Brazil World Cup costs skyrocket due to corrupt billing

ManeGarrinchaStadium1-Dec2013 (Getty)

By RYAN TOLMICH

With costs skyrocketing, this summer’s Brazilian World Cup is already set to be the priciest in tournament history and, despite promises to the contrary, it appears those paying for the soccer spectacle may just be the Brazilian public.

With the World Cup set to cost roughly $11.5 billion, and a majority of that coming from public funding, Brazil’s reckless spending and the ensuing protests have become a major storyline leading up to the tournament. One such investment, Brasilia’s Mane Garrincha stadium, is expected to total roughly $900 million, despite opening in a city that has no professional team.

Due the high costs, organizers have found ways to accumulate the money necessary to afford such a tournament. According to an AP report, political contributions have exploded during the build up to the tournament, signaling corruption fueled by politicians’ links to construction firms. For example, the lead builder of Brasilia’s stadium has increased its political donations 500-fold in the elections leading up to this summer’s tournament.

“These donations are making corruption in this country even worse and making it increasingly difficult to fight,” said Renato Rainha, who is investigating pre-World Cup spending. “These politicians are working for those who financed campaigns.”

According to the report, the auditors have found that one third of stadium costs can be attributed to overpricing while costs have quadrupled from their initial projections.

“Is there corruption in the Cup? Of course, without a doubt,” said Gil Castelo Branco, founder Open Accounts, a group that campaigns for transparency in government spending. “Corruption goes where the money is, and in Brazil today, the big money is tied up in the Cup.”

Despite initial promises stating that stadiums would be privately funded, public money has been funneled into the stadium project. Initially, public funding was intended to go towards infrastructure and transportation. However, funding for the Brasilia stadium came solely from the district coffers, meaning tax payers funded every dollar. According to the report, $28 million public dollars were lost just to poor planning and discarded steel. Auditors also found $2.3 million spent on items that were billed for multiple times.

Brazilian Sports Minister Aldo Rebelo spoke out in reference to the allegations and assured the public that they had not been misled.

“No disservice will be done to the people because of this Cup,” Rebelo said. “If any corruption is proven, it will go through our legal system and punishments will be handed out for anyone found responsible.”

What do you think of the report? Will corruption be the lasting legacy of this summer’s tournament?

Share your thoughts below.

This entry was posted in FIFA World Cup, South American Soccer, World Cup 2014. Bookmark the permalink.

35 Responses to Brazil World Cup costs skyrocket due to corrupