What the World Cup Brings to Russia
Moscow has hosted the second International Conference on the Economics of Football, organized by HSE, the New Economic School, and the Centre for Strategic Development. One of the most topical discussions at the conference was the impact of the 2018 World Cup on the development of the Russian regions, the sporting industry, and the economy as a whole.
The participants of the conference’s round table, which include representatives of the World Cup organisers, academic researchers, the heads of various football clubs, and journalists, all discussed what the World Cup’s legacy in Russia could look like and what needs to be done for this to be used effectively.
Quality of Life in the Regions
According to experts, the tournament’s impact on the Russian economy as a whole should not be overestimated. HSE and University of Chicago Professor Konstantin Sonin noted that even multi-billion-dollar spending on the World Cup could not substantially impact the growth rates of the economy, which now exceeds a trillion dollars. But investments in transportation and housing infrastructure in the regions that hosted World Cup matches should improve the quality of life there.
‘Seven years ago we arrived in Saransk, where we had a clean slate. Now the city has not only a stadium, but also an entire microdistrict with schools and hospitals,’ said Alexei Sorokin, CEO of the 2018 FIFA World Cup Russia Local Organising Committee. ‘After arriving to a different city and a different clean slate, we were told that there would be an airport there, and Rostov-on-Don, for example, really did get a modern, luxurious airport. The same thing happened in Kaliningrad – when people got there, there was nothing. Soon after, hundreds of thousands of meters of housing and office buildings appeared near the stadium.’
How Russian Sport Can Make Money
While the tournament’s macroeconomic effect is not very noticeable, the microeconomic effect certainly is. Packed stadiums, a large number of women and children in the stands, a show not only during but also before and after the matches – this should all show Russian football clubs the right way to organise sporting events and attract new audiences. Game-day revenues from the sale of merchandise and season tickets are an important part of European clubs’ budget, Sonin added. Russian football also has the potential to become a true business, but a lot depends on how savvy the managers in the Russian football industry are.
FC Spartak Moscow Vice President Nail Izmailov talked about how Spartak makes money on its own stadium, which was built using ‘clean money,’ on more than just game days. Stadium infrastructure is used to carry out 250-270 events a year, including sporting events, concerts, and exhibitions. It is easier to hold larger concerts in Moscow than in the aforementioned Saransk, but it is completely feasible to ensure that stadiums do not stand idle in Saransk as well. Kaliningrad’s Baltika stadium is proof of this. Additionally, as the stadium’s CEO Teimuraz Lepsaya has noted, legislative restrictions deprive the clubs of a portion of their earnings. During the World Cup, for example, beer sales were permitted at stadiums (representing tens of thousands of glasses of beer), but this is prohibited during matches in Russia.
An Image More Valuable Than Money
Many months before the World Cup, public opinion polls showed a belief that Russia might not be able to organise such a large-scale event without some failures. FIFA had to defend its decision to hold the tournament here. According to Arkady Dvorkovich, who is Chairman of the World Cup Russia Local Organising Committee and Chairman of the Board of Directors at the New Economic School, the most popular word among FIFA organisers was ‘tomorrow.’ Everything had to be ready by ‘tomorrow.’ As it turned out, everything was actually ready and it all does work.
‘Feedback from the teams participating in the tournament was extremely positive,’ FIFA Chief Competitions & Events Officer Colin Smith said. He added that during the World Cup, nearly 200 domestic flights were carried out in Russia, almost 7 million people visited fan zones in various Russian cities, stadium occupancy was at 98% (2.7 million tickets were released in total), Russian fans made up 46% of the overall number of fans, and the majority of foreign fans came from the U.S., Germany, and Brazil.
According to conference participants, one of the most important results of the World Cup was Russia’s ‘new reputation,’ something that is even ‘more important than GDP growth.’ ‘Russia’s image is now more in line with reality, and this creates a basis for trust, openness, and new international partnerships,’ Arkady Dvorkovich concluded.