SA to 'break even' on World Cup

SA to 'break even' on World Cup

2010-07-02 14:35

Johannesburg - The World Cup will add R38bn to South Africa's economy this year - more or less the amount spent by South Africa to host the tournament, Finance Minister Pravin Gordhan said on Friday.

Addressing a press conference in Johannesburg on the economic benefits of the tournament, Gordhan said the massive infrastructural improvements undertaken for the world cup would benefit the country for generations to come.

The government has spent R33.7bn on hosting the tournament, including R11.7bn on 10 world cup stadiums, five of which were built from scratch, and R11.2bn to boost the rail network.

A further R1.3bn was spent on securing the event and R1.5bn on telecommunications and new broadcast technology, treasury figures showed.

Those figures do not include spending by host cities and provinces, which bring the overall bill closer to R40bn.

"There's definitely a few billion more. There could be 3 to 5 billion more than the R33bn we've indicated to you," Gordhan conceded.

The minister estimated the world cup had created 130 000 jobs - in the construction of stadiums and other facilities, tourism and feeder industries. He did not say how many were permanent jobs.

Spending by hundreds of thousands of world cup visitors would add 0.4% (R38bn) to GDP this year, he predicted.

Most of the income from the tournament, however, goes to football's ruling body FIFA, which is on course to gross $3.2bn from the world cup.

FIFA says 75% of that goes back into football development.

Many have questioned the judiciousness of South Africa spending so much to host the world cup given the challenge it faces in bringing housing, clean water and electricity to millions of its citizens.

'Soft' benefits

Gordhan said the new infrastructure would act as a magnet for investment as well as improve the lives of citizens.

"Once you build a road, it doesn't disappear the day after the world cup ends," he said. The "soft" benefits were equally important, he added.

The world cup had also forged a sense of unity unseen in the country since the end of apartheid in the 1990s. And South Africa had earned a reputation "as a country that can deliver".

Iraj Abedian, chief executive officer of Pan-African Capital Holdings Ltd, which advises potential investors, said the world cup had buried negativity about South Africa, at home and abroad.

There had been a lot of doubt before the tournament about South Africa's ability to meet deadlines, maintain order and contain crime, he said.

Three weeks into a trouble-free tournament, he said, "those (concerns) have been put to rest".

- Sapa

  • Realist - 2010-07-02 14:43

    Thus is one man's prediction. My prediction is that the Black Elephants will cost us more.

  • William - 2010-07-02 15:06

    @ Realist... Your comment is just "one man's prediction" too! and the term is white elephants not "black"... lol

  • William - 2010-07-02 15:11

    So we broke even, but how much did FIFA make!!!

  • Gee Whiz - 2010-07-02 15:12

    I thought the benefits of the WC were incalculable and here we have an exact amount...

  • Duh - 2010-07-02 15:21

    With all due respect Realist i and many more millions out there would go for the "man's" prediction against yours since he's earned it and much more educated than you. Nothing personal though since i choose to rather look forward to the positive growth for our Country.

  • john - 2010-07-02 15:21

    If the world cup generates that much income it will be great. The soft benefits have been great yes, only hope we will see the actual analysis, tamper free, after the event.

  • ono - 2010-07-02 15:26

    Pravin Gordhan deliberatley confuses cash flow with profit. The stadiums have to be paid out of profit. The money spent is gross not profit.

  • Jack - 2010-07-02 15:29

    Magic by numbers!

  • Eric Martinsich - 2010-07-02 15:30

    Good for our country to get rid of the negativity. At the end of the day Sepp Blatter will say thank you for hosting a great tournament. Well done and all the nice words that go with it and he will be gone. Plenty money in the bank and his personal pay will be many millions. 75% of gross $3.2bn will be ploughed back into Football development. Ya Ya Ya. That 75% will be used to make more money while developing football and so the rich get richer off the backs of the man in the street, worldwide. I wish I was part of the money making group like FIFA so that i can also use all the nice words while lining my pockets. The challenge should be for countries to play against one another for the love of their country and not big pay packets. Anyway I love my soccer, great that the world cup took place in South Africa.

  • DeonL - 2010-07-02 15:34

    Rugby and Cricket may be able to help with payments of upkeep of the Stadiums, but at best they will only brake even at worst the Government (Tax payers) will have to pay again and again to keep the white elephants!

