Here’s something to celebrate – not. The deal between the South African government and FIFA is out the bag and it’s a horror story. The terms are so not in South Africa’s favor that I can’t help wondering why they were agreed to in the first place.
The cost to South Africa of hosting the games is now at $8.6 billion. The most South Africa is predicted to make is less than the $2.5 billion FIFA will make. That leaves a huge shortfall, in a country where 21,560,000 people live on less than $2 a day (40% of the population).
The event is predicted to bring a .5% increase in SA’s GDP, whereas FIFA’s profit will be .7% of SA’s GDP. Something doesn’t seem right.
How did this happen? How was the South African government persuaded to sign an agreement where they shouldered the entire cost of the new stadia and infrastructure demanded by FIFA, yet will have no share of the tickets and television and marketing deals? Furthermore, how did FIFA manipulate that their profits would be exempted from tax?
Surely a government makes a deal like that if they’re getting something in return? FIFA didn’t get away with this when they dealt with Germany. They’ve done well for themselves here; their profits have allegedly increased by 50% since the 2006 World Cup in Germany. They’re registered as a charity in Switzerland, where they’re exempt from tax. They have $1.1 billion in equity. They refuse to reveal the salary of president Sepp Blatter. Rumors have it that he earns in excess of $1.12 million a year. Smart guy. He must sleep well at night.
But there’s worse. 750,000 people were expected to come to the World Cup, but that projection has now dropped to 370,000. Oops. FIFA is rumored to have completely booked out two major top class hotels in Cape Town, but have now withdrawn all of them, leaving both hotels with not a single booking for the event. Hmm. I hope the hotels got deposits.
So who in the South African government made the deals? Somebody perhaps who didn’t really care what the cost was to the country because they made their kickback? Now politicians are blaming FIFA. It’s pass the buck time now. Yes, FIFA have sucked us dry and suckered us for fools in this one, but somebody helped them do it. I call it an inside job.