University of Florida Warrington Finance Scholars Carleena Fiorenza Ryan Gilbert Maggie Smith Alex Walsh Go for the Punt An Economic Socio E conomic and Political E valuation of the South African 1995 Rugby World Cup and 2010 FIFA World Cup The purpose o f this research is to examine the economic and socio economic impacts of the 1995 Rugby World Cup and the 2010 FIFA World Cup on South Africa a recent addition to the "BRICS" nations. Using both national and international data collected and displayed throu gh several mediums, this research concludes that while economic and socio economic benefits may have outweighed the costs in the 1995 Rugby World Cup on a marginal basis, the precedent staged by this event, as well as the continued presence of severe issue s in South Africa's social environment, significantly increased the costs for the 2010 FIFA World Cup. By examining certain aspects of growing economic inefficiencies and socio economic inequalities, this paper analyzes South Africa's decision to continue to host Mega Events and uses its example to posit whether other developing nations should follow in South Africa's footsteps. The Minister of Sport and Recreation once stated, "Sport m ust be the catalyst for the building of a non racial, non sexist, dem ocratic, prosperous and free South Africa. It must build social cohesion and build a proud South African Nation for all South Africans." The first five words of his statement are the most profound: sport must be the catalyst. The intentional usage of mus t underscores the complex relationship found between sport and racial lines. The usage of catalyst wisely acknowledges that sport is only an agent to hasten the country into an era of reconciliation and progress. Sport is but
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 5 one factor in the equation f or creating a unified, economically sound South Africa. Real institutional changes are necessary to solid if y any long term change. While this is simply rhetoric from a glorified politician, t he quote do es highlight many of the issues this paper seeks to address. Why is spo rt the chosen medium for nation building? In the past two decades, South Africa has hosted three international sporting events: the 1995 Rugby World Cup, the 1996 African National Conference, and the 2010 FIFA World Cup. In this pap er we will endeavor to discuss the nature of nation building through a close analysis of both the Ruby World Cup and the FIFA World Cup hosted fifteen years later Nation building encompasses all aspects of society. Social, political and economic forces interact in the reconstruction of a society. To understand the forces at play in the reconstruction, we first must understand South Africa's dark and violent path. History of South Africa Brit ish settlers brought with them r ugby. In 1906, the national t eam pl ayed their first international r ugby game on British soil. At this game, the name Springbok's came into fruition. The Springbok is a small gazelle native to South Africa. Rugby is known as the gentleman's sport. In Great Britain, rugby divided th e elite from the working class. In South Africa, the sport united the Afrikaaners and British at the expense of driving an even more decisive wedge between the white s and blacks. By 1948, the whites had united in o pposition of the black majority, and so began the apartheid, so called "lawful separation". The next four decades brought about horrors of racism: forceful relocation
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 6 during the "Partition period", imprisonment of political enemies, brutal violence, and total disenfranchisement for non whites The international community was outraged by the racism of the apartheid. T he sporting community in general condemned the racist policies of South Africa National Party By the early 1970's, South Africa was completely banned from all international sp orting events. In 1971, the New Zealand All Black rugby team finally joined the international boycott against their historical rivals. For the next two decades, the Springboks and all other South African teams faced total isolation. The switch to major ity rule was a strategic battle won in no small part by the power of sport in South African society. Some have even said that the white minority traded their political dominance for rugby. The c lose identification of the white community with rugby was a driving force for the re integration of international sports. Nauright says, the sports boycott inflicted a measure of psychological damage on the white community." As a measure of good faith, the African National Party (ANP) petitioned international sporting committees on behalf of the white minority. The ploy worked too well, too soon. The international community lifted the boycotts unilaterally between 1990 and 1991 before a political compromise had been reached. On March 17, 1992, a referendum was held concerning the minority governments return to talks with the ANC about transfer to majority rule. If a "yes" vote was not achieved, South Africa would return to sports isolation. The desire to be a part of the world community outweighed the rese rvations of the whites about the transfer of power. Two years later, Nelson Mandela, a former political prisoner, won his bid for the Presidency through a democratic election.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 7 Nature of Sports The use of sports to unite a country is followed by mixed vie ws. "Sport is one of the most significant shapers of collective or group identity in the contemporary world." ( Adam ) However, sports inherently facilitate the mindset of "us" versus "them". Even at the lowest levels, one identifies with a team and suppor ts that team against all opponents. In South Africa, this initially became another strain on racial tensions once the sports isolation had been forgone. The black South Africans would not support the Springboks; they would actively cheer and celebrate th e successes of other teams against their national team. It was not until the World Cup in 1995, that South Africans because united in their support of the Springboks. Additionally, any nation building associated with sports and international mega events are intricately tied to success on the field. If the teams do not perform well or win the tournament, the efforts to unite the nation will fall flat. There is no positive reinforcement, no common ground where all can celebrate. As Grundlingh states "th e malleability of sports symbolism often undermines its capacity to exert a lasting effect on national identity" ( Grundlingh ) Analysis of the 1995 Rugby World Cup The Rugby World Cup put South Africa on display for the world. The fledgling government and South African Rugby Union (SARU) took intensive measures to present a united, positive image. The key individuals like he CEO were handpicked for their progressive views. Edward Griffiths, a noted sports journalist, was appointed as the new CEO. Gri ffiths fully understood his burden to present the South African rugby team in
