Economics of Qatar 2022 FIFA World Cup

Synopsis

How much money does the World Cup cost? The Qatar 2022 World Cup is expected to not only be the most expensive World Cup, but also the most expensive sporting event in history. FIFA is projected to spend roughly one point seven billion dollars to set it up, while the country of Qatar itself is estimated to spend a staggering two hundred and twenty billion dollars on it. So how much is the 2022 World Cup expected to rake in? And will the costs be worth it for the country of Qatar?

Below, we explain: 1) some of the major costs associated with the 2022 World Cup; 2) Qatar's arena construction controversy, which led to nearly 7,000 migrant worker deaths related to its preparations; 3) how much the 2022 World Cup is expected to make (spoiler alert: its an almost 3X ROI); and 4) how the World Cup profits are 4x that of other major sporting events.

Real quick: This report was made possible by the You Exec 2023 Calendar, which you can download and customize with this link to save time and hours of work. Okay, back to the World Cup!

Top 9 insights

1. FIFA invested $1.7B into the 2022 World Cup, of which $324M will go to operational expenses like tickets, event transport, hospitality, and referees, $247M will go to TV operations, and $440M will go to the prize money
2. Qatar expects 1.5M attendees to the 2022 World Cup, and built 7 new stadiums which cost between $6-10B in total. The rest of its $220B price tag will go to the infrastructure and hotels to host all these attendees
3. Over 7,000 migrant workers have died during the construction of these arenas, which caused the Qatar government to pass legislation to protect workers from heat stress, give migrant workers more rights to insurance, and provide compensation packages for abuse
4. Even though Qatar spent $220B to prepare for the World Cup, it expects the event to add up to $17B to its economy over the next three years and billions more in tourism for years to come
5. The Qatar 2022 World Cup will have a total ban on alcohol, which will make it the first tournament where alcohol is banned (which could impact profits)
6. During the 2014 Brazil World Cup, FIFA spent $2.2B and earned $4.8B in revenue. Since it invested $1.7B in the Qatar event, it could net a similar ROI of almost 3x (or even better)
7. FIFA generated $6.5B between 2015 and 2018, of which $5B came from the 2018 World Cup alone. For comparison, that's 4x the revenue generated by the last Super Bowl
8. Over one billion viewers watched the last World Cup; the only other major sporting event with more viewers was the Olympic Games, which had 3.5B viewers
9. The next World Cup will be hosted in sixteen cities across North America, with an expected economic impact of over $5B in short-term activity and 40,000 new jobs created

Summary

How much does the Qatar 2022 World Cup cost?

FIFA's one point seven billion dollar investment in the 2022 World Cup covers everything from marketing to workforce management. Operational expenses stand at three hundred and twenty-two million dollars, which includes ticketing, event transport, hospitality, and the ever-important referees who stand to make seventeen million in total. The cost of TV operations stands at two hundred and forty-seven million dollars. Surprisingly (or not so surprisingly), FIFA's biggest expense is the prize money, which stands at a whopping four hundred and forty million dollars.(source: FIFA)

Ever since Qatar was awarded the event in 2010, it has been developing rapidly in response. The World Cup will take place across eight Qatar stadiums in November and December, with seven of them new and one with renovations to bring it to capacity. The country expects over one point five million visitors, which has required extensive infrastructure development. The two hundred and twenty billion dollar price tag includes all the hotels, roads, public spaces, transportation, and stadiums involved. The stadiums alone cost between six and ten billion dollars in total.

How is Qatar's arena construction controversial?

All this infrastructure and arena construction has come at a cost that isn't just about money: a human cost. Pressure to build fast and cut costs led to the deaths of many migrant workers as they built these arenas. According to Amnesty International, there are over one point seven million migrant workers in the country, who account for over ninety percent of the workforce. Many of these migrant workers have been subject to systemic abuse and poor working conditions.(source: Sky News)

Analysts estimate a total of seven thousand migrant worker deaths related to the World Cup preparations. Since 2017, the Qatar government has passed some legislation to protect workers from heat stress and give migrant workers more rights such as insurance programs and even compensation packages for abuse. But critics say the measures don't go far enough, and the government recently admitted that workers in the private sector are still being exploited.

How much is the 2022 World Cup expected to make?

So will all this cost and effort be worth it? Qatar expects its World Cup to add up to seventeen billion dollars to its economy over the next three years. Even if the upfront profits seem a bit low, Qatar hopes to continue to benefit from the tournament for years to come. The country wants to use the tournament to showcase its expansion as a major country and attract lifelong tourists. Interestingly, Qatar has a total ban on alcohol, making it the first tournament where alcohol will be banned, which could significantly impact fans' spending decisions during the event. Which could hurt its profits more than anything.(source: Bloomberg)

But the big winner is likely to be FIFA. For the 2014 Brazil World Cup, FIFA spent two point two billion dollars and earned four point eight billion in revenue. That's a pretty good return on investment. With lower expenses for 2022, it's safe to say that FIFA will make even more this year off the event in Qatar.

How do World Cup profits compare to other major sporting events?

Football remains the single most popular sport in the world, and with great popularity comes great revenue. Between 2015 and 2018, FIFA generated nearly six point five billion dollars, with over five billion generated by the 2018 World Cup alone. Compare that to the last Super Bowl, which generated roughly a fourth of that, and you can see why every country on Earth wants to host the World Cup. The only other major sporting event to attract more viewers is the Summer Olympics. The most recent Olympic games saw three point five billion viewers tune in, while over one billion watched the last World Cup. (source: the18.com)

So who's the next host country after Qatar? It will be hosted in sixteen cities across North America. And the anticipated economic impact will be similar to Qatar's, with over five billion dollars in short-term economic activity and over forty thousand jobs created. These cities will likely look to Qatar to see what goes right… and what goes wrong. Thanks for reading!