Saturday, July 10, 2010

Fifa walks away with £2 billion in tax-free profit, while South Africa's bill stands at £6.8 billion




One of the problems with having 17,000 journalists at World Cup 2010 is that we end up interviewing each other about the deeper meaning of the story we’re covering.

In the run-up to the event, foreign hacks expected locals such as yours truly to calibrate the extent of the looming fiasco. This week it’s more like: “Please comment on South Africa’s World Cup triumph, which surely heralds a turning point in your troubled history and a new beginning for all of Africa.’’

Boris Johnson, the Mayor of London, has picked up this theme, declaring that the World Cup has given South Africa a “priceless” opportunity to show that it can, in extremis, meet construction deadlines, control crime and otherwise stage world-class events in darkest Africa. Boris is generally right, but let’s interrogate the meaning of ''priceless’’ before we succumb to delirium.

For a start, how many tourists actually showed up? Fifa initially dazzled us with promises of 483,000 visitors. Last week, Minister of Finance Pravin Gordhan claimed we were likely to hit that target, a spot of wishful thinking topped only by newspaper headlines announcing that the number of tourists arriving here “during the World Cup period” had “topped the one million mark.” In truth, border control stats show 201,856 additional arrivals in the month of June (ie 201,856 more than during the same period last year).

Another 30,000 may have come for the semis or be on their way for the final, but we’ll still wind up with well under half the tourists anticipated. If we pull, say, 230,000 visitors in total, their cumulative spending will add up to about £450 million– a third of original predictions.

Against this backdrop, it’s hard not to laugh about claims to the effect that World Cup benefits will “more or less” equal expenditure. When hosting the cup was first mooted, we were told it could cost about £1 billion. Earlier this year, local newspapers reported that costs had risen to £3.1 billion. This was considered shocking, until the ruling African National Congress sent out a press release placing the real tally at £6.8 billion – more than twice as high.

A fraction of the rise was attributable to surging steel and cement prices, but that can’t even begin to account for the ominous pattern we see here. In 2006, we committed £730 million to building the stadiums. By the time the work was done, costs had doubled (according to the finance ministry) or even trebled (according to the ruling party). Why? The government isn’t saying, but don’t be surprised if a sizeable chunk of this frenzied overspending eventually turns up in Swiss bank accounts.

In the end, the only clear winner is Fifa. The sharpies from Geneva convinced our leaders to carry all the risk and lay out all the capital – a grand total, when all is said and done, in the probable region of £10 billion, according to the Swiss accountancy firm UBS.

South Africa winds up with 10 new stadiums, some smart new infrastructure and £450 million in tourist cash. Fifa walks off with about £2 billion in tax-free profits [from sponsorship and broadcast and licensing deals] – 50 per cent more than it made at the last World Cup in Germany.

The politicians who negotiated this deal clearly gave the farm away. Now they’re laying down a smokescreen, hoping we don’t notice how thoroughly we’ve been diddled. But they needn’t bother, because your average South African doesn’t really care. The fantasy of success is seductive, the outside world’s admiration likewise. We’ve had 24 present and former heads of state here in recent weeks. The celebrity density was so high that even Paris Hilton might have gone unnoticed if she and a friend hadn’t been caught with a marijuana joint outside a post-match party.

These things are a big deal in a small country. The reality to which we return next week is almost unbearable – poverty, mass unemployment, foundering services and a state of near-panic among foreign Africans, who have reportedly been warned they’ll be butchered by desperate locals – they claim the immigrants have taken their jobs – once the last tourist leaves.

The billions squandered on the cup wouldn’t have solved these problems, but it would have made a dent. If we had known at the outset how much it would cost, would we have gone ahead? The answer isn’t as easy as I once imagined. I initially saw the tournament as an obscene waste, but then I found myself caught up in the primordial business of waving flags, stirring national anthems, and watching our beautiful stadiums glowing like jewels in the African darkness on my television. Boris Johnson is right; such things are almost invaluable. I would just have done it differently.

Last month, British journalists asked our tourism minister, Martinus van Schalkwyk, what he’d learned from his dealings with Fifa. “Read the small print,” he quipped. That would have been a good place to start.