Every World Cup comes with billion-dollar promises. Every time, the economists shrug. Before FIFA and politicians take their victory lap in July, here's what the research has been saying for decades and what they won't mention when they do.
YES! Thanks for this. And, yes, my hometown Chicago looks like the smart ones- finally. I think we learned a lesson when a previous Mayor with a very (in)famous dad (ahem) leased all the city parking meters for 99 years to a private firm for some upfront cash in order to produce the winning bid for the 2014 Olympics. That went over well. This also may be why we're letting Indiana help foot the bill for a new stadium for our NFL franchise. We know how cash strapped that league is! ;) So, Hammond, IN will be the recipients of a shift in Chicago spending for 8, 9 or maybe even10 Sundays a year. Curious what that trade-off looks like for Hoosier-land. Psychic benefits aside (and, they are hard to quantify), I appreciate your spelling it out like this. The role of FIFA and the IOC as monolith monopsony and monopoly are certainly worthy of some SEISMIC commentary.
There were so many different ways to approach this topic, but it just goes to show how many people will still keep peddling this nonsense when it’s about an event they like. I am glad to see more people pushing back about funding subsidies for companies and organizations earnings billions from their events.
- When I was an Air Force aircraft maintenance officer, my data analyst gave me a sign for my desk with the Homer Simpson quote, "Facts are meaningless, they can be used to prove anything." This is probably how FIFA justifies its press release, much to the chagrin of the Italian restaurant around the corner from the sports bar...
- If the government can set up a fund to repay those who are victims of a weaponized justice system, I wonder if they could set up a fund to reimburse investors (lodging, transportation) who thought more overseas fans would show up and then we started trade/immigrations wars with the rest of the world.
- "Psychic Income" - I was hoping this was a boost in GDP due to fans visiting psychics trying to decide who to bet on!
One nice thing that has changed over the past few years has been the media’s willingness to push back on these economic impact studies as being reputable sources of information.
A couple of things occurred to me after reading this...
1. Bastiat's point about the seen and unseen is that the seen is a quick, short run benefit at the loss of things in the long run (the unseen). Bad economists go for the quick bump, while good economists invest for the gains in the long run, even if there is short run pain.
Just because you might have spent your money on the ballet instead of the World Cup (or a MMA fight or a pub crawl) isn't the seen and unseen as Bastiat laid it out. Otherwise, all economic activity would be a zero sum game. If you offset spending by what would have happened (which conveniently can’t be measured) no economic activity will increase output. For this to be the same as Bastiat's seen and unseen, the money spent on World Cup activities would have to be put to a more profitable, long-term use. Knowing some people who are going to the World Cup, I can confidently say, they would not have used their money for something better in the long run.
2. In the US, GDP is so large that no event will ever create a noticeable bump in GDP. Even if FIFA's estimate of $80 billion is correct (and it isn't) that would only be roughly 0.3% of total GDP. It won't make a difference. My guess is that the impact on the GDP of other countries is also rather small as a percentage. For example, South Korea's GDP per capita took off after it hosted the World Cup. It probably wasn't stimulated by the World Cup though (maybe BTS - https://www.koreajoongangdaily.com/business/bts-fandoms-spending-power-projected-to-lift-koreas-gdp-by-035-percentage-points-by-2040/12558530).
3. I wonder if costs in the US are different since we already have stadiums built. Aren't some of the costs of transportation being covered by higher prices - which would be part of GDP?
4. The claim of permanent job creation by FIFA is as fake as the fouls soccer players writhe on the ground to draw. Anyone who buys this argument deserves to have FIFA rob them blind.
I'll need to go back and read Bastiat again, but I usually just link it back to the broken window fallacy and opportunity cost.
Don't worry, the $80 billion was for all three countries. The US was expected to get only $30.5 billion of that.
The three countries haven't had to build stadiums, but they've dumped a lot of money into renovations alongside other things. I've seen estimates that each city will spend $100+ million.
If you have a copy of What is Seen and Not Seen, and if it has Bastiat's author's introduction, it provides a good summary.
Oh dear! $80 billion for all three countries? How is the combined Mexico and Canada increase more than that of the US? They are hosting 78 if the 104 games. I know FIFA is corrupt, but at least try to report a believable number.
I've been making this point about subsidised events in Australia since forever. Car races the absolute worst.
The fact that Big 4 consulting firms support these claims (which their economists must know are spurious) is a good reason they should not be hired for any purpose
It's so strange that news outlets will cover these economic impact studies as though they were traditional research when they're paid for by the group that would benefit from the event. It feels like such an obvious conflict, but so many people repeat them over and over and over and over.
There are a lot of things wrong with Chicago, so let them have this one thing. Their mayor had a good quote about how funny it was to hear FIFA talk about marketing the city to tourists as though Chicago wasn't already one of the most popular summer tourist destinations in the country.
This is a particularly good moment for a strike...
"Roughly 2,000 SoFi Stadium workers overwhelmingly authorized a strike a week before the 2026 FIFA World Cup kicks off in Los Angeles.
"Unite Here Local 11, which represents the stadium's hospitality staff, said 96% of its members voted in favor of striking. While their demands include higher wages and job security, the main reason for the potential walkout stems from the presence of Immigration and Customs Enforcement at the international soccer tournament. "
Your strike was ended late in December 2024: "Contracts OK’d by workers at all three hotels raised wages, preserved health insurance, and guarded against workload increases caused by understaffing."
Thank you for such a nice summary. It's likely I'll use this in my sports econ class in the fall. I love teaching about crowding out and the substitution effect surrounding mega-events!
We actually have a paper out on the effect of organizing mega events and increased wealth inequality, check it out: https://www.sciencedirect.com/science/article/pii/S0176268024001174
I'm surprised I never got a chance to read this when it came out. Thank you for sharing!
YES! Thanks for this. And, yes, my hometown Chicago looks like the smart ones- finally. I think we learned a lesson when a previous Mayor with a very (in)famous dad (ahem) leased all the city parking meters for 99 years to a private firm for some upfront cash in order to produce the winning bid for the 2014 Olympics. That went over well. This also may be why we're letting Indiana help foot the bill for a new stadium for our NFL franchise. We know how cash strapped that league is! ;) So, Hammond, IN will be the recipients of a shift in Chicago spending for 8, 9 or maybe even10 Sundays a year. Curious what that trade-off looks like for Hoosier-land. Psychic benefits aside (and, they are hard to quantify), I appreciate your spelling it out like this. The role of FIFA and the IOC as monolith monopsony and monopoly are certainly worthy of some SEISMIC commentary.
There were so many different ways to approach this topic, but it just goes to show how many people will still keep peddling this nonsense when it’s about an event they like. I am glad to see more people pushing back about funding subsidies for companies and organizations earnings billions from their events.
Great post, and timely as always!
A few thoughts:
- When I was an Air Force aircraft maintenance officer, my data analyst gave me a sign for my desk with the Homer Simpson quote, "Facts are meaningless, they can be used to prove anything." This is probably how FIFA justifies its press release, much to the chagrin of the Italian restaurant around the corner from the sports bar...
- If the government can set up a fund to repay those who are victims of a weaponized justice system, I wonder if they could set up a fund to reimburse investors (lodging, transportation) who thought more overseas fans would show up and then we started trade/immigrations wars with the rest of the world.
- "Psychic Income" - I was hoping this was a boost in GDP due to fans visiting psychics trying to decide who to bet on!
One nice thing that has changed over the past few years has been the media’s willingness to push back on these economic impact studies as being reputable sources of information.
A couple of things occurred to me after reading this...
1. Bastiat's point about the seen and unseen is that the seen is a quick, short run benefit at the loss of things in the long run (the unseen). Bad economists go for the quick bump, while good economists invest for the gains in the long run, even if there is short run pain.
Just because you might have spent your money on the ballet instead of the World Cup (or a MMA fight or a pub crawl) isn't the seen and unseen as Bastiat laid it out. Otherwise, all economic activity would be a zero sum game. If you offset spending by what would have happened (which conveniently can’t be measured) no economic activity will increase output. For this to be the same as Bastiat's seen and unseen, the money spent on World Cup activities would have to be put to a more profitable, long-term use. Knowing some people who are going to the World Cup, I can confidently say, they would not have used their money for something better in the long run.
2. In the US, GDP is so large that no event will ever create a noticeable bump in GDP. Even if FIFA's estimate of $80 billion is correct (and it isn't) that would only be roughly 0.3% of total GDP. It won't make a difference. My guess is that the impact on the GDP of other countries is also rather small as a percentage. For example, South Korea's GDP per capita took off after it hosted the World Cup. It probably wasn't stimulated by the World Cup though (maybe BTS - https://www.koreajoongangdaily.com/business/bts-fandoms-spending-power-projected-to-lift-koreas-gdp-by-035-percentage-points-by-2040/12558530).
3. I wonder if costs in the US are different since we already have stadiums built. Aren't some of the costs of transportation being covered by higher prices - which would be part of GDP?
https://www.cbsnews.com/news/world-cup-mass-transit-us-costs/
4. The claim of permanent job creation by FIFA is as fake as the fouls soccer players writhe on the ground to draw. Anyone who buys this argument deserves to have FIFA rob them blind.
I'll need to go back and read Bastiat again, but I usually just link it back to the broken window fallacy and opportunity cost.
Don't worry, the $80 billion was for all three countries. The US was expected to get only $30.5 billion of that.
The three countries haven't had to build stadiums, but they've dumped a lot of money into renovations alongside other things. I've seen estimates that each city will spend $100+ million.
If you have a copy of What is Seen and Not Seen, and if it has Bastiat's author's introduction, it provides a good summary.
Oh dear! $80 billion for all three countries? How is the combined Mexico and Canada increase more than that of the US? They are hosting 78 if the 104 games. I know FIFA is corrupt, but at least try to report a believable number.
I've been making this point about subsidised events in Australia since forever. Car races the absolute worst.
The fact that Big 4 consulting firms support these claims (which their economists must know are spurious) is a good reason they should not be hired for any purpose
It's so strange that news outlets will cover these economic impact studies as though they were traditional research when they're paid for by the group that would benefit from the event. It feels like such an obvious conflict, but so many people repeat them over and over and over and over.
(Accurate) cynicism like this is what keeps me coming back for more. Very nicely done.
Although I don't think anyone has ever looked at Chicago government and thought "they're the smart ones".
+1 Bastiat
There are a lot of things wrong with Chicago, so let them have this one thing. Their mayor had a good quote about how funny it was to hear FIFA talk about marketing the city to tourists as though Chicago wasn't already one of the most popular summer tourist destinations in the country.
This is a particularly good moment for a strike...
"Roughly 2,000 SoFi Stadium workers overwhelmingly authorized a strike a week before the 2026 FIFA World Cup kicks off in Los Angeles.
"Unite Here Local 11, which represents the stadium's hospitality staff, said 96% of its members voted in favor of striking. While their demands include higher wages and job security, the main reason for the potential walkout stems from the presence of Immigration and Customs Enforcement at the international soccer tournament. "
https://www.cbsnews.com/losangeles/news/sofi-stadium-workers-strik-2026-fifa-world-cup-los-angeles/
There was also a major labor strike in San Francisco a few year’s back during one of the ASSA meetings. Of course, that wasn’t about ICE at all.
https://www.aeaweb.org/news/member-announcements/2024-dec-02
Your strike was ended late in December 2024: "Contracts OK’d by workers at all three hotels raised wages, preserved health insurance, and guarded against workload increases caused by understaffing."
https://sfstandard.com/2024/12/23/hilton-workers-poised-end-strike-agrement/
Thank you for such a nice summary. It's likely I'll use this in my sports econ class in the fall. I love teaching about crowding out and the substitution effect surrounding mega-events!
Thanks, Sarah! I have a couple of other articles in a similar vein that may fit better with what you're doing:
Paris Olympics: https://www.mondayeconomist.com/p/the-paris-olympics-wont-add-billions.
Caitlin Clark & Iowa: https://www.mondayeconomist.com/p/caitlin-clark
I was trying not to duplicate myself on this one, so I left a lot of those explicit terms out of it.
Oh, perfect! Thank you so much! :)