A couple of weeks ago, while outside at lunch from our day job in the city, we observed a band playing its heart out to about two people in Perth’s Women’s world cup ‘Fan Festival‘ or Fan-Fest. By the time we left work later in the day, only a few more rowdy fans had arrived to watch Australia lose to Nigeria on the big screen.
We weren’t in town last Saturday for the Australia-France match, but it would have been interesting to see whether attendance was a bit higher.
Being good economists we wondered whether such a seemingly small event would deliver (economic) benefits to Australia.
It got us thinking back to a former job when we saw the Cost-Benefit Analysis (CBA) of the then bid from Australia for the 2022 Men’s World Cup, eventually held in Qatar last year.
Strangely enough, this CBA for this event commissioned by the Commonwealth Department of Resources, Energy and Tourism is publicly available, so we can talk about it without violating confidentiality. We’re also far enough away from our old job that we can use it as an example in out ongoing series on economic evaluation of projects and policies.
The analysis provides an economic welfare-based CBA using a Computable General Equilibrium Model to analyse flow-on benefits. We won’t go different types of modelling here, but if you are interested a read of our post on the Mowen Forest controversy is worthwhile. This old post is also worthwhile to consider what counts as a cost and what it counts as a benefit. At some point we’ll publish some of our old conference papers on this topic.
If you think of sporting events as like a house auction, where the higher perception of value leads to a higher number of bidders (countries in our case), who bid ferociously for the house, meaning all of the value accrues to the seller (FIFA in our case).
The economic welfare impact of the Men’s World Cup CBA doesn’t include a number for a benefit-cost ratio.
However, it does calculate (Table ii) a Net Present Value (NPV) Australian Dollar net benefit of -$1.477 billion in 2009 prices, from an NPV of costs of $2.536 billion and an NPV of benefits benefits of $1.058 billion.
We’ll do the calculation for them and say this is a benefit-cost ratio of 0.41!
This analysis is undefeated in terms of being the only CBA or economic analysis that we ever saw submitted to governments that had a net negative outcome. A few had negative results after we had finished with them, but they normally came in with an economic benefit attached.
The figures above were for the scenario that required large capital expenditures on stadiums to meet FIFA’s standards. If little stadium expenditure were required the event might have provided a slight economic benefit to Australia. However, Australia’s stadiums needed substantial upgrades to meet FIFA’s standards (largely media areas if we recall correctly), so this was not a realistic scenario.
There was a bit of hilarity in the proposed 2022 event, as it required more hotel rooms for players coaches officials and media (we can’t remember whether these were paid for by the teams and media organisations, or had to be provided by the Local Organising Committee or LOC) than were realistically available in Perth at the time, given Western Australia was in the middle of a mining boom and had many interstate fly-in-fly out workers staying in the city. Organisers were investigating whether there was enough accommodation in, and train services from, Mandurah accommodate World Cup tourists.
Imaging arriving for your morning commute at Mandurah Station and finding yourself with thousands of boorish (and maybe drunk) soccer fans trying to cram on a train.
Fan-Fests were created so the host-nation LOC had an event where it controlled of the finances and could make a bit of money, as FIFA took anything resembling a profit from any official event such as games. Fan-fests were to show games on a big screen to patrons who either couldn’t get a ticket to a local game, or to watch games in other cities.
Understanding Fan-Fests shows what a brilliant move Qatar pulled when it alcohol banned in games (controlled by FIFA) and only allowed it to be consumed in Fan-Fests (controlled by the Qatar LOC). It’s also fair to say Budweiser has had a rough 12 months!
In the 2022 Men’s World Cup bid, our memory recalls that Fan-Fests were meant to be massive affairs enabling the LOC to recover some money. However, the 2023 version is tiny, Forest Place in Perth isn’t that big, holding a couple of hundred people at most. Not a money-making venture we suspect, but maybe it is?
Which is what gave us the bug to revisit the 2022 Men’s World Cup bid CBA and wonder about the economic impact of the women’s event.
We can’t find a complete economic analysis of the 2023 Women’s World Cup.
Football Australia (FA) claims a $460 million “economic and social” benefit but we can’t find a primary source for this figure, with most articles leading to a statement by FA’s Chief Executive in this ABC article (we’ve also seen an unsourced $568 million). If anyone can find the primary source then let us know.
We suspect this is a gross impact or some sort of impact analysis perhaps using (discredited) input-output multipliers. But we don’t know. We also suspect the social benefits are doing some heavy lifting here (see below).
By way of comparison 3.2 million tickets were sold in Qatar contributing to US$6.3 billion in revenue (including sale of rights) for the Men’s World Cup, compared to 1.5 million tickets sold in Australia and New Zealand. Revenue is tricky to match up on a like-for-like basis, but FIFA’s entire projected revenue for 2023, including but not only the women’s world cup, is US$807 million. This means that the tickets sold in Australia/New Zealand 2023 are much lower priced than for the 2022 Qatar men’s event.
However, ticket sales over and above costs are owned by FIFA and so aren’t an economic benefit to the host-nation(s), although it does make for an interesting gender-pay discussion.
The women’s world cup is certainly smaller than the men’s version would have been. We’ve mentioned the Fan-Fests and tickets/FIFA revenue, and additionally FIFA’s Australian Chief Operating Officer claimed the women’s world cup would bring 60,000 tourists to Australia , compared to “around 700,000 tourists” for the Men’s World Cup CBA (2022 World Cup Bid CBA, p2).
That’s a lot less hotel rooms, meals, coffees and beer/wines purchased by tourists.
We’d also argue that the CBA for the 2022 Men’s World Cup counts some costs as benefits, which will flow through to any analysis of the women’s event.
On the plus side, stadium infrastructure expenditure is likely a a lot less for the Women’s World Cup and it doesn’t require the NRL and AFL to host games in off-Broadway and country stadiums for the month prior to and during the World Cup (2022 World Cup Bid CBA, p16).
Nevertheless, still likely a large net economic loss from the Women’s World Cup.
Back to social benefits. Many articles breathlessly gravitate to a focus on ‘secondary benefits’ or social benefits including women’s participation and making community clubs more ‘female-friendly’, such as here and here (this one also unwittingly makes the case as to why you should never listen to a word major bank economists say).
There are certain things you have to say to be part of today’s ‘polite society’ and we guess that this is one of them. However, an emphasis of such things over competency and real impacts will come back to bite us in the long run.
Regardless, from our involvement with our family’s junior soccer over the past seven years we would say girls and women’s soccer was growing just fine with or without the World Cup.
We can’t be too critical of the 2023 Women’s World Cup as it is like every other major sporting event in that, despite the hype, provides little or no economic benefit to the host nation(s). Some people will get enjoyment from going to the games and that’s great, but let’s not kid ourselves that is good for the Australian economy.