The high cost of sporting glory

Events such as the World Cup and the Olympics are not the economic juggernauts that their promoters

There is no doubt that the World Cup has been a joyous party for those lucky enough to attend. There is also no doubt that it has been a bon­anza for Fifa, football's governing body. The commercial income accruing to Fifa will come to about £2.2bn for TV rights, sponsorship and merchandising, while an estimated £800m has been spent on organising the tournament and £700m on local development projects.

Fifa, therefore, generates a tidy profit of £700m, which it either retains to promote its own pet projects or disburses to national football associations: a significant bargaining chip in the hands of its 24-man executive committee. In 2004, the projected cost to the South African taxpayer for hosting the finals was R2.3bn, or £200m (the bid book was lost for years until the Mail and Guardian posted it online in June); the current figure is said to be R33bn (£3bn). Fifa does not pay for the stadiums, but gets to put its brand all over development projects in the host country. And what does South Africa get in return for its investment?

The organisers claim that the event will produce an economic stimulus of R55bn (£4.8bn), generating in excess of 300,000 additional foreign tourists and promoting growth across the economy. Similar claims have been made for previous World Cups and other major sporting events, especially the summer Olympic Games. Politicians seem especially fond of claiming that major events bring significant economic benefits. This case rests on two foundations: first, that the building of stadiums and related infrastructure will boost the construction industry, with knock-on effects into the wider economy; second, that there will be a large influx of foreign visitors.

Eye candy

The problem with the first claim is that it is predicated on the assumption that the resources required for construction are lying around idle, waiting for something to do. In reality, modern infrastructure construction requires skilled labour and expensive resources. The question is not whether construction generates income; it is whether this particular form of construction puts resources to best use. It is not difficult to see that the needs of a developing country such as South Africa would be better met by building roads, houses and related infrastructure in the townships rather than building big stadiums. As with the Olympics, facilities for the World Cup are likely to be little used after the event. It's like building a bridge that is going to be used only once.

Take the development of Green Point in Cape Town at a cost of R4.5bn (£400m): the stadium will have hosted just eight games by the end of the tournament. It does offer spectacular views of Table Mountain, but remember just how much this eye candy cost. The original plan was to upgrade the existing stadium in Athlone, at an estimated cost about R1.7bn (£150m). The Athlone redevelopment was attractive because the facility is located in the poor Cape Flats and could have triggered public-sector spending in an underdeveloped area while providing a long-term facility for football fans.

Green Point, by contrast, is located in an affluent area and the mostly white sports fans there are already well provided for in the sports that interest them: rugby and cricket. The local authority had developed the Athlone plan with the South African government. It came into question when Fifa's president, Sepp Blatter, visited the Cape, after an advance delegation realised what a superb TV image a stadium at Green Point would provide. A dubious case was made that Athlone would not provide enough seats, and the semi-final promise was dangled in front of the organising committee. The result: £400m for a few TV shots.

It is questionable whether developing stadiums is a good use of South African government revenue, but the absurdity of the Green Point white elephant seems beyond doubt. Similar questions were raised about the Moses Mabhida Stadium in Durban, which cost R3.1bn (£270m). Local housing activists have bemoaned the waste of resources when so many ordinary people remain without basic facilities. The question of visitor numbers is similarly problematic. It sounds as if the event ought to bring a tourist bonanza, but the records from previous tournaments provide little evidence of any. Take Germany, for example. In June 2006, hotel bookings for overnight stays increased by 1.4 million compared to the previous June - which sounds impressive, until you realise that stays were significantly down on the previous year in May and August 2006, and that 2005 overall was a bad year. The entire 2006 overnight stay figure was only slightly higher than that recorded in 2001. Thus, the World Cup did little to boost German tourism that had stagnated after the 11 September 2001 attacks.

The decision to attend a World Cup hinges on complex factors. Many people who would have visited a location anyway choose to reschedule their trip to coincide with the event. Worse still, others will avoid visiting the country while the event is on. In 2003, there were 14 million visitors to Greece, but in 2004, when it hosted the Olympics, only 13 million. A better comparison with South Africa is the Japan-South Korea World Cup, which was some distance from the main sources of affluent, travelling fans. Japan had an increase in visitor arrivals in June 2002 of 37,646 over the previous year. South Korea suffered a decline of 56,864. South Africa expected a tourist uplift from Europe and the US; experience suggests disappointment.

In 2004, when South Africa was awarded the World Cup, there was talk of visitor numbers as high as 600,000 from people connected to the bid. By last year, Grant Thornton, as consultant to the organising committee, was still anticipating 483,000 visitors, but down­graded its forecast to 373,000 in the spring. Even this number sounds optimistic; hotels in Durban, Cape Town and elsewhere have been reporting occupancy rates in the region of 10-30 per cent, rather than the expected 65-75 per cent. Journalists have been talking about how quiet it is outside the stadiums. Demand for tickets within South Africa and from the rest of Africa has been particularly disappointing and some of the group matches were played in half-full stadiums, as if to emphasise what a waste of money much of the investment has been.

To put it in perspective, visitor numbers from outside Africa totalled 331,000 in June and July last year, while visitors from other African nations exceeded 1.2 million. So it looks as if numbers of tourists to South Africa will be little different from previous years. This is a financial nightmare for South African commerce, including large numbers of small businesses that invested in facilities to meet a much higher level of demand.Yet none of this should come as much of a surprise: if the South Africans had asked for an objective view backed up by data five years ago, they could easily have got it.

So, why are such inflated and misleading claims presented by governments and organisers? The answer is that Fifa and the International Olympic Committee (IOC) are monopolists selling the rights to the most attractive sports events on the planet and, like any good monopolist, they are not prepared to give their property away cheaply. That is why they organise bidding contests among potential host nations. Setting political rhetoric aside, what wins you the bid is the promise to lay on lavish games to the greater glory of Fifa and the IOC, largely at the public expense. These events could be self-funding, but then they would not be so lavish. Fifa and the IOC demand a government guarantee to underwrite the staggering cost. To justify this extravagance, politicians cover themselves by claiming that there is an economic benefit - a quite breathtaking refusal to face the facts.

Voodoo economics

In many cases, one might say that this does not really matter. There is good evidence that the public at large derives a significant feel-good factor from hosting major events and so is quite willing to subsidise them. Wealthy nations such as Germany and the UK can afford (more or less) to cover the cost if that is what people want. And, in the light of the banking bailouts, the subsidies no longer look so huge. Moreover, there is reason to believe that the public is not fooled by the organisers' voodoo economics. When it was announced in 2007 that the cost of the 2012 Olympic Games in London would be closer to £9bn than the original estimate of £2.4bn, few batted an eyelid.

But with South Africa, the issue is more serious. The UK government spends about £80bn annually on education, whereas South Africa spends about £12bn. The UK is spending a sum equal to just over 10 per cent of its annual education budget on London 2012, South Africa about 25 per cent to host the 2010 World Cup. Scarce resources are being diverted from activities that have much greater value added.

This is just not good enough. Historically, most major sports events have been awarded to wealthy nations that can afford to pay for them. Awarding the World Cup to a developing nation is an important step forward, but this achievement should not be bought by using essential resources to provide VIPs with freebies. There is no doubt that these events could be less lavish and remain equally entertaining. Most of us watch the World Cup on TV - we will be watching what is happening on the grass, and not from the blimp, or even the terraces.

There are many ways in which a more equitable World Cup could be organised, but most reforms require a more open and democratised governance at the top. Both Fifa and the IOC could choose to award their prestigious prizes not on the basis of extravagant public spending, but on sporting merit. For example, the nation that did the most to promote participation in sport could be awarded the right to host these events. Nor need they discriminate against the poor, as the key measure would be growth, not the base level at which countries start. However, such reforms require a commitment to pursuing purely sporting objectives, rather than the current system of rampant commercialism for the good of organisations such as Fifa. Football is meant to be the beautiful game, not the bankrupt game.

Stefan Szymanski is professor of economics at Cass Business School and co-author of “Why England Lose" (HarperSport, £7.99)

This article first appeared in the 05 July 2010 issue of the New Statesman, The cult of the generals

BRIAN ADCOCK FOR NEW STATESMAN
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Divided Britain: how the EU referendum exposed Britain’s new culture war

The EU referendum exposed a gaping fault line in our society – and it’s not between left and right.

There are streets in Hampstead, the wealthy northern suburb of London, where the pro-EU posters outnumber cars. A red “Vote Remain” in one. A “Green Yes” in another. The red, white and blue flag of the official campaign sits happily next to a poster from the left-wing campaign Another Europe Is Possible proclaiming that the world already has too many borders.

If you were looking for an equivalent street in Hull, in the north of England, you would look for a long time. In the city centre when I visited one recent morning, the only outward evidence that there was a referendum going on was the special edition of Wetherspoon News plastered on the walls of the William Wilberforce pub in Trinity Wharf. Most of the customers agreed with the message from the chain’s founder, Tim Martin: Britain was better off outside the European Union.