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 8 the most favorable light. He is quoted with saying his sport was part of the "entertainment industry with responsibilities extended far beyond the rugby field." The preparatio n for the opening ceremonies was masterfully planned. The new manager Du Plessis went as far as hiring a professor to instruct the team on the meaning and proper pronunciation of the new national anthem. Team members that were negatively associated with dark history of the apartheid were banned from playing on the national team. The new management searched tirelessly for a black individual who could compete with the elite at the international level. Chester Williams, a coloured winger, became the token black individual on the team. While Williams held his own in the matches, his value to the team lied predominantly in promoting a new, unified South Africa. Even the team captains were chosen for their eloquence and skill with dealing with the media. Ca ptain Plenaar responded to a reporter by saying that it was "not just 60,000, fans, but 43 million south Africans" ( Adam ) that celebrated the national team's victory. Each key member became an actor on the international stage promoting a united and non ra cial South Africa. While the rest of the world was impressed by the show of unity and non racialism during the competition, across the board they remained doubtful that fundamental changes in society had taken place. The predictions of the rest of the wo rld turned out to be true. Grundlingh coined the term "spontaneous ideology" in relation to the euphoric, optimistic response of South Africans at the conclusion of the World Cup. This "spontaneous ideology of unity" and euphoria for the successes at the world cup were not harnessed effectively to promote lasting societal change. The impact of this "spontaneous ideology" can be described as fleeting at best. Any long term impact was dependent on real institutional changes just did not happen.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 9 The foll owing four tables are to show the distribution of the interview participants that following analysis will be based upon. The tables breakdown the income level, respondent int e rest, education level and social class by survey year. ( SALDRU Data Catalog ue ) ( SALDRU Data Catalogue ) ( SALDRU Data Catalogue )
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* : ( SALDRU Data Catalogue ) While the organization who collected all these responses seems to have attempted to control for self selection bias, there are some concerns about how representative this data set may be for the population as a whole. For the purpose of this paper, we will assume that this data set provides the most accurate view of South African society available for this time period. Self identification brought interesting results ab out the lack of progress toward social cohesion in South African Society. In both 1996 and 2001 less than 25% of those surveyed identified themselves as South African first. Most identified first with either skin color or ethnic group, and then his or her nationality. There was no data from 1990, so there is no consensus on self identification before the major events of the early 90's. Furthermore, by 2001 even fewer respondents considered themselves South African first a 28% decrease from an already lo w number.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* ; ( SALDRU Data Catalogue ) As can be seen in this table, the public opinions on basic attitudes concerning society became more positive in 1996. Fewer people supported the extremes or either radical change or valiant defense. Over 70% of thos e surveyed considered gradual improvements by reform to be the best vehicle to change in society. By 2001, the majority supporting gradual change had decreased by 7% with more of those surveyed supporting radical changes. This reversion further highlight s the lack of success of the reforms implemented by the government. For all the grand plans for social cohesion and economic development, few came to fruition with any success and public opinion reflected this disillusionment. ( SALDRU Data Catalogue ) This disillusionment can be further seen in this survey on national pride. In 1996 over 82% of those surveyed were very proud of their country; only 3.6% of population would consider themselves not proud. This overwhelming majority of positive public op inion can be attributed to both the political changes and the success on the rugby field.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* < In 2001 survey respondents were less favorable in their reports on national pride. The highest level of pride dropped 8%; national pride was reverting to the levels of the early 90's before the switch to majority rule. ( SALDRU Data Catalogue ) This study shows the on average what is the most pressing co ncern of South African society. This question focused on what was the most important issue to be addressed by society. The stable economy and economic development in general has had a strong majority that has mostly remained unchanged over the decade in question. The focus on economic development peaked in 1996 at 51.1% immediately following the Rugby World C up. While there is not enough evidence to imply causation between the increased focus on economic development and the successes of the 1995 World Cup, there is substantial evidence for the correlation between the mega sporting event and many short term po sitive changes in perception. For e xample, the society's focus on "progress toward a less impersonal and more humane society" decreased by 10.9% over the decade. The 6.9% decrease can be attributed in part to the switch to majority rule and in part to t he goodwill generated by the successes of the World Cup. On negative note, the increased focus on the "fight
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* => against crime" is concerning due to the divisive nature of crime and its effects on society and economic development. ( SALDRU Data Catalogue ) This data set shows the representative view on income inequality. The mean value increases from 4.6 to 5.4 over the time period while the spread of the data tightens. With regard to the valuation, the middle range of values implies a more moderate view on income inequality. The standard deviation decreases to 3.21 from 3.62. This shows a growing number of those surveyed are beginning to cluster around the mean, a moderate take on income inequality. This data set is less compelling than others, but i t do es offer weak evidence for slight changes in public opinion on the income gap. Economic Impact of 1995 Rugby World Cup
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* == Rugby's Uniqueness is Marketable: In this section of the paper, we will be looking at what economic effects the 1995 Rugby World Cup had on the South African economy. In order to understand what economic impact hosting a rugby tournament can have on a hosting community, you must first understand some unique aspects of rugby. Rugby has been growing at a booming rate over the past decade and has been seen as a revenue source for hosting economies all across the world. According to a study conducted by The Active People Survey, rugby participation in England has increased by 26,000 players in 2012 (RFU, 2012). In fact, rugby has been so suc cessful in all parts of the world, including the United States, that it is a new addition to the 2016 Olympics in Rio de Janeiro for the first time since 1924. R ugby has begun to popularize as a sport because many aspects of its rules and culture make it m ore unique and marketable compared to other sports like football and soccer. First off, rugby has been around since the beginning of the 1800's. Since the sport has been in existence for so long, rugby has established a strong sense of culture and brother hood between fans and players. Perhaps it is the dangerous bone crushing hits that bring this diverse group of fanatics together or maybe it's the respect that the players show for each other after each match. As the saying goes, "rugby is a hooligan's spo rt played by gentleman" as opposed to soccer which is said to be "a gentleman's sport played by hooligans". This unique aspect of the game has resulted in high fan retention no matter how far away or expensive the match is to attend. This dedication is evi dent because other than FIFA World Cup and the Olympic games, the Rugby World Cup is considered one of the top sporting events for bringing international spectators to one location. Bringing in foreign consumers is very significant in deciding whether to h ost a
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =5 mega event. These international consumers create an entirely new market for domestic businesses as well as bring nations to international light. Another factor to consider is that rugby is truly a one of a kind sport because of the dangerous appeal to the fans. Unlike football, rugby is played with no pads, which makes it more dangerous and exciting to watch. The danger that comes along with rugby and the fast pace of the game makes rugby incomparable to other sports. As a result, the majority of rug by fans do not see any substitutes for rugby including American football and soccer. Since many nations also hold other sporting events, they have little to worry regarding cannibalization of profits from other sporting events. This high demand and little competition make hosting a World Cup appealing to most countries. Despite these positive characteristics that make rugby marketable, it also has some quandaries. The most significant dilemma to bring to attention is the trouble with television sponsors. A ru gby game consists of two, forty minute halves and is played with very little stoppage time. As a result, there are fewer opportunities for commercials, which may deter some sponsor revenue. First Rugby World Cup The first ever Rugby World Cup was coho sted by Australia and New Zealand in 1987. Sixteen teams competed for the cup in the inaugural year, which brought in 600,000 spectators from around the world. The host countries were able to keep all of the ticket gate receipt revenues while also receivin g 48% of the income generated by the tournament representatives (Ministry for Culture and Heritage, 2012). Although this event was profitable, Australia and New Zealand did not see any significant economic benefits including an impact on tourism percentag e. This could have simply been due to
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =6 the fact that the event was hosted in two different countries, which would have made it difficult to attend all of the games without spending a copious amount of money. However, as rugby's first mega event, it changed the way that rugby was seen throughout the world and set the stage for the future World Cups. After this tournament, the demand for rugby dramatically increased at all levels. There was a sharp increase in the amount of revenues going towards rugby. In fac t, by the next World Cup in 1991, the tournament expanded to 31 teams and roughly one million spectators attended, which increased the amount of television broadcasting hours by ten times the amount as the previous tournament. The steady growing economic d emand drove rugby players to produce more on the field, which would ultimately be the reason why rugby became a professional sport in most countries. Prior to the World Cup era, South Africa rugby national rugby team, the Springboks, began playing interna tional games as early as the late 1800's. Although they did not compete in the first two World Cups, the hosting Springboks competed and won the 1995 World Cup, which to date is one of the most significant sporting events in the country's history. South Africa Economy 1995 In the 1990's, South Africa was watching their economy deteriorate before their eyes. Not only were some their top industries continuing to fail, but their currency, the rand, fell sharply in the course of a few months. Part of South Af rica's failing economy was mostly in part to political sanctions put on their economy in retaliation to the apartheid government. The economy was segregated by blacks and whites, which created significant economic issues. To many, the South African economy mirrored a
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =7 "malevolent invisible hand" system (good fellows). Essentially, the hand of the economy would drastically shift economic wealth from the black population to the white population. In fact, by the late 1970's, the ratio of per capita incomes from white to black Africans rose to 15:1 from 10.6:1 in the 1940's (Plessis, 2006). However, once the apartheid was abolished and Nelson Mandela was elected president, South Africa began to see impro vements in their economy's well being. In 1996, the governme nt announced their Growth Employment and Redistribution macroeconomic framework. The purpose of this plan was to work to eliminate the country's financial gap through wealth distribution and creation of opportunities for the poor. The plan also aimed incre ase services demanded by society, such as educational programs and health care. Below is a graph showing the change in GDP per year in the South African economy. Today, Africa is considered the powerhouse of sub Saharan Africa and Africa's largest economy (Kangarlou, 2013). (Plessis, 2006) As we see in this chart, South Africa's GDP was in the negatives in 1992. After this low peak, we can see a high spike around 1995. After analyzing the history of the South African economy, it is hard to determine what actually caused this increase in GDP. Could hosting the 1995 Rugby World Cup really have had this kind of effect on
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =8 their economy? I think no. As we have seen, prior to South Africa hosting the cup, their economy was in crisis. Their economy policy was co rrupt to favor the minority group, which had devastating effects. However, following the time of the World Cup in 1995, we saw that South Africa began to see improvements on their total economy. Although these improvements followed the World Cup, I am conc luding that this was mer ely correlation rather than causation. Infrastructure One common benefit of hosting international mega events is that hosting these events requires spending urban infrastructure and sporting facilities. Many argue that this spendi ng typically boosts local economies by providing jobs and increasing tourism. Because South Africa had the goal in mind of showing the world the changes to "New South Africa", nearly 177 million South African Rands (equivalent to $10,945,116.00) were spent to upgrade rugby facilities all across the country (Plessis, 2006). Nine stadiums were used during the tournament, most of which were significantly upgraded in anticipation for the tournament. Surprisingly, of the nine stadiums used in the tournament, on ly one stadium, Free State Stadium, was built specifically for the 1995 Rugby World Cup. The other eight venues had previously been built for other purposes including rugby matches, football and cricket games or outdoor festivals. Since the 1995 World Cup, almost all of these stadiums, including the Free State Stadium, have been renovated utilized to host many other notable events. Specifically, the Free State Stadium was used to host the 1996 African Cup of Nations and the 2010 FIFA World Cup. In fact, pr ior to hosting the 2010 FIFA World Cup, Bloemfontein was given
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =9 $20,674,108.00 to upgrade the stadium, which included expanding capacity by 4,373 people and adding in an electronic scoreboard. Tourism From the short term perspective of tourism, the 1995 Wo rld Cup was a failure. A major goal for South Africa was to attract overseas spectators to the games in order to bring new markets to their economy. The South African team was initial estimating that the games would bring in anywhere between 35,000 and 50, 000 overseas visitors. To their disappointment, the games only attracted 18,000 visitors to attend from overseas countries. Of this 18,000, the majority only attended for the end of the month long tournament. Reflecting back, there could have been many rea sons for this poor attendance number. Some have attributed this failure to the simple fact that the Rugby World Cup was a relatively new event, which did not bring in as much demand as expected. After conducting some research, however, the following World Cup in 1999 hosted by countries in Europe attracted nearly 1,600,000 (42,683 per game) fans. Based upon these numbers, I suggest that the game of rugby was not the deterrent, but rather the country itself. Below is a chart listing the total attendances fro m the previous Rugby World Cups (Deloitte, 2008).