  • clyde - 2010-07-02 15:35

    hooray!!!!! blue sky scenario

  • gcr - 2010-07-02 15:36

    I am so glad we have Pravin as Finance Minister - he seems so astute at massaging disastrous finance number and turning them in an epiphany. Can't wait for his next budget speech, we should see wholesale reduction in tax margins to companies and individuals as we see massive inflows of investments from overseas - bollocks Pravin admit we are in the same financial constraints as any of the European countries, poor government spending and trying to turn the country into a welfare state to garner votes

  • Andy - 2010-07-02 15:39

    Pravin, the roads in my suburb are disappearing PDQ, chappie!

  • LittleNinjaDevil - 2010-07-02 15:45

    so we broke even. we might have well not run the tournament. if a company does a function and breaks even they look at each other in shame not congratulate each other.

  • kagiso - 2010-07-02 15:45

    For once lets all be positive... we have a great country and we have a great vibe.. and the world has seen that its not all doom nad gloom.. its fascinating to see how tourists have embraced this country.. and how e embrace them.. now lets embrace one another.. VIVA SA!

  • Corne - 2010-07-02 15:48

    """Iraj Abedian, chief executive officer of Pan-African Capital Holdings Ltd, which advises potential investors, said the world cup had buried negativity about South Africa, at home and abroad."""" Lets just hope brother Julias and his cronies don't convince the foreign investors otherwise

  • Bullsh@t - 2010-07-02 15:49

    Fact is,taxpayer money was used to build everything but the only people that will benefit are the ones that got the tenders,absolutely now prizes guessing who they are,the taxpayer will not see a sent

  • jay@ono - 2010-07-02 15:50

    Completely agree. No indication of cost of sales or the percentage of the moeny that then goes straight back to government via taxes. At least he will get a fat bonus this year on adnormally inflated (in areas) and deflated (in other areas)

  • mark - 2010-07-02 16:11

    another spin story from the spin doctors themselves.speak to the people that own businesses in the stadiums that have lost sales and earnings. speak to the general population Mr Gordhan instead of speeding past with your entourage in your escalde . guess what they never made a cent. Speak to the hotel owners of the hotels where the teams that have been eliminated from the worldcup stayed there loss is greater than what they where paid by match and the countries. Tell the people the truth.

  • Realist - 2010-07-02 16:33

    Although it was originally a term used in Asia it has been adopted by the Europeans (mainly whites) to mean the following: A White Elephant is an expression for a valuable possession of which its owner cannot dispose and whose cost (particularly cost of upkeep) is out of proportion to its usefulness or worth. I have decided it was only fair to introduce a similar expression for Africa (mainly blacks) to mean the following: A Black Elephant is an expression for a valuable possession of which its owner cannot dispose and whose cost (particularly cost of upkeep) is out of proportion to its usefulness or worth.

  • Own goal - 2010-07-02 16:34

    You have to be concerned when a finance minister can make such outlandish claims. The correct figure for stadium development (municipal and treasury) is closer to R20 billion - this is money confiscated from the taxpayer and redirected into stadium construction which will never produce a return sufficient to cover initial investment, or even the costs of maintaining stadiums. It was a waste of money and opportunity. The jobs are already gone. Better to have left this money in the hands of industry for investment in economically viable, job and income-producing investments, which would have generated tax income to the Treasury in the long term. Or to have spent it on our collapsing infrastructure. To argue that road and rail development expenditure only occurred because of FIFA is ludicrous - this should have been upgraded years ago, and the implication that only the shady characters of FIFA could get our butts moving on this type of investment is embarrassing. Only 200 000 visitors are now expected. That means according to Mr Gordhan, that each and every tourist spent R190 000 to "earn" us the R38 billion mentioned? Duh, I think not. Who is doing the sums at treasury? Or is this the famous "multiplier effect" at work? Who exactly “earned the R38 billion“ - well big business, a lucky few in hospitality industries and businesses located near stadiums. By the way, 800 000 foreigners visit South Africa every month, so why spend R20 billion attracting 200 000 visitors ? What does FIFA do with its profit of R30 billion? We have no idea, because it is an organisation completely lacking in any transparency or accountability, hiding away in Switzerland as a charity, which pays no tax. Did the German SWC in 2006 change your perception of that country? Did it make you visit the country later, or invest in it? Did you think better of Germans after the event ended? What about the 2002 event in Korea? Remember that one? No, I didn’t think so. Our backpacker visitors and billions of television viewers around the world are not interested in South Africa’s image, they just want to watch soccer. Potential investors in South Africa don’t need to see us host a soccer tournament to prove we are a country worth investing in – they do their homework properly, and stadiums don’t figure in that at all. The abuse and misuse of our police force in securing FIFA’s commercial interests, the hijacking of our criminal justice system to ensure swift protection of FIFA’s civil law rights (yes the Government criminalized a range of activities which the rest of us have to take through the civil courts, just for FIFA), small trader forbidden to earn a living for a month, etc etc and I just shake my head. Sorry to rain on the parade, but it’s a great pity that South Africa was distracted at such great cost from the issues that really count in this country, and an even greater shame that our media are willing to uncritically spread the hype and hoopla from FIFA and the nonsense from Treasury. Political leadership will unite us, not soccer, we will become a great nation when we face the real issues and stop hiding our heads in the sand. Please please forget about the Olympics

