Everyone knows Brazil hosted the World Cup last summer, and suffered a humiliating loss to Germany in the semi-final.
Everyone knows Brazil spent around $14 billion on the Cup, including $3.6 billion to build or renovate stadiums. About $270 million was spent on a stadium that was used … four times.
Coming up will be more billions spent on lavish accommodations for the summer Olympics in 2016.
In Brazil there’s plenty of money to spend on entertainment that generates dollars for multimedia companies and temporarily brings amnesia to the population about the insider crony capitalism and corruption that this whole mess inspires.
Despite the largesse to sports, Brazil apparently does not have the money to invest in clean water. About 70% of Rio de Janeiro’s water flows untreated into Guanabara Bay. Not surprisingly, there is a lot of fecal matter floating around. A superbacteria found in the waters is the same kind normally encountered only in hospitals, and is difficult to control.
This example illustrates the fallacy that lives on in boardrooms of politicians and supposed city boosters around America—that buiding stadiums somehow is supposed to promote economic development. To be impolite about it, it’s rot. Don’t take my word, look at the results of all the studies done by impartial evaluators, as reported by John Siegfried and Andrew Zimbalist in “The Economics of Sports Facilities and Their Communities,” The Journal of Economic Perspectives 14(3)(Summer, 2000): pp. 95-114.
Few ideas in economics offer unanimous findings: but one near certainty is that building stadiums involving public funds will generate a drag on economic development.
All aboard for Rio 2016! – a shining example of how not to do economic development.