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =: Chart 2.2 (Deloitte, 2008) As we can see from this graph, up until 2007, the Rugby World Cup saw a significant increase in attendance from the previous games except from the 1991 World Cup in England to t he 1995 World Cup in South Africa. I feel that South Africa's reputation in the early 1990's was responsible for this loss. During this time, South Africa was just recovering from its Apartheid period. During this time, as mentioned earlier, the country wa s characterized by separation between the black and white populations which left their country scrutinized by the rest of the world. In my opinion, both the fear of traveling to South Africa and the disapproval of their government were the main factors co ntributing to this loss. Leading to other Events When nations host these mega events, they often serve as evaluators for their economy. Looking back, the Rugby World Cup served as a test for South Africa as to whether or not their country could sustain an international mega event. Since South
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =; Africa successfully handled the implementation of this event, it was clear that another mega event would be in their near future. In itself, this aspect of the World Cup was an economic success because South Africa hosted many more international events after the Rugby World Cup. Since 1995, South Africa has hosted multiple international events including the African Nations Cup the following year, the Cricket World Cup in 2003, which brought in 626,845 spectators (Ep imetheus, 2012) and even the FIFA World Cup in 2010. Had South Africa not been successful in hosting the Rugby World Cup, I doubt that they would have benefited from the events following 1995. Impact on Youth One of the most significant economic impacts from the 1995 Rugby World Cup was the new allocation of resources to rugby development in youth. In fact, a clause in the South Africa Rugby Football Club's (SARFC) revenue sharing contract with Rugby World Cup Limited required SARFC to allocate 30% of the ir income for rugby development purposes. In addition to this requirement, Edward Griffiths, chief executive of SARFC, pledged 40% of their Rugby World Cup Profit to be used for rugby development. This increased their 1995 development budget from $1,496,76 8.00 to $1,964,508.00 (Epimetheus, 2014). Griffith also announced a program that aims to rebuild and renovate roughly twenty rugby stadiums in predominately black communities. This promotion of rugby culture to the youth in Africa is a smart investment on the SARFC's part. What they are doing is establishing new fans and consumers for their products. Although this may seem insignificant, youth spending actually makes up a large amount of consumer spending. For instance, a study conduct by Damian Hattingh an d Bill Russo in 2002 found that Africa has the youngest population in
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* =< the entire world. In Africa, about 53% of all income earned is made from individuals who from the ages of sixteen to thirty four (Hattingh and Russo, 2012). Because of this large young p opulation, the SARFC have benefited from marketing to the youth later down the road. Economic Conclusion of the 1995 Rugby World Cup As we have seen, hosting mega rugby events can have big ef fects on the hosting community, and South Africa benefited from h osting the 1995 World Cup. H owever, most of the benefits were social. Despite this, South Africa did experience some economic benefit s in their communities and host cities. South Africa benefited economically in the area of youth development in rugby and t he Rugby World Cup helped create future mega event opportunities. Examination at the Socio Economic Impact of the 2010 FIFA World Cup An Overview In 2004, The FÂŽdÂŽration Internationale de Football Association's (FIFA) World Cup was chosen to be held in S outh Africa in 2010, following the bid process that was held exclusively to African nations. Presenting a drastic change in dynamics compared to the 1995 Rugby World Cup, the 2010 FIFA World Cup cost South Africa more than just the few billion dollars in i nvestment. Because of global as well as local factors, the World Cup had to combat different forces than it previously had in 1995. First off, the prime symbol and leader that represented the humanity of South Africa, Nelson Mandela (critical in the 1995 g ames as previously discussed) only made
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 5> an appearance briefly in the final between Spain and Netherlands as he readied to turn 92 in a week (Grundligh and Nauright). Even at the age of 91, Mr. Mandela did a lap of honor (albeit in a golf cart); however, su ch was distinctly different from leading the spirit of the games as he did in 1995. Aside from the lack of having a central leader who embodied South Africa's leader affecting the 2010 FIFA World Cup, there were heightened concerns regarding global terrori sm fo llowing the September 11, 2001 attacks on the World Trade Center in New York (Cornelissen). Another massive change on the international scale was the aftermath of the worldwide recession of 2009, which according to the International Monetary Fund's Wo rld Economic Outlook in April 2012 hit South Africa harder than some of its fellow African countries. These two macro factors played a role into a growing fear of the security of and crime rates that would take place, which FIFA would require stringent and infringing regulations to ensure the productivity and benefits reeked from the games. These stringent regulations would show too, however, that the costs greatly outweighed the benefits earned, especially for South Africa. In addition to the excessive ec onomic costs to the benefits gained from the 2010 FIFA World Cup, these costs would be incurred when social inequality was at a high for the nation potentially exacerbating its socio economic crisis by helping the elite and squandering the poor. An examina tion at the Lorenz curve for the past two decades and the Gini coefficient fo r South Africa as a whole and the decomposition for specific racial group will offer insight to support this claim. Overall, examination at these differences amongst the socio eco nomic and political factors reveal a South Africa that spent far more than just economic cost; in addition, the 2010 FIFA World Cup cost South Africa