“Far too much Hampstead and not enough Hull” – that was the accusation levelled at the Remain campaign by Andy Burnham in the final weeks of the campaign. He wasn’t talking about geography; Remain’s voice is persuasive to residents of Newland Avenue in Hull, where I drank a latte as I eavesdropped on a couple who were fretting that “racists” would vote to take Britain out of the EU.

Rather, Burnham was talking about an idea, the “Hampstead” that occupies a special place in right-wing demonology as a haven of wealthy liberals who have the temerity to vote in the interests of the poor. The playwright and novelist Michael Frayn, in his 1963 essay on the Festival of Britain, called them “the Herbivores”:

“. . . the radical middle classes, the do-gooders; the readers of the News Chronicle, the Guardian, and the Observer; the signers of petitions; the backbone of the BBC . . . who look out from the lush pastures which are their natural station in life with eyes full of sorrow for less fortunate creatures, guiltily conscious of their advantages, though not usually ceasing to eat the grass.”

For Hampstead then, read swaths of Islington, Hackney, Brighton, Bristol, Cambridge, Edinburgh and Oxford today – all areas that were most strongly in favour of Remain and where Jeremy Corbyn is popular. But Remain never found a tone that won over the other half of Labour England; the campaign struck as duff a note among the diminishing band of pensioners on Hampstead’s remaining council estates as it did on Hull’s Orchard Park Estate.

The rift between “Hampstead and Hull”, in the sense that Andy Burnham meant it, is one that has stealthily divided Britain for years, but it has been brought into sharp focus by the debate over Europe.

Academics use various kinds of shorthand for it: the beer drinkers v the wine drinkers, or the cosmopolitans v the “left behind”. “It’s not just that [Britain] is div­ided between people who buy organic and people who buy own-brand,” says Philip Cowley, a professor of politics at Queen Mary University of London, “but between people who wouldn’t understand how anyone could buy own-brand and people who wouldn’t buy organic if you put a gun to their head.” Equating political preferences with shopping habits might sound flippant, but on 21 June the retail research company Verdict estimated that “half of Waitrose shoppers backed a Remain vote, against just over a third of Morrisons customers”.

The referendum has shown that there is another chasm in British politics, beyond left and right, beyond social conservatism v liberalism, and beyond arguments about the size of the state. The new culture war is about class, and income, and education, but also about culture, race, nationalism and optimism about the future (or lack of it). This divide explains why Ukip’s message has been seductive to former Labour voters and to Tories, and why Boris Johnson, an Old Etonian, led a campaign that purported to despise “elites” and “experts” and spoke of “wanting our country back”.

***

At the start of the campaign, the question that most accurately predicted whether you would back Remain or Leave was consistently: “Are you a graduate?” (Those who answered yes were much more likely to vote in favour of staying in the EU.) Stronger In never found a way to change that and win over those who left education at 18 or earlier. Pollsters also suggested that the much-vaunted Euroscepticism of older voters reflects generations where only one in ten people went to university.

This fissure has been growing for the best part of a decade and a half, but Britain’s first-past-the-post system, which deters newcomers and maintains entrenched parties, has provided a degree of insulation to Labour that its European cousins have lacked. Yet even here in the UK the mid-Noughties brought the brief rise of the British National Party, powered by voter defections from Labour in its strongholds in east London and Yorkshire, as well as the election of the Greens’ first MP on the back of progressive disillusionment with the governments of Tony Blair and Gordon Brown.

In office, both Blair and Brown calculated, wrongly, that Labour’s core vote had “nowhere else to go”. In opposition under Ed Miliband, the party calculated, again wrongly, that discontent with immigration, and the rise of Ukip powered by that discontent, was a problem for the Conservative Party alone.

In a 2014 pamphlet for the Fabian Society, ­Revolt on the Left, the activist Marcus Roberts, the academic Rob Ford and the analyst Ian Warren warned that Labour had “few reasons to cheer about the Ukip insurgency and plenty to worry about”. When the votes were cast in the general election the following year, that prediction turned out to be dispiritingly accurate. Defections from Labour to Ukip led to Labour losing seats to the Conservatives in Gower, Southampton Itchen, Telford and Plymouth Moor View.

For the most part, however, first-past-the-post papered over the cracks in Labour’s broad coalition: cracks that, in the harsh light of the EU referendum, have become obvious. The divide isn’t simply one of class, or income. The social profile and culture of voters in Cumbria are no different from that of voters on the other side of the border – but Scots in the Borders backed a Remain vote while their English peers in the border areas opted for Brexit. Inhospitality towards Brexit proved a stronger indication of city status than a mere cathedral: Vote Leave generally found Britain’s great cities more difficult terrain than the surrounding towns and countryside.

