Economics of The World Cup

It's Monday, June eighth. The World Cup starts Wednesday. I'm going. I have tickets to a match at Levi's Stadium in Santa Clara, and I am extremely excited about it, which is probably why I started looking into the economics of hosting a World Cup and immediately wished I hadn't. FIFA projects this tournament will generate $40.9 billion in global GDP and create 824,000 jobs. That sounds enormous and it is an enormous number. The problem is that nearly every independent economist who has studied past World Cups has come to the same conclusion: the economic benefits are overstated, sometimes wildly, and the people who pay the most, the host cities and their taxpayers, are rarely the people who benefit the most. FIFA keeps the revenue. The cities keep the bills. That pattern has held for decades, and there's no reason to believe 2026 will break it. The 2026 World Cup is the largest in history: forty eight teams, a hundred and four matches, sixteen host cities spread across the United States, Mexico, and Canada. The opening match is Mexico versus South Africa at Estadio Azteca (es-TAH-dee-oh ahz-TEH-kah) in Mexico City on Wednesday. The final is July 19th at MetLife Stadium in New Jersey. FIFA's total revenue from the tournament will exceed eleven billion dollars, generated from television rights, sponsorships, ticket sales, hospitality packages, and licensing. FIFA keeps nearly all of it. The host countries and cities don't receive a direct share of that revenue. What they get instead is "indirect" economic impact: tourism spending, hotel taxes, restaurant revenue, retail sales, and temporary job creation. FIFA's own study projects $30.5 billion in combined benefits for the three host nations. The trouble with those projections is that they've been wrong before, and not by a little. Before the 2010 World Cup, South Africa projected massive tourism gains. The actual increase in international visitors was about 200,000, and the total additional tourism revenue didn't come close to covering the $3.6 billion the country spent hosting the event. The government recouped roughly a tenth of what it spent. Before the 2014 World Cup, Brazil spent an estimated eleven to fourteen billion dollars on stadiums, infrastructure, and security. A Brazilian government audit concluded that the public spending was "enough to pay the entire country's annual Bolsa Familia social welfare bill twice over." Sixty one percent of Brazilians said hosting was not a wise use of money. The most absurd example: in Manaus, Brazil, a city in the Amazon with a second-division soccer team averaging 1,500 fans per home game, the government built a $46 million stadium to host World Cup matches. It hosted four games. Afterward, a judge overseeing a corruption case about the stadium's inflated construction costs suggested it might better serve the community as a prison. The standard defense of the 2026 World Cup is that it avoids the worst historical mistakes. The US, Canada, and Mexico already have world-class stadiums built for NFL, MLS, and Liga MX teams. There's no need to construct twelve new venues from scratch the way Brazil did. The "white elephant" risk, building a billion-dollar stadium that sits empty after the tournament, is substantially lower because these venues will go right back to hosting professional sports. That's a real advantage, and it's worth acknowledging. But the costs don't disappear just because the stadiums already exist. Every venue still requires modifications to meet FIFA's specifications: natural grass installation over existing turf, field dimension adjustments, temporary seating changes, and what FIFA calls "clean site" requirements, which means stripping all existing branding and sponsor signage so that only FIFA's commercial partners are visible. These modifications cost tens of millions per venue. Then there are the city-level costs that don't make the promotional materials. Foxborough, Massachusetts raised $7.8 million just for public safety at Gillette Stadium, and local taxpayers refused to pay for it. Toronto's cost estimates ballooned from tens of millions to roughly $380 million. Hotel prices in North American host cities have spiked an average of 328 percent during the tournament window compared to three weeks earlier. In some Mexican host cities, the increase is closer to a thousand percent. If you're attending, which I am, the personal cost is striking. Tickets, flights, hotels, food, and transportation add up to somewhere between $3,300 and $7,500 per person depending on the city and the match. I looked at what I'm spending for one game at Levi's and it's the kind of number that makes you understand why FIFA can project $40 billion in economic activity. The money is real. The question is where it ends up. Economists who study mega-sporting events have a term for what happens to the projected tourism boost: the substitution effect. When a city hosts a World Cup match, soccer fans flood in. But regular tourists who would have visited anyway stay away because they've heard the city will be crowded and expensive. The net increase in visitors is smaller than the gross increase, and in some cases, the net effect on tourism is close to zero. South Africa's additional 200,000 visitors sound impressive until you learn that some regular tourists rerouted their trips to avoid the congestion. Victor Matheson, a sports economist at Holy Cross who has studied mega-events for decades, summarized the research bluntly: even when new stadiums are actively used after the tournament, academic studies of sports facilities are "nearly unanimous in finding little or no economic benefits associated with stadiums and arenas." The infrastructure spending that's supposed to justify the cost, new roads, transit improvements, airport upgrades, could be done without hosting a tournament. You don't need FIFA's permission to build a better subway. The pattern across World Cups, Olympics, and other mega-events is consistent: the organizing body keeps the broadcast and sponsorship revenue, the host government pays the operating costs, the projected economic benefits are calculated using models that count gross spending without subtracting the spending that would have happened anyway, and the final accounting, when anyone bothers to do it, shows a much smaller return than promised. FIFA generated nearly five billion dollars from the 2014 World Cup alone while contributing nothing to Brazil's hosting costs. The contrarian case is that economic impact isn't the only thing that matters. A World Cup puts a city on the global stage. It creates civic pride. It generates memories. I'm going to Levi's on a weeknight to watch a sport I love with tens of thousands of strangers, and the feeling of that, being inside a global event that three billion people are watching, is worth something that doesn't show up on a spreadsheet. The economists are right about the money. But the money was never the only reason cities bid to host. The problem is that politicians sell it to taxpayers as an investment, and as an investment, the returns have almost never justified the cost. So if this comes up in conversation, here's how to think about it. The World Cup starts Wednesday with forty eight teams across sixteen cities in three countries. FIFA will collect over eleven billion dollars in revenue from television rights, sponsorships, and ticket sales. The host cities won't see a direct share of that. They'll spend hundreds of millions on stadium modifications, security, transit, and infrastructure, and they'll hope to recoup it through tourism and economic activity. History says they probably won't. South Africa recouped about a tenth of what it spent in 2010. Brazil spent up to fourteen billion in 2014 and a majority of its citizens called it a waste. A stadium built in the Amazon for four matches was later suggested as a prison. The 2026 tournament avoids the worst of those mistakes by using existing venues, but the fundamental structure hasn't changed: FIFA keeps the revenue, the cities keep the costs, and the projected benefits are almost always larger than what materializes. I'll be at Levi's this summer cheering my head off. I just know who's paying for the party and who's keeping the profits. Stay informed, stay curious, and we'll see you tomorrow.