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 5= the iconic image of Democracy and humanity it had previously displayed to the world in the 1995 Rugby Worl d Championship. Stringent Securitization of the 2010 FIFA World Cup The image of South Africa heading into 2010 was that of a country which was riddled with crime and violence. South Africa's high rate of capital crimes and the rampant institution of vio lence led to hesitant feelings of the destination being regarded as safe by forthcoming tourists ( Cornelissen ). Furthermore, this culture was thought to have potentially exacerbated the odds of having a terror threat in the post 9/11 era an era marked by e xtraordinary cost to ensure that an extraordinary tragedy would not happen again. Mega events are regarded as a major security risk in and of themselves today, and because of South Africa's already turbulent persona, the securitization of the country had n ot only a major cost burden, but also cost for how its people were governed which left long term physical and social impacts that still remain largely to be seen ( Cornelissen). One way to combat the crime and institute security for South Africans (and mor e importantly for FIFA, for money spending tourists), was to require the South African government to effectively alter its constitution. The South African parliament did this by passing the 2010 FIFA World Cup Special Measures Act 11 and Act 12 (Tang). Thi s legislation was a governmental guarantee that allowed FIFA to infringe on South Africa's sovereignty over a few issues, including: security, via procedures, labor regulations, customs and tax laws, and infrastructure (Tang). By appeasing to FIFA's non ne gotiable
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 55 demands for these factors, South Africa effectively suspended part of its constitutional rights in order to allow coherence, and accordance to protect, as some critics put, "FIFA's cash cow" (Jacobs). One factor that this paper will focus on speci fically is the implementation of the FIFA World Cup Courts. South Africa's justice system is notorious internationally for being lengthy and overcrowded. Aside from cases that receive international attention because of the involvement of an Olympic champi on, as Oscar Pistorius has done in international headlines, residents of South African generally have feelings that their justice system operates at "glacial pace," which is why the establishment of the 56 World Cup courts had such a large reaction (Cornel issen). These 56 courts were scattered across the entire country which at first glance may seem a bit excessive ; however, there were instances that foreshadowed potential serious issues with the execution of the games. Such an instance was the xenophobia a ttacks that happened in South Africa close enough to the games to cause serious concern. In May 2008, there were a series of xenophobic attacks which targeted African immigrants and refugees which had 62 casualties and hundreds more injured and displaced (Desai and Goolam). These attacks preceded the sustained attacks on Africans that began on May 12, 2008, which occurred across the entire country as result from the existing tension between football fans and players as well as immigrants who posed a threa t to the stability of peace because of their potential to become victims of xenophobic attacks by natives (Desai and Goolam). While football fans had little issue supporting African immigrants from other countries on the field, Africa natives had opposite feelings when it came to mixing inside their communities (Desai and Goolam). Of the
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 56 approximately 80 who meet this profile, they are typically labeled and stereotyped as "takers of jobs and resources" (Desai and Goolam). Furthermore, due to rumors that the World Cup might be moved elsewhere, harsh steps were taken to force African immigrants out of camps and back to home countries. Methods of enforcement were so drastic to go as far as "the removal of identity cards from residents, removing their propertya rresting residents for trespassing' and then withdrawing the charges after a weekend in detention," according to Lawyers for Human rights (Desai and Goolam). Such attacks and the threat to the implementation of the 2010 FIFA World Cup in South Africa as well as the threat to the productivity of FIFA's cash cow gave grounds in which the 56 World Cup courts were established to diminish. While these courts were initially welcomed, their incomparable speed of justice with the addition of types of cases that w ere being tried changed the perception of their welcoming. The 56 World Cup courts staffed 1500 employees, including; magistrates, prosecutors, public defenders and interpreters (Tang). These courts had jurisdiction over all crimes that originated out of the World Cup tournament, similar to the granting of broad powers that FIFA required through Special Measures Acts 11 and 12 (Tang). Furthermore, the complete number of cases these courts actually heard totaled to 172 meaning that each of these courts hear d approximately 3 cases each on average (The Week Staff). Not only was this number small in comparison to the amount of resources put out to ensure domestic tranquility among the games, but the actual cases themselves were menial in comparison to the xenop hobic attacks that had occurred two years prior. Of the 172, most cases involved trivial matters such as theft, selling of World Cup tickets, fraud and common robbery (Pretoria). Furthermore, the speed of these cases in comparison to the typical South
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 57 Afri can case (which included those of more severity and quantity) was significantly different. One famous case which included two Zimbabweans who robbed a journalist from another country. These two robbers stood trial, were convicted and were sentenced all wit hin a period of two days by the World Cup courts (Hyde). Why were such resources being poured into just the benefits for the games instead of being poured into the country itself, for the better good for the nation as a whole? By implementing Special Mea sures Acts 11 and 12, South Africa appeased the stringent FIFA requirements to host the World Cup in its country; however, in doing so, it contracted to invest in institutions, such at the 56 World Cups that benefited the games (therefore concentrated on b enefitting FIFA) instead of benefitting broken institutions of government. To make matters worse, by implementing this legislation, infractions that were normally civil offenses were made into criminal activity by FIFA (Hyde) a transmutation that went agai nst the very grain of rights inside the South African constitution. These were broken rights that Nelson Mandela had conquered through his release in the 90s and his prosperity as the image for South Africa's humanity. With the implementation of new polici es, South Africa ensured that FIFA would indeed host the World Cup inside its country, allowing it to once again stand in the limelight of global attention, unfortunately this time revealing a South Africa that did not necessarily reflect the official slog an for the 2010 FIFA World Cup: Ke Nake: Celebrate Africa's Humanity (Steinbrink, Haferburg and Ley). Furthermore, the light would reveal a growing trend of social inequality in the country.