The problem of the fracturing vote is particularly acute for the Labour Party, which for much of the 20th century was able to rely on the Herbivores. In concert with Frayn’s “less fortunate creatures”, they have been enough to guarantee Labour close to 250 seats in the House of Commons and roughly one-third of the popular vote, even in difficult years. But Britain’s EU referendum placed Hampstead and Hull on opposing sides for the first time in modern British political history.

It was Tony Blair who, in his final speech to the Trades Union Congress as Labour leader in September 2006, said that the new debate in politics was not left against right, but “open v closed” – openness to immigration, to diversity, to the idea of Europe. Driven by their commitment to openness, Blair’s outriders dreamed of reshaping Labour as a mirror of the US Democrats – though, ironically, it was Ed Miliband, who repudiated much of Blair’s approach and politics, who achieved this.

At the 2015 election Labour’s coalition was drawn from the young, ethnic minorities and the well educated: the groups that powered Barack Obama’s two election wins in 2008 and 2012. The party was repudiated in the Midlands, went backwards in Wales and was all but wiped out in the east of England. (Scotland was another matter altogether.) Its best results came in Britain’s big cities and university towns.

The Remain campaign gave Labour a glimpse of how Miliband’s manifesto might have fared without the reassuring imprimatur of a red rosette. Britain Stronger In Europe has been rejected in the Midlands and struggled in the east of England. But it also failed to inspire passion in Sunderland, Oldham and Hull – all areas that, for now, return Labour MPs.

***

In appearance, Hull’s city centre is built on blood and sandstone, dotted with memorials to a lost empire and postwar replacements for bombed buildings, all ringed by suburban housing built by the private sector in the 1930s and the state in the 1950s and 1960s. It could be Bristol without the excessive hills, or a smaller Glasgow with a different accent. Unlike in Glasgow or Bristol, however, the residents of Hull are largely hostile to the European Union. Unlike Glasgow and Bristol, Hull is a post-imperial city that has yet to experience a post-colonial second act.

The William Wilberforce is named after a native son who helped destroy the British slave trade, the engine of Hull’s prosperity in the 18th century. The destruction of another local industry – fishing – drives resentment among the pub’s ageing clientele, who were there for breakfast and a bit of company when I visited. They blame its demise squarely on the EU.

Although the Labour Party now has only one MP in Scotland, the back rooms of the labour movement host an outsized Scottish contingent. For that reason – and the continuing threat that the loss of Labour’s seats in Scotland poses to the party’s chances of winning a majority at Westminster – the Scottish independence referendum of 2014 loomed large for Labour throughout the EU campaign.

From the outset, Britain Stronger In struggled to replicate the success of the Scottish No campaign, in part because the price of victory was one that Labour regarded as too high to pay a second time. In Glasgow, in the week before the Scottish referendum, everyone knew where Labour stood on independence – consequently, many voters were already planning to take revenge. The proprietor of one café told me that Labour was “finished in this city, for ever”.

Predictions of this sort were thin on the ground in Hull. Alan Johnson, the head of Labour’s EU campaign, is one of the three Labour MPs whom Hull sent to Westminster in 2015. But even late in the campaign, in his own constituency, I found uncertainty about the party’s official position on the referendum. For that reason, if nothing else, it didn’t have the feeling of a city preparing to break with a half-century-plus of Labour rule, as Glasgow did in 2014. In Scotland, most people I spoke to believed that they were on the brink of independence, which made the eventual result a big blow.

Only among Hull’s pro-European minority could I find any conviction that Britain might actually leave the EU. In September 2014 Kenneth Clarke remarked that Ukip’s supporters were “largely . . . the disappointed elderly, the grumpy old men, people who’ve had a bit of a hard time in life”. To listen to Hull’s Leave voters is to hear tales of the same frustrated potential: they feel that politicians of all stripes have lives entirely removed from theirs. In their defence, they are right – just 4 per cent of MPs in 2010 were from working-class backgrounds.

As for Ken Clarke, he has carved out a second career as every left-winger’s favourite Tory, but that tone of indifference towards the “disappointed lives” of globalisation’s casualties recalls his younger days as a rising star of Margaret Thatcher’s government.

Hull’s residents have been dismissed, first as the regrettable but inevitable consequence of Thatcherite economics, and now as small-minded opponents of social progress and racial diversity. Unsurprisingly, people who feel that their wishes have been ignored and in some cases actively squashed by successive governments of left and right did not expect to wake up on the morning of 24 June to discover that this time, their votes really had changed something.

Equally unsurprisingly, the Remain campaign’s warnings of economic collapse lacked force for people for whom the world’s end had been and gone.

