A goal the city should reconsider

By Dennis Coates

With Pennsylvania facing a $280 million budget deficit - which would be far worse if not for federal assistance - and Philadelphia suffering from a $150 million deficit of its own, the state and region cannot afford any missteps. But the United States' current bid to host a second World Cup may bring them more misery.

On Monday, a delegation of Philadelphia sports, business, and government officials traveled to New York City to cheerlead for the U.S. bid for the 2018 or 2022 World Cup. The U.S. Bid Committee has touted the tournament as a major moneymaker, predicting an economic benefit of up to $5 billion. Such a boost would be welcome - if it really could be expected.

With officials from FIFA, the world soccer federation, visiting the United States, Philadelphia and other potential host cities are vigorously promoting themselves. They are trying to beat out competing countries such as England, Russia, and Qatar for the right to - if history is any judge - lose money.

In July, I released a report titled "World Cup Economics: What Americans Need to Know About a U.S. World Cup Bid," which examined past research on the economics of sports mega-events such as the World Cup, the Olympics, and the Super Bowl. My key finding was that, although organizers' claimed the 1994 World Cup would bring a $4 billion boost to the American economy, an analysis conducted a decade later revealed those estimates to be so far off as to be laughable.

In reality, economists found that the United States suffered losses that may have surpassed $9 billion. And if that sounds bad, consider that other mega-events have done far more economic harm to their host countries. The 1976 Montreal Olympics, for example, accumulated debts that took 30 years to pay off.

The U.S. Bid Committee has refused to share its economic impact statement, but it has been willing to claim in press releases that an American World Cup would yield benefits on the order of $5 billion at no cost to taxpayers.

Claims that the event won't cost the public money don't match up with reports that Chicago withdrew as a potential host city because it was unwilling to make up to $10 million in financial guarantees. In my experience with sporting events across the country, the public almost always pays a price.

The 1994 World Cup is not the only mega-event that came with ludicrously high expectations and fell disturbingly short of them. Supporters of events ranging from the 2006 Germany World Cup to the 2011 Super Bowl have tried to justify their use of public resources with overblown, largely unchallenged estimates of economic benefits. In light of this consistent tactic, it's not surprising that the company that drafted the economic impact statement for the 1994 World Cup was brought on board for the current bid.

There has been little public pressure for any justification of such estimates or disclosure of the methods behind them. Indeed, none of the euphoria Americans felt during the South Africa World Cup this summer has translated into curiosity about our own country's bid.

Pennsylvanians need to demand that the Bid Committee defend its claim that no taxpayer money will be spent on the World Cup. The committee must show, not just tell. They should also demand to know what state and city governments will be expected to provide in the way of money and services to support the bid.

Ultimately, the question is whether the state can afford to host the World Cup. With the economy struggling to recover from recession and tax dollars increasingly stretched, this isn't an easy decision.

I am a sports fan as well as an economist, and I am not personally opposed to a second U.S. World Cup. But I am strongly opposed to unfounded economic optimism and secretive bidding processes at a time when more than 9 percent of the workforce is jobless. We should demand a serious discussion about the costs of the World Cup and whether this is the best use of the country's scarce resources.