  • Math Teach - 2010-07-02 16:38

    did this guy pass math?

  • neels - 2010-07-02 16:42

    And I thought the idea was to make a profit.......? Does it include payment for the White Elephants/stadiums?

  • MBA - 2010-07-02 16:55

    The Minister has no clue what he is talking about.He will ten to one please the uneducated masses out there by painting a false picture in a golden frame.Watch your taxes over the next 5 years.That will be the REAL picture.I always thought that the Minister is an intellegent man....I will now have to re-evaluate that as I think he is actually a bullduster. Confusing guesstimate income over guesstimate and calling it BREAK EVEN !! Nee man, kom reg, we not all that dof !!!!!!

  • Wool over our eyes - 2010-07-02 17:11

    According to the department of home affairs, we had an increase in visitor numbers of 32% for June. This equates to an extra 180,000 visitors. For the world cup visitors to spend a total of R38bn, the visitors would have to spend an average of R200,000 each. This is highly unlikely! Somebody is trying to pull wool over our eyes.

  • Michael - 2010-07-02 19:01

    "Breaking even" they say...hmmm....sounds like sound business practice to me! ;-) (And how on earth can they reasonably accurately quantify how much will be added to SA economy as result of SWC??)

  • Magician - 2010-07-02 20:52

    Hallo Merlin (aka Pravin Gordhan)!!!!

  • Frans - 2010-07-02 21:50

    This is strange, especially since the formal business sector released its official estimate of a 27 billion rand shortfall just earlier this week. The fact is that the voters in South Africa would want the heads of some government figures to roll due to this shortfall, so who do we trust? If you believed that the arms deal would really have created huge spin-offs with thousands of jobs, you would probably also believe this government sugar coated fairytale. Go and have a look, that is if you are brave enough.

  • Etienne Marais - 2010-07-02 21:54

    So we want to change the image of the country and attract investment, why not invest in crime control and make the citizens safe before spending billions on stadia. Crime is a major factor in scaring of investment.

  • Tommo - 2010-07-02 22:43

    Amazing all the numbers add up, yeah- right far to convenient,we weren't all born yesterday,maybe we had eskom accountants doing the sums?

  • hyena - 2010-07-03 06:47

    aint creative bookkeeping a wonderful tool ?

  • MDK - 2010-07-03 07:42

    So the "country" spends R38billion (give or take a few)on hosting the event. The money the minister is talking about is money spent by the tourists. This money had gone mainly to accommodation and having a good time. It's not like that money is going back to government. This works out to be the biggest wealth transfer from "the people" to "the connected people" and the people who own businesses (read white people) Fifa are making BILLIONS according to Fifa themselves. We paid for the party and they get MOST of the profit? Who negotiated THIS crap deal? The guys at the IOC must be rubbing their hands in anticipation!

  • ppip - 2010-07-03 09:38

    Oh WOW! In this country priding itself on trying to beat Columbia on corruptness is showing a profit on SWC?!? That means the hands were kept out of the cookie jar this time! And that, with a crooked police chief? Wow! Absolutely wow!

