothing major going wrong except little incidents which were being handled as they happened.”

This, among other “non-tangible” benefits, would make up for the monetary shortfall in recovering the World Cup expenditure by the government and private sector, she added.

“Is it money worth spent? I’d say yes, it’s money well spent. I think we got a bargain,” she told Reuters.

The recent worldwide recession projections from Grant Thornton released on 21 April this year saw foreign tourist numbers drop to 373 000, but they were expected to stay longer and spend more.

The firm’s conclusion was that the forecast net economic impact for South Africa remained unchanged at 0.5% of GDP, and added that the economic impact is significantly higher if one factors in higher government spending and the number of jobs sustained.

According to Grant Thornton’s report, the South African government has spent R30.4bn – up from a budgeted R17.4bn – in addition to R9bn spent by local government; while the gross economic impact of the Soccer World Cup is estimated at R93bn, with 62% generated before 2010 and 38% during the course of the year.

Global viewership

Sampson said the global viewership of the Soccer World Cup was about 715 million.

The 64 games were watched by 28 billion viewers, according to Fifa.

It is estimated that over four weeks, South Africa received the equivalent of R2bn in free television coverage.

Both socially and economically, the positive impact should be significant. After all, in 2006 the German economy outperformed the rest of the world by 9%, said Sampson.

Some critical voices

The Human Sciences Research Council (HSRC) says that notwithstanding the many positives, the economic benefits of the 2010 World Cup to South Africa tend to be slightly overstated.

The Council says the World Cup’s contribution to GDP is predicted to be only in the region of between 0.2% and 0.5%; 150 000 employment opportunities – not real jobs – were created for a short period of time, most temporary in nature, with little skills transfer. Increased trade and investment flows have yet to materialise; the boost to tourism is unlikely to exceed 0.5% of GDP. (Source: SABC News)

The event will not help to mitigate poverty significantly nor accelerate levels of service delivery, as longitudinal studies have attested.

“So overall, the material benefits seem to be circumscribed,” said HSRC executive director, Udesh Pillay.

“On the other hand, the more pronounced material or tangible benefits – both of which will serve the country’s economic interests well in future – will be the development of an integrated public transport system and expedited investment in infrastructure, including information communications technology, ports-of-entry upgrades, improving infrastructure in the service industry and so forth,” he said in an interview with SABC News.

Fifa and profit margins

Well-known economist Mike Schüssler told Rapport that he hoped the South African tourism industry would lure millions of additional international visitors within the next decade.

“South Africa has received excellent exposure in new markets like Eastern Europe, Latin-America and the East.

“South Africa must build on the success of the tournament by competing with other contenders in an effort to host an Olympic Games,” he said.

“But next time, we should be more vigilant and clever, and not present this country on a plate to an organisation
like Fifa.”

Fifa expected its provisional income for the 2010 World Cup to be R24bn. The provisional figure was given in reply to a question at a media briefing at Soccer City in Johannesburg.

Fifa director of Communications Nicolas Maingot said the World Cup was the main source of income for Fifa, and its revenue from this one would tide it over for the next four years.

He added that 75% of its revenue would be invested into football development.

The estimate comes after it was reported that South Africa, which spent about R63bn on hosting the event, has granted Fifa a number of tax concessions.

Stadium debate

President Zuma told Reuters that “the infrastructure development will continue as part of the World Cup legacy to benefit all South Africans in years to come and enable all citizens to have improved access to services and infrastructure.”

But some observers are concerned about the commercial sustainability of at least five host stadiums in South Africa.

The World Cup has, for example, brought Port Elizabeth a stunning new landmark in its ocean-side stadium, but questions remain about who will fill the stands now that the global football fans have left.

“In the South African case, all the stadiums were either renovated or constructed by the government. That means that the commercial consideration was never primary,” economist Stan du Plessis from Stellenbosch University told Sapa-AFP.

“Some of these stadiums are simply not going to be in a position to cover their running costs. In that sense, they will be loss-making.”

South Africa has poured more than R30bn – multiples of the original estimates – into 10 stadiums in nine cities to showcase Africa’s first World Cup.

