March 25 (Bloomberg) — South Africa has spent 34 billion rand ($4.6 billion) to host the soccer World Cup, including building 10 world-class stadiums. All it needs now is fans.
The government had expected the world’s most-watched sporting event to attract 450,000 international spectators, spurring economic growth that would help create jobs for the one in four people without work. Three months before the June 11 kickoff, about 100,000 international air tickets have been sold, the visitor estimate has been cut to 350,000 and the expected contribution to economic growth has been halved.
“When the World Cup was awarded to us in 2004, the economic situation was completely different,” Sports Minister Makhenkesi Stofile told reporters in Pretoria on March 19. “We have to revisit those projections and be realistic.”
Low attendance would be a blow to the government’s efforts to expand the tourism industry and revive consumer spending following the country’s first recession in 17 years. It would also be an embarrassment for President Jacob Zuma and Sepp Blatter, president of FIFA, world soccer’s governing body. Both gave repeated assurances that holding the event in Africa for the first time would be a success.
The Ministry of Finance said on March 17 that the tournament would boost gross domestic product by about 0.5 percent this year, half of what was projected before the global recession.
MATCH Services AG, which FIFA contracted with to supply ticketing and accommodation services for the tournament, has relinquished rights for more than 450,000 nights of hotel room bookings due to a lack of demand.
Sales of corporate hospitality packages were 50 percent short of the target, with tournament sponsors and partners returning thousands of tickets for premium-price seats in luxury boxes, FIFA said in a Feb. 19 presentation at its Zurich headquarters.
Banks, including Frankfurt-based Deutsche Bank AG and Commerzbank AG, that paid millions of dollars to attend the 2006 tournament in Germany are among those staying away, Peter Csanadi, Zurich-based MATCH’s head of marketing, said in a Feb. 19 interview.
The Germany World Cup attracted about 2 million tourists, earned the tourism industry an extra 300 million euros ($407 million) in revenue, added 2 billion euros to retail sales and yielded 50,000 new jobs, according to a report by Chancellor Angela Merkel’s cabinet.
More than 600,000 of the 2.9 million South Africa tickets remain, Horst R. Schmidt, the competition’s head of ticketing, said on March 13. The highest availability is for those exclusively for South Africans, the lowest price bracket at 140 rand. Schmidt said at this stage four years ago virtually all the tickets were sold out.
“We don’t know how long the people will stay or who the tickets have gone to,” Brett Dungan, chief executive officer of the Federated Hospitality Association of South Africa, a Johannesburg-based industry body, said in a March 9 interview in Cape Town. “We truly don’t know what the benefits of hosting the tournament will be.”
About 130,000 jobs have been created since 2007 in the construction of five new stadiums and the refurbishment of five others, the Treasury estimates. Even so, South Africa’s unemployment rate was 24.3 percent in the fourth quarter of last year, near the highest in five years. The Treasury expects the rate to remain above 21 percent until 2014.
As many as 30,000 workers who built the stadiums and provided related services are back on the streets, said Issac Ntshangase, who coordinates construction for the National Union of Mineworkers in Johannesburg.
“The event will not help to significantly mitigate poverty” even though it will leave behind “many positives,” said Udesh Pillay, co-author of “Development and Dreams: The Urban Legacy of the 2010 FIFA World Cup.”
The cost of long-haul flights and accommodation has been a deterrent to international fans.
“A group of us were really seriously looking into it but were priced out,” said David McNally, an accountant from Swindon in southern England. “The whole trip for a couple of weeks would have ended up setting us back more than 3 grand each. That’s just too much.”
Thomson Sport, a unit of Crawley, England-based TUI Travel Plc, has advertised packages that include tickets for one of England’s first-round games, flights and five nights accommodation, starting at 2,495 pounds ($3,765).
“Any European World Cup has the benefit of having approximately half of the participating teams being within driving distance of the hosts,” Jaime Byrom, MATCH’s chairman, said in a March 9 interview in Cape Town. “That has tremendous advantages.”
The portrayal of South Africa as a crime-ridden country in the international media may also be scaring off tourists, Pule Selepe, the Department of Transport’s aviation coordinator for the World Cup, told lawmakers on March 2.
South Africa had 2.1 million serious crimes, including 18,148 murders, in the year through March 2009, a slight decline from the previous year, according to the latest police statistics.
The government expects a last-minute rush for tickets for the 32-nation tournament as tour operators bring down prices.
“There is no need to panic but rather to start selling South Africa even more feverishly,” Finance Minister Pravin Gordhan told reporters in Cape Town on March 11