  • gfm - 2010-07-03 09:52

    Adding R38bn to cashflow dioes not equate to the CAPITAL spent of R 38bn! FIFA will enar a PROFIT of R3bn that's great but SA will forever be in debt because of this, Surey our Finance MNinister cannot be tis naive to make this staetmentwhen studies have shown that most of the stadia (if not all) will run a a loss year-on-year? Even Japan admiotted last month that the stadia they builit for the klast WC there is running at a loss of over USD 3m - annually!!!!C'mon Mr. Minister, dont say these things because FIFA gave you the script, be honest now we could hve built housing/ spent on power supply, basic education, medical care......shall I go on?????

  • Kallie - 2010-07-03 10:25

    The formal business sector said the shortfall would be 27 billion rand just earlier this week. Who do trust, our honest government or real business leaders with credibility?

  • Loyal Citizen - 2010-07-03 10:56

    We complained that we will not be ready and the cup will move to OZ - we were proved wrong, then we said crime will be a problem - we were proved wrong, now we do not believe the benefits - we will be proved wrong. Become South Africans, not emigrants in waiting

  • Orca - 2010-07-03 11:32

    Yes, Pravin, no doubt you'll find some idiots who will actually believe you. Bloody liar!

  • Minimally optimistic - 2010-07-03 14:43

    I think I have just heard that the All Blacks will meet the Boks at the Soweto stadium as part of the Tri-Nations rugby, so hopefully we can get some use out of some of the stadia before they degenerate

  • geejay - 2010-07-03 15:47

    Certainly the perceptions of South Africa have changed, that will effect not only how foreigners percieve investment into South Africa but how young South Africans percieve their own country. Whats it really worth? I would aay well over 100 billion USD over the next 3-4 years, to those who have a low self worth, seek help, we have good doctors

  • Bryan - 2010-07-03 17:05

    Then why is the price of petrol being held???

  • SAGE - 2010-07-03 19:08

    HAHAHAHA waht utter rubbish. All the projections even the official govern documents all posted far higher expenditure. Even the budget speech added up to a heck of a lot more than 38bn in SWC support. I think they are scared of an audit and the truth coming out.By now they have already started burning and shredding receipts to cover up the loses!

  • Taxpayer - 2010-07-03 20:19

    Pravin, give us figures we can understand: What is the income and expenditure to the TAX PAYER? Fortet about this "future benefit" promises.

  • TT - 2010-07-04 07:13

    Mr Gordon, you but a toothless puppet that spews out numbers that means well, nothing..your ticket fiasco is something so simple to control yet, you could not even do please, they are just annoucing how the jobs you "predict" are now mostly gone..and those that are created to maintain that infrastructure you so proudly mention will be paid for by our taxes and rates, which no doubtly increase dramatically once again. My rates were at R104 in 2001, 2010 R710,same house, no you go figure...Mr Gordon..

  • Ben - 2010-07-04 07:21

    There can be only one person who believes him, and that is Pravin Gordhan

  • Pharcide - 2010-07-04 07:30

    Why don't I believe him and how did he work this sum out?

  • Optimistic - Anderso - 2010-07-05 07:37

    Forget figures ,have a vision for the future, the World cup tournament triggered what RSA needed anyway , which is improvement on infrustructure .This will in translet in investment growth maybe not now but soon.We will be luck if we manage to break even the expenditure versus the income during the world cup period, but to me thats not the fact, there's life after the world cup. To those negative who just want to see the world cup bare the fruit, i say look beyond yo nose the sky could not even be the limit, but yo negativity will definately impact on our progress. Viva RSA viva.

  • TOM Watney - 2010-07-05 08:59

    Should have rather spent the money on ungratefull youths to get a 30% pass rate? The money was well spent

  • SAGE - 2010-07-05 12:47

    @TOM WHATNEY...Tom that is exactly the order to splash out on the stupid SWC the govt cut the budgets to fund the real things that matter. You are getting a 30% pass rate because you are are investing 30% in the old adage get what you pay for! Lets not even talk about healthcare and general services delivery.

  • @Realist - 2010-07-05 13:58

    You are a racist bud...get over your superiority attitude...even better, go to America and join the KKK, we dont need moegoes like you here. Not one race is better than the other, the sooner you get that the more valuable you'll be as a citizen. Otherwise you are just a waste of space. No offence meant, just had to say it like it is:-)

  • Gerrie - 2010-07-06 14:35

    Yeah right and I am Santa

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