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Soccer News, World Cup News | April 13, 2010
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Delayed returns on World Cup, South Africa
By Donna Bryson
April 13, 2010
White River, SA — The Ingwenyama Lodge has an Olympic swimming pool, gym, driving range, indoor cricket courts, and two regulation soccer fields spread across 24 acres.
Turns out, though, the grass on those fields wasn’t good enough. The surface had to be replaced when the Chilean national team chose this eastern South African hotel as its World Cup base.
That’s not all. Ingwenyama also needed a sauna, steam baths, a whirlpool, better fencing—even brighter light bulbs, more sophisticated TVs and spare wardrobes for the players’ rooms.
Henk Bredenoord, general manager of the nationwide Status Hotels chain to which Ingwenyama belongs, estimated the upgrade cost 7 million rand (just under $1 million), and said the Chileans were paying 4 million rand for their stay. Instead of a shortfall, though, Bredenoord sees opportunity.
“We’ll be a better standard resort and better able to compete in the marketplace,” he said in an interview in the lodge’s lobby, adding that the right to brag about having hosted a World Cup team won’t hurt.
“Remember, there’s a long-term vision involved,” Bredenoord said, calling the World Cup “a catalyst for growth.”
Bredenoord could be speaking for all South Africa.
The government and private entrepreneurs have spent many millions renovating airports and building roads, bus and rail systems, hotels and stadiums for the monthlong tournament. In the short-term, the World Cup is a money-losing proposition. What South Africans are hoping for is a payoff in the future.
“We want the post-2010 South Africa to be able to compete in the global economy,” Danny Jordaan, chief executive of the South African 2010 organizing committee, said in an interview.
Jordaan’s short-term worries include flagging ticket sales, a key source of income for the local organizers.
In early April, organizers said 2.2 million tickets had been sold and 500,000 remained unsold. FIFA general secretary Jerome Valcke acknowledged in February only half of high-priced hospitality seats in the luxury suites had been purchased. Soon after, the number of tickets priced for working-class South Africans was doubled.
Jordaan said then he would not be able to determine until all the tickets had been sold what effect the larger percentage of cheap tickets would have on his bottom line.
Valcke said in February that South Africa would fail to draw the 450,000 international visitors it once projected for the tournament. South African Tourism Minister Marthinus van Schalkwyk said last week the figure could be as low as 300,000. Still, it will be a boom to the economy,
“This event in June and July in South Africa will be the single biggest sporting and tourism event ever on the African continent,” he said during a visit to New York. “We would like people to come out and experience, yes, modern cities, great infrastructure, great airports, nice shopping malls, but also to experience what Africa is all about—the landscapes, the wildlife, the rich political history of the country that produced somebody like Mr. (Nelson) Mandela, where he grew up, where he was incarcerated, how he became our first fully democratic president.”
Yvonne Themba, head of a Johannesburg-based organization that supports small businesses, said for new entrepreneurs in particular, benefiting from the World Cup will be difficult.
FIFA, soccer’s Zurich-based governing body, relies on income from broadcast rights from the tournament, sponsors and advertising. It has set tight rules meant to protect its official partners: Adidas, Coca-Cola Co., Emirates airline, Hyundai-Kia Motors, McDonald’s Corp., Sony Corp. and Visa Inc. That means fans aren’t likely to find stadium restaurants serving South African favorites like steak and pap—a corn pudding—prepared and sold by locals.
“It is so tightly managed,” Themba said. “There are very few opportunities that are lucrative in my view. Because everything is FIFA.”
Officials say they also have worked to pressure against high prices during the tournament, and insist gouging has been isolated.
Themba advises South Africans to prepare for after the World Cup. FIFA and its sponsors will be gone, and South Africans will have a chance to do business when the stadiums are used for local sports and other events.
Managing stadiums and other infrastructure will be crucial after the tournament, said Gillian Saunders, who has tracked South Africa’s World Cup preparations as a strategist for Grant Thornton South Africa, which provides risk analysis, financial and other services.
Five stadiums were built for the tournament and five renovated, plus more than a dozen other stadiums were improved so they could be used for exhibition games and training.
There have been concerns that some of the new stadiums in smaller cities won’t see much use after the World Cup. Even Johannesburg might find it hard to fill the 94,700 seats of Soccer City, which cost 2.2 billion rand (about $300 million), after it hosts the World Cup final.
Other spending, organizers say, has included 655 million rand (about $90 million) for helicopters, vehicles and other equipment to help police provide security during the tournament. Long after the World Cup ends, the investment in policing is expected to continue to benefit a country with one of the highest crime rates in the world.
While crime is a concern, poverty is a greater worry for most South Africans. More than 40 percent of South Africans live below the poverty line set by their government. A quarter of the work force is unemployed.
The infrastructure building boom sparked by the World Cup had already begun to die out when the global recession reached South Africa late last year and even more jobs were shed.
Still, Sibongile Mazibuko, who led World Cup preparations in South Africa’s economic hub of Johannesburg, said construction workers gained new skills putting up state-of-the-art stadiums that will put them in a better position when the economy revives. Exposure to soccer fans from around the world will also build skills and expertise in the tourism industry, she said.
Bredenoord, the hotelier, said while the Chileans are at Ingwenyama, the lodge will be employing four young South African Spanish speakers, who took advantage of language instruction for impoverished students offered by a Johannesburg university in the lead-up to the World Cup.
SA Tourism, the state-owned tourism development company, says more than 9.6 million tourists came to South Africa in 2009, and expects the figure to top 10 million this year, much of the increase due to the World Cup. The challenge will be to build on that in 2011—when there won’t be a World Cup—and keep building to reach a goal of 14 million by 2014.
Jabu Mabuza, chairman of SA Tourism’s board and chief executive of a national hotel and casino chain, said the key is getting World Cup visitors to return, and bring friends and family.
The World Cup is “the biggest billboard we can ever get,” Mabuza said in an interview.
Saunders, Grant Thornton’s director of strategic solutions, cautioned a World Cup alone won’t solve South Africa’s economic problems.
Even with hundreds of thousands of visitors, Saunders has seen estimates they will contribute less than 1 percent to the country’s GDP. “We still need the 6 to 7 percent growth, and we’re not anywhere near that,” she said.
Economist Stefan Szymanski and sportswriter Simon Kuper, whose study of the economic impact of big sporting events was published last year as “Soccernomics”, question whether hosting a World Cup is the most efficient way of revitalizing an economy, especially in a country like South Africa that had to start from scratch for so much of the infrastructure.
But Johannesburg’s Mazibuko said much of the new infrastructure was in the pipeline, and work was just speeded up for the tournament. Because prices can only be expected to rise, getting the new roads early meant they were cheaper, Mazibuko said.
Mazibuko said thanks to the nationwide renovation, South Africa can now set its sights on hosting the Olympics.
“I’m of the view that South Africa has the capacity to do it,” she said. “I really feel that we can only grow.”
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