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 58 Growing Prosperity and Growing Inequality An empirical way to observe the growing inequality in South Africa is through an examination of trend of the Gini coefficient and the Lorenz curve from the past few decades in South Africa. According to The World Bank, the Gini index "measures the extent to which the distrib ution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution." Furthermore, The World Bank defines that a Lorenz curve "plots the cumulative percentages of total income received a gainst the cumulative number of recipients, starting with the poorest individual or household." By viewing these two statistical interactions in the period from before the 1995 Rugby Championship to before the 2010 FIFA World Cup and comparing them to the distribution of benefits of the 2010 World Cup, a claim can be made on the effects of mega event in regard to the growing trend of inequality. The curve below represents a Lorenz curve on the cumulative share of population against the cumulative share of income, comparing the differences in 1993 and 2008 against an "ideal" line that represents equal distribution among the population.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 59 Figure 1: Income Lorenz curves for total income, 1993 and 2008 Source: "#$%&'!()**+,-!.//012!345675489:;<=!($>9,,?4;@8-!A 9;;-!B::54?@1 The above graph depicts the Lorenz curves for total income in both 1993 and 2008, both curves preceding mega events within two years. The line in the middle of the graph, angled at 45 degrees, depicts a society of perfect income equality. Be cause the curve in 1993 is angled closer to this "perfect income equality," and because it does not intersect the 2008 distribution of total income, it can therefore be deduced that income inequality from 1993 to 2008 has grown. The causes and effects of t his trend extend beyond the scope of this paper what is crucial for examination is the trend itself and that the South African government chose to host the 2010 FIFA World Cup despite the growing trend of a potential social crisis. Instead of allocating go vernment funds to potential solutions to the growing social inequality, the mere occurrence of the prioritization of an international global mega event the 2010 FIFA World Cup over intra national focus on social issues display a dynamic of social ambivalen ce that cannot be overlooked. Furthermore, when a closer examination at how the income in 2008 is distributed among races, further analysis of potential social issues in South Africa is brought even more to the fore. Below is a graph from the same source as the graph above that depicts the distribution of income among different races, specifically: African, White, Asian/Indian and Coloured. Once again, the causes and effects of the relationship between races and the distribution of total income in 2008 is outside the scope of this paper. Furthermore, because Asian/Indian curve crosses the African and C oloured curves, any deductions about the impact of total income distribution to Asian/Indians are baseless from the results of this graph alone (Liebbrandt, F inn and Woolard)
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 5: Analysis that can be drawn, however, is that inequality for Africans is highest in South Africa. Furthermore, inequality for whites in South Africa is the lowest. Such a relationship supports the claim that the economic benefits, specific ally those stemming from tourism, stadium improvements, training camps from the 2010 FIFA World Cup served to deepen relations between old white capital and the new Black elite ( Desai, Ashwin, and Goolam Vahed ). Figure 2: Income Lorenz curves by race, 20 08 Source: "#$%&'!(.//012!345675489:;<=!($9>,,?4;@8-!A9;;!4;@!B::54?@1 The brief view at the social inequality in South Africa sheds light at social injustice that is not in a trend that is decreasing. Furthermore, it is ironic that the 2010 FIFA World Cup was labeled as the "people's World Cup, where the people celebrate the game" (Desai and Vahed). Because of the hosting of the game potentially further exacerbated an already skewed allocation of total income particularly in a distribution where Africans w ere subjected to the greatest income inequality and whites to the least leaves the question on whether emerging countries with an imbalance of socio economic inequality should host mega events such as the 2010 FIFA World Cup. With a growing
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 5; trend in the Gi ni coefficient as demonstrated by the Lorenz curves, the apparent need for better social infrastructure seen in the inefficient court system compared to the surmountable FIFA World Cup system and the willingness of South Africa to comply with FIFA's demand s, there is sufficient grounds to argue that South Africa should have forgone the hosting of the 2010 FIFA World Cup. It did not shape the country in the same ways the 1995 Rugby World Cup did; furthermore, there is evidence that suggests it only deepened the growing schism of social inequality that exists in the country. Economic Impact of the 2010 FIFA World Cup In the two decades since the end of the apartheid, South Africa has worked to rebuild its economy and to establish itself as a strong nation in the eyes of the developed world. While it has successfully transformed into a stable democracy and GDP has almost tripled over this period to around $400 billion (Coleman), South Africa's status as a developing nation is still marked by issues such as pove rty, inequality, and poor education. In a major move that placed South Africa on the world stage, the F ÂŽ d ÂŽ ration Internationale de Football Association (FIFA) executive committee chose South Africa as the host of the 2010 FIFA World Cup. This opportunity is considered to be one of the most unifying moments in the country's history and paved the way for South Africa to "embrace the challenges ahead and () to plot their own path and future," (Makgabo). Former President Thabo Mbeki stated at the time that th e tournament was an "African Cup" (Warshaw); this was not just a win for South Africa, but for the entire African continent. With this in mind, FIFA launched the "Win in Africa, With Africa" program.