White elephant fears often dog major sporting events, with Athens 2004 Olympics facilities said to be rusting away amid early rumbles about London 2012.

In South Africa’s smaller towns such as Nelspruit and Polokwane, and distant cities such as Port Elizabeth, local officials are already wondering how to keep their new world-class stadiums running.

Port Elizabeth’s R2-billion, 46 000-seater hopes to lure a top football or rugby team to offset its annual R18-million running costs.

“I don’t think you can ever get the money back on the stadium,” said Stephan Pretorius, chief executive of the stadium’s private management firm, to Sapa-AFP.

“The stadium is built really for the community. The idea would be that we make the stadium as successful as possible. People here are very hungry for sport and they are very hungry for events and concerts.”

The building boom shielded South Africa from the global recession. But concerns about the stadiums themselves extend even to Cape Town – the priciest pitch at R4.5bn – in Fifa’s preferred location on prime property amid premier tourist sites.

Morné du Plessis, executive chairperson of Stadefrance, which holds the management contract for Cape Town Stadium, said the company has engaged legacy planning. This included meticulously plotting the target of between seven and nine major events in its first year.

These events will potentially include staging three or four soccer events, plus concerts, religious and political gatherings.

“Around that, we will be able to commence with building a stadium commercial plan, including the selling of corporate suites, business suites and concessionaries, advertising rights and sponsorships,” Du Plessis told Service magazine.

But the value of these commercial rights depends on a vibrant events calendar.

“We hope to announce our events plans for the remainder of the year shortly after the World Cup,” he said.

“If we can host more events, we won’t limit ourselves to seven or nine. Ideally, a stadium would want approximately 25 large events per annum.”

The viability of the stadium will be dependent on the ability to host 25 events, as well as securing a major sporting host team that can guarantee 12 major games or more per year, Du Plessis added.

Western Province Rugby has already announced its decision to stay at its traditional home, Newlands.

“I understand there are emotional reasons to stay at Newlands, which has been part of the heartbeat of Western Province Rugby for so long,” said Du Plessis.

“We say we will make Cape Town Stadium sustainable [but] there are numerous challenges. One is the establishment of a major sporting team within three years. The ability to commercialise as much of the stadium activities as possible will also pose questions of us.

“We face certain regulatory constraints incorporated in the record of decision. There are concerns about commercialisation, but we believe it can be done and simultaneously add value to the environment,” he told Service.

Foul play and other concerns

A developing country such as South Africa did not require new mega-stadia, argues Andrew Jennings, author of Foul! The Secret World of Fifa: Bribes, Vote Rigging and Ticket Scandals.

“Who is going to pay the bill? South Africa,” he told Sapa-AFP. “It is a saga of greed from Fifa; they don’t care about South Africa.

“There has been a shameless exploitation of South Africans. They have been left with white elephants; it is now for taxpayers to pay the bill.”

For Germany’s 2006 World Cup, clubs oversaw much of the construction, but only three 2010 stadia have home teams to help ensure future success.

Durban City manager Michael Sutcliffe has called for an urgent post-tournament look at sustainability, telling Sapa-AFP that all host cities face “huge funding issues”.

“If I’m battling in a big city, I would hate to know what my colleagues are doing in Polokwane and Mbombela (Nelspruit),” he recently told lawmakers.

Polokwane, in undeveloped northern Limpopo – host to a R1.3-billion stadium with annual bills of up to R17m – has already turned to the Treasury for more cash.

Both Polokwane and Port Elizabeth have shrugged off white elephant labels.

But according to Du Plessis, only Durban’s Moses Mabhida Stadium and Johannesburg’s Soccer City have promising chances post-2010.

He stops short at dishing out white elephant labels, though. “These stadia are actually built for something very specific. They will host a great World Cup. So in that respect, they are not white elephants,” he said.

But “a number of them will simply not be viable in the long run,” he told Sapa-AFP.

“We should not see the World Cup as one event that solves all economic issues, but rather an opportunity to refine the way we do things and create a legacy for the future”