In Glasgow in 2014 Scottish independence was a question of identity in itself, whereas in Hull, hostility towards Europe is the by-product of other identities that feel beleaguered or under threat: fishing, Englishness and whiteness, for the most part.

In Hampstead, a vote for Remain feels more like a statement about the world as you see it. One woman, who walks off before I can probe further, tells me: “Of course I’m voting to stay In. I buy Fairtrade.”

***

Immigration, not the European Union, is the issue that moves voters in Hull. “Britain is full” was the most frequent explanation they gave for an Out vote. Knowing that immigration, rather than the abstract question of sovereignty, would be crucial to winning the contest, Vote Leave tried from the beginning to make it a referendum on border control. Leave’s main theme: the threat of Turkey joining the European Union and, with it, the prospect of all 75 million Turks gaining the right to live and work in Britain.

Although Turkey’s chances of joining the EU are somewhere only just north of its hopes of launching a manned mission to Mars, the tactic worked: according to an ­Ipsos MORI poll released on the morning of 16 June, 45 per cent of Britons believed that Turkey will be fast-tracked into the Union.

That same morning, Nigel Farage posed in front of a poster showing refugees – mostly from Syria and most of them non-white – on the border between Croatia and Slovenia, with a slogan warning that uncontrolled immigration was leaving Britain at “breaking point”. But the row over the poster came to an unpleasant halt just a few hours later as news began to break that Jo Cox, the Labour MP for Batley and Spen, had been shot and stabbed on her way out of a constituency surgery. She died of her injuries a little over an hour later. On 19 June Thomas Mair, who was arrested in connection with the killing, gave his name at Westminster Magistrates’ Court as “Death to traitors, freedom for Britain”.

The circumstances of the killing felt familiar. A little after midnight on 5 June 1968, Robert Kennedy was returning to the Ambassador Hotel in Los Angeles in high spirits. He had just won a crucial victory in the California primary and was well placed to secure the Democratic nomination to run in that year’s presidential election. Going through the kitchen in order to avoid cheering crowds and get straight to his press conference, he was ambushed by a man called Sirhan Sirhan, who fired six shots from a revolver. Kennedy was rushed to hospital, where he died early the following morning.

Five months later Richard Nixon was elected president. The American right held on to the White House for 20 years out of the next 25. Jo Cox’s killing, amid the nativist howling from Farage et al, felt like the beginning of a similar chapter of right-wing advance in the UK.

Labour’s problem, and that of its social-democratic cousins throughout Europe, is the same as the American left’s was in the 1960s. Its founding coalition – of trade unions, the socially concerned middle classes and minorities, ethnic and cultural – is united (barely) on economic issues but irrevocably split on questions of identity. Outside crisis-stricken Greece and Spain, the left looks trapped in permanent opposition, with no politician able to reconsolidate its old base and take power again.

***

When I arrive in Hull, preparations are under way for a vigil in Jo Cox’s honour, but it is the nation of Turkey that is weighing on the minds of undecided voters. On Park Street, residents are divided. Those who have exercised their right to buy and are concerned about their mortgages are flirting with an Out vote but are terrified about negative equity. Those who remain in social housing or the private rented sector are untouched by stories of soaring mortgages. To many residents, the Treasury’s dire warnings seem to be the concerns of people from a different planet, not merely another part of the country. As Rachel, a woman in her mid-fifties who lives alone, puts it: “They say I’d lose four grand a month. I don’t know who they think is earning four grand a month but it certainly isn’t me.”

As Vote Leave knew, the promise that an Out vote will allow people to “take control” always had a particular appeal for those with precious little control – of their rent, of next week’s shift, of whether or not they will be able to afford to turn the heating on next week. Never mind that the control envisaged by Vote Leave would be exercised by the conservative right: the campaign found a message that was able to resonate across class and region, at least to an extent that could yet create a force to be reckoned with under first-past-the-post in Britain.

Four grand a month isn’t a bad salary, even in leafy Hampstead, but in that prosperous corner of north London fears of an Out vote, and what will come after, gained a tight purchase. The worry was coupled with resentment, too, over what would come, should the Outers triumph.

The great risk for the left is that herbivorous resentment is already curdling into contempt towards the people of Hull and the other bastions of Brexitism. That contempt threatens the commodity on which Labour has always relied to get Hull and Hampstead to vote and work together – solidarity. The referendum leaves the Conservatives divided at Westminster. That will give little comfort to Labour if the long-term outcome of the vote is to leave its own ranks divided outside it.

 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics. 

This article first appeared in the 23 June 2016 issue of the New Statesman, Divided Britain