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 5< A $70 million budget was allocated to use the game of fo otball as a way to help South Africa build a better future. This program was their "most promoted and financially supported initiative to provide tools and skills for South Africa (and the African Continent) to continue its own development," (Walker et al. ). Several reasons exist that compel a country to bid for the World Cup, including a world class infrastructure and an environment that is favorable for maximizing revenue (Makgabo). South Africa's difficult segregated history has led to a social and econo mic environment that is different from previous host nations, and because of this an additional priority of the tournament was included: "that of leaving a lasting social and economic legacy," (Makgabo). Tourism and the Economy Economic legacies of hostin g mega sporting events have generally been inconsistent, and determining how to accurately measure the impact of the actual event itself is complex. "Mega events are often associated with increases in the number of tourists to a host city. Although it is d ifficult to determine the impact of tourism in the long term, the tourist legacy needs to be evaluated by measuring the number of tourists over a longer period," (Cornelissen et al.). In South Africa's case, only short term impacts can be considered, and w hile current numbers show no negative effects, there is not yet any indication that a significant difference was made to their economy. A study conducted by Grant Thornton offering projections for tourism and economic expenditures in South Africa during t he tournament predicted that about 373,000 foreign visitors would arrive for the World Cup and that tourist spending would reach R8,8 billion (Saunders). It was also estimated that a total of 159,000 annual jobs would be created and a total of R6 R7 billio n would be collected in taxes (Saunders,
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 6> Makgabo, Bohlmann & van Heerden). The economic outlook predicted "a contribution to real GDP in excess of R10 billion, with thousands of jobs being created by the construction of new venues and upgrading of existin g infrastructure," (Bohlmann & van Heerden). This was also expected to give a substantial boost to the private sector from public and private spending for related projects (Makgabo). As stated by Cornelissen, "the economic impacts [of hosting mega sporti ng events] are seldom at levels anticipated by consultants' ex ante projections." This remains true for South Africa's World Cup, but while the numbers weren't as high as expected, there was still a short term increase in tourism and a positive, albeit sma ll, positive effect during the tournament and into the next year.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 6= As displayed in the table (source: SA Tourism) above, there were 309,554 foreign tourists who visited South Africa primarily for the World Cup tournament. This number is less than the 373,000 predicted, although Grant Thornton states that with the inclusion of those who arrived before May and many VIP, as well as those who changed their trip to South Africa to coincide with the tournament, this number is actually closer to 345,000 350,0 00 (Saunders et al.). Their calculations are based on South Africa Tourism research and they estimate that tourist expenditure was around R8 billion during the event, with a total economic impact of around R18bn (Saunders et al.). A year following the tou rnament the tourism industry seemed to reflect a boost from previous levels. Hotel average room rates rose 61% and hotel occupancy was up 18% in 2011; food and beverage industry income had increased 10% and 4% respectively from June 2009, (Saunders et al.) "Previous peak performance records smashed at many places, such as Cable Car, airport shops, nightlife, and restaurants," (Saunders et al.). Host cities such as Cape Town experienced higher visitation to attractions than previous peak levels and data pul led from television and social networks is indicative of the event's great success with viewers across the globe. However, although there was an initial boost within the first year following the tournament, the predicted tourism boom from the World Cup has not yet transpired as expected and the industry continues to experience slow growth. According to the head of Advisory Services at Grant Thornton, Gillian Saunders, this can be attributed to "the international economy taking longer than expected to recove r from the global recession, significantly curtailing international travel," (Saunders et al.). Still, the presence of several other problems has hindered South Africa's economic progress. South Africa spent R40 billion on the 2010 World Cup, and while it
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 65 is generally considered to have been money well spent, income inequality, poor education and crime remain prevalent; according to the World Bank's overview of South Africa, these, among other issues, "undermine economic efficiency and job creation." The u nemployment rate remains incredibly high at 25.2% (Heritage Foundation), and "South African businesses continue to be constrained by the perennial shortage of skilled workers," (Hern). The World Cup has not made a notable dent in job creation, but while "l ong term structural unemployment will not be solved by the hosting of a mega event such as the World Cup, it will definitely ease the problem in the short term," (Bohlmann & van Heerden). Data has only been observable over a short period of four years. Sau nders also notes that there are several areas where South Africa must learn from World Cup initiatives in order to "glean greater benefits" to the country's services sector; services contribute the most to South Africa's GDP and employment (Heritage Founda tion). Infrastructural Investment Another important measure of the World Cup's economic legacy can be taken by observing the infrastructural impacts created by the event. South Africa's hosting of the 1995 Rugby World Cup provided them with several venues before the FIFA World Cup in 2010. Still, five new stadiums were built and five existing stadiums were made ready to use through renovations for the tournament. The question remains as to whether these facilities possess financial sustainability. The gra ph (source: Alm) below shows the construction costs for South Africa's World Cup stadiums, totaling nearly $1.8 billion, exceeding pre event estimates.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 66 Cape Town Stadium was by far the costliest new stadium built, totaling $536 million, $130 million higher than expected. With a capacity of 55,000, the estimated annual operating cost of this stadium is $6 million, not including maintenance cos ts, and these expenses pass down to taxpayers (Alm). Alm estimates that costs could have been much lowe r if Cape Town had instead used their existing stadiums, Athlone and Newlands, with minor renovations, but FIFA's requirements for football stadiums prohibited this and pressure from FIFA and the South African government implied that a new stadium had to b e built in order for Cape Town to serve as a host city alongside others including Johannesburg and Port Elizabeth. In order to help pay the high annual costs, the stadiums attempt to find permanent tenants. Finding high profile tenants for these venues is a challenge, as some of the local teams still play at the old stadiums, such as Newlands, where the debt has been paid off. Issues such as these plague many of the
