Given the FIFA scandal and the bribery allegations surrounding the 2010 FIFA World Cup that was hosted by South Africa, we asked the author of South Africa’s World Cup: A Legacy for Whom?, Eddie Cottle, to tell us who benefited from the 2010 Soccer World Cup in South Africa.
When the South African government entered the FIFA market to bid to be the first country in Africa to ‘host’ the World Cup it pu
rchased the right to host the sporting spectacle without a definite price. The bid document, itself a secret document, (which was funded by Multinationals with a direct financial interest in the games) contained flawed calculations based on what is called guess-estimates, which cannot account for cost escalations let alone the net income to the state and society.
The initial cost estimate was calculated at R2.3 billion and was to be paid by the South African government, largely to fund the stadia and related infrastructure. At the same time, it was projected that South Africa would gain an additional R7.2 billion in tax revenue related to hosting the event. However, the 2010 estimated cost for the South Africa government was R39.3 billion – an enormous 1 709% increase from the original estimate and amounted to a complete financial loss in terms of taxable sales.
The concessions to FIFA are contained in the seventeen government guarantees in the FIFA Bid Book and secured through the Revenue Laws Amendment Act 20 of 2006. Guarantees included amongst others a tax-free bubble around FIFA-designated sites; unrestricted import and export of all foreign currencies to and from South Africa, as well as their exchange and conversion into US dollars, euros or Swiss francs; the suspension of any labour legislation that could restrict FIFA, its commercial partners, media and broadcast members; free security and medical care; the protection of FIFA’s intellectual property rights; and guarantees to indemnify FIFA against all claims and proceedings against it. To enforce these extraordinary concessions to South African sovereignty, FIFA demanded that the state set up and fund special courts.
Furthermore, multinational companies were largely responsible for stadium design, and were involved in materials manufacture and construction of the ‘iconic’ legacy stadiums mostly in joint ventures with South African construction companies. All the stadiums built are white elephants as none of the municipalities in the host cities are able to afford the exorbitant operation and maintenance costs of these high-tech modern stadia.
Due to the international character of FIFA’s sports accumulation complex economists have not yet calculated the losses by South Africa’s economy as remittances and profits land in international companies’ coffers. Due to FIFA’s complete monopoly over the event, StreetNet international estimates that some 100 000 South African street vendors and informal traders lost their livelihoods during the World Cup as they had been forcibly removed or banned from trading in areas around the stadiums and official viewing areas.
Increasing the rate of exploitation
The South African government provided the stimulus for the rapid and large scale expansion of the economy which at the same time required the mobilisation of the readily available and large supply of cheap labour. With an official unemployment rate of 24% a large reserve army of labour (including the unemployed, casuals, self-employed and migrant workers) was absorbed into the labour market for the production of the sporting spectacle and were disposed of in the run up to the mega-event (held 11 June to 11 July 2010), contributing to the a loss of 627,000 jobs in the overall economy.
Gearing the South African economy up to meet the needs of the World Cup, including providing the required upgrades and expansion to infrastructure, the manufacture of commodities and provision of services related to the hosting of the event necessitated increasing the rate of exploitation of workers. The FIFA mascot Zakumi, for example, licensed through the Global Brands Group, was produced by Chinese teenage workers under sweatshop conditions as they worked 13-hour shifts for a meagre $3 a day.
Rising profits of the ‘Big Five’ construction companies during the stadium years, 2004–2009
Despite the world economic crisis of 2008-2009 the top five South African construction companies benefited handsomely from the World Cup infrastructure projects, raking in an average profit of 100% over the five year period (2005-2009) after making substantial losses up to 2004. The total remuneration of CEO’s, which includes benefits and bonuses, on average rose by over 200% from 2004 to 2009.
In keeping with the time-bound nature of the World Cup some 452 000 jobs were said to have been created. However, these jobs were temporary. The general trend has been for construction companies to downsize their workforce and retain a core workforce of quantity surveyors, site managers, foreman, health & safety officers and a few artisans and semi-skilled workers. Then there was a large layer of unskilled casual or temporary workers hired on short-term contracts, largely as general workers. Skilled South Africans are in great demand but there are very few opportunities for millions of unskilled, mainly black workers, who can be delivered to companies through labour brokers and sub-contractors and trained very quickly, if required. Through this mechanism a racial dimension to work was maintained or perpetuated in construction of the World Cup infrastructure.
On 17 July 2013, at the tribunal of the Competition Commission of South Africa conservatively estimated that some R4,7 billion (R$1 billion) of ‘unfair profits’ were made by construction companies for the 2010 FIFA World Cup and other projects. They were consequently fined a total of R1.5-billion. This plundering of public funds, demonstrates how public mega subsidies for mega sports events degenerate into vehicles for sponsored private capitalist-profit accumulation.
The production of mega sports spectacles such as the World Cup not only requires investment in new infrastructure, but also demands a vast amount of short-term employment and other resources. Host governments and host cities alike subsidise the events through the provision of the required infrastructure, security and other requirements which are invariably also debt-financed. In this way, the state becomes the guarantor of capital accumulation for both international and national capitalists.
South Africa did prove the Afro-pessimists wrong, as though the country was trying ‘to escape from the undignified position called underdevelopment’. What the World Cup highlighted is that Africans have attained global recognition that they are ‘developed’ enough to meet FIFA’s stringent criteria in pulling off a world-class mega sporting event with its architectural legacy as its trophy. But attaining this new-found image came at a huge financial cost to the host country in order to meet the expectations of the ‘developed’ world. Mimicking the North’s advanced infrastructure for a luxury mega sporting event such as the FIFA World Cup came at the expense of meeting other, more pressing social needs.