What the 2014 FIFA World Cup means for Brazil

The FIFA World Cup is one of the biggest sporting events on the planet. Starting on Thursday, Brazil will host the tournament again 64 years after the Brazilian national team was crowned runner-up in the Maracanã stadium, Brazil. Many benefits arise from mega events, ranging from tourism and employment to improvements in social welfare and infrastructure. The 2014 World Cup will be the first to establish ecological and social parameters to be met by governments and private companies that participate in its organisation. FIFA calls this the “Green Goal” created to mark the concern for the environment and sustainability of mega events.

It is estimated that the FIFA World Cup 2014 will add R$ 183 billion (aprox. £ 52 billion) to the Brazilian Gross Domestic Product (GDP) and will lead to R$ 33 billion (aprox. £ 10 billion) in infrastructure investment, especially in the area of transport and road systems. About 3.7 million tourists, Brazilian and foreign, should generate in the event period R$ 9.4 billion (aprox. £ 4 billion). In all areas, 700.000 permanent and temporary jobs will be created in Brazil. The total planned investment in infrastructure and urban stages correspond to 0.7% of GDP of the Brazilian States. The investment of R$ 15.4 billion (aprox £ 6 billion) represents 1.9% of GDP of all the host cities together. Although the amount of investments for the works in the city of Sao Paulo is prominent (20.1% of the investments), this represents only 0.9% of GDP of the city.

Clearly, regarding the economic investment alone, there is going to be a huge impact in Brazilian economy. However, these benefits come at a cost. As part of the bidding process the bidding country must give assurances to FIFA to implement what they view as necessary changes to legislation of the country to protect the FIFA World Cup brand.

According to the legal structure of Brazil, some steps must be strictly obeyed; otherwise the World Cup would never take place in Brazil. The Federative Republic of Brazil is a democratic state of law which has a constitution that emanates all the laws that determine the operation of the country. It is set out in Article 1 of the constitution that one of the country’s fundamental principals is that of sovereignty (item “I”), i.e. to apply the guidelines and orders issued by signed treaties.

FIFA made some demands to the Brazilian government which, if strictly enforced, create what can be described as a ‘parallel state’ during the tournament. As well as requests about the construction of the stadiums, the governing body of football requires changes in federal, state and municipal Statutes. It also wants to control all advertisement related to the World Cup and calls for the characterisation of new crimes accompanied by the creation of courts to judge them. For supporters of FIFA, including the Brazilian Football Association (CBF), it is fair to cede to the pleas of those who brought the biggest sporting event on the planet to Brazil. To critics, including the federal government, the impositions jeopardise national sovereignty, as enshrined in Article 1 of the Constitution.

Firstly, the so called “supporters Statute” prohibits the entry and sale of alcoholic drinks inside the stadiums during football matches. This Article also prohibits the entry of fireworks, flags and rods and glass bottles.

The biggest obstacle on the subject concerns one of the principal sponsors of the FIFA World Cup. The Budweiser beer brand contributes about US$ 28 million to FIFA. The recently approved General Law of the World Cup, has no express provision on this issue, leaving it to the States to decide on the matter, like Sao Paulo, which expressly prohibits the sale. This means it is up to FIFA to use its power to persuade State’s to change their Statutes to release the sale of alcoholic drinks, particularly Budweiser, inside stadiums.

Secondly, the price of the tickets. In Brazil, by law, a high proportion of the tickets needs to be sold at an affordable price so local people can participate. The sale of tickets for the World Cup takes into account the provisions included in the World Cup General Law. According to the text, the elderly are entitled to half price in the four categories of entry provided. The benefit of half price will be also extended to students, but only in Category 4. From the beginning FIFA was opposed to this discounting as a federal government study estimated the loss of US$ 100 million.

Thirdly, the liability for damage in Brazil. Article 23 of Statute n. 12.633 establishes that the Government assumes the liability for FIFA, its legal representatives, employees or consultants for any damages arising, or having arisen in connection with, any incident or accident related to the security of the event, except if FIFA has directly contributed to the occurrence of damage. This is what we call in Brazil “theory of full risk”, similar to ‘strict liability’. The theory of full risk says that the Government would be required to indemnify any and all losses sustained by third parties, even if it is the result of negligence or willful misconduct of the victim. The only situation currently where this theory is applied is when there are environmental damages. Therefore, the Government cannot become a sort of universal insurance when the offending and the injured are mixed in the same person.

The realisation of the World Cup 2014 in Brazil has been the subject of great controversy among the Brazilian people. Some are in favour of the project, focusing on significant investments in infrastructure and internal development. Others say the event will bring huge spending, which would be best used in the poor sectors such as health and education.

It is certain however that the country’s economy will grow in all areas. The cities that will host the games will be the first to benefit with major infrastructure projects such as the construction of stadiums or refurbishing the existing ones, by constructing new buildings, the upgrading of the public transportation system, improving the system of security and the construction of new hotels and restaurants. All of which inevitably lead to the generation of jobs in various sectors of the economy.

Given Brazil’s previous experience with the Pan American Games of 2007, the country has to take care that the World Cup does not lead to scandals involving the Government, with the diversion of public funds and illegal contracts along with other forms of corruption.

Brazil can only benefit from hosting a mega event like the World Cup. Many tourists will visit the country, many public and private works will be carried out and a lot of work, and by association employment, will be generated. Should this once in a generation unique opportunity be managed effectively, efficiently and with integrity, all sectors of the economy and society at large will greatly benefit.