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 67 stadiums constructed specifically for the World Cup. Their capacities exceed attendance rea lities and they have problems attracting big crowds. For example, Ajax Cape Town, Cape Town Stadium's anchor tenant, attracted total attendance over ten games of 40,000 during the 2011/2012 S eason. "This gives an average of 4,000 [people per game], in a s tadium with a capacity of 55,000," (Alm). So far, it seems that these stadiums are too big in relation to local need and there is now an over capacity of big venues (Alm). It may take several more years to see any chances of profitability, depending on wh ether these venues can be utilized to offset their high costs. "Long term profitability of the stadiums is dependent on usability for a wide range of activities which will certainly need private sector involvement and structures which create a profit motiv e," (Alm). In some cases, those stadiums that have successfully hosted events like concerts, tournaments and other large gatherings may expect to offset their costs, but others may find it difficult to breakeven; Saunders "cautions that the importance of t hese cent e r s to be used as community facilities should not be overlooked," (Saunders et al.). It is also worth noting that the significant investments made in infrastructure during the World Cup have further prepared South Africa for hosting a possible Oly mpics in the future, as well as carry some influence over their bid for the 2022 Commonwealth Games. South Africa also invested in other forms of infrastructure for the 2010 FIFA World Cup. The government reportedly "set aside R10 billion for supporting ?/#@$A%B*3(,C%$*%.*(,DE
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 68 i nfrastructure such as roads and transport that will serve the economy far beyond 2010," (Makgabo). Upgrades were made to roads and freeways in and between the host cities, the King Shaka airport was built in KwaZulu Natal, and enhancements to South Africa' s transportation systems were achieved with the installation of the Gautrain and Rapid Bus systems. A year following the World Cup, the Gautrain was being utilized to an extent above initial estimates, and it continues to be a successful implementation. Ac cording to the M&R via Grant Thornton, it was predicted that around 3,000 to 6,000 people a day would use the train, but numbers were closer to 13,000 people on weekdays and 20,000 on weekends (Saunders et al.). Another important infrastructural impact to ok place i n the telecommunications sector with the installation of the Next Generation Network. This allows for significant information, specifically 128,000 kilometers of new fibre enabling 25 Terabytes of data, to be transmitted across South Africa. This is expected to "enable public and private technology advancement in South Africa for many years to come," (Saunders et al.). Perhaps South Africa's greatest successes with the FIFA World Cup were enhancing its global image, developing national pride and integrating sports and tourism into South African culture. Currently, any economic impact made by the event is not yet substantial enough to be immediately observable and may take several more years to fully develop. Still, the event provided an initial b oost that helped tourism businesses that were struggling with the economic decline and provided a foundation of infrastructure that may prove to be extremely beneficial in the future. Conclusion
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 69 Our findings for the economic effects of the 1995 Rugby Wo rld Cup and the 2010 FIFA World Cup in South Africa were very similar. In both cases, we found that there were no significant short term economic impacts on South Africa. In both cases, construction and renovation of stadiums and other infrastructure were apparent, yet too small to be considered significant at the time On the other hand, these mega events set the stage for South Africa in the future and undoubtedly result in future profits. For instance, we found that if it had not been for the 1995 Rugby World Cup, the execution of the FIFA World Cup would not have been as successful or even existed. For example, during the FIFA World Cup, South Africa utilized many of the same stadiums renovated during the Rugby World Cup. The FIFA World Cup also benefite d from the experienced gained from hosting the Rugby World Cup nearly fifteen years before. Overall, th e FIFA World Cup and the Rugby World Cup brought the world's spot light to South Africa, which we feel will result in higher tourism rates and consumer spending in the future. As a high growth nation, South Africa will continue to invest their future in hosting these mega events which will eventually lead to higher short term economic effects As far as Socio Economic and political effects, South Afric a has utilized mega events to both strengthen and weaken its standing in the international community. The 1995 Rugby World Cup offered a great opportunity for S outh Africa to showcase its huma ni tarianism and forthcoming as a growing democratic success especi ally through the leadership of its premier icon, Nelson Mandela. Following the 1995 Rugby World Cup, however, socio economic conditions trended in such a way where income inequality actually grew, clearly juxtaposing the model it had broadcasted to the res t of the world.
!"#$%&'()*+",-%$. )*/0".1*2*3(,41* 6: The success and the passing of the "economic stress test" of the 1995 Rugby World Cup certainly allowed for South Africa to decide to again bid for a mega event for the 2010 FIFA World Cup; however, once it received the bid, the stringent p olicies enforced by FIFA that it would have to implement would physically alter its constitution. Furthermore, the worsening effects of social inequality, as seen by the Lorenz curves and corresponding Gini coefficients, back up that those who profit from these mega events are the elite. As the elite prosper, those who suffer the worst are the citizens whose social inequality is the greatest, which in this case are black citizens, who face more inequality than those with the best distribution of total incom e, white citizens. This deepening of social inequality raises the question on whether these events are a better opportunity cost then to pursue policies and governmental programs that would help fix South Africa's clear social need. The question that is ev en more stern and relevant is whether South Africa will pursue this kind of investment into its country's longevity instead of premiering in international headlines for the benefit of major global corporations and its own elite class. While these questions remained unanswered for now, history seems to keep repeating itself with other countries with similar social inequality, where the cycle of what happened to South Africa repeats while FIFA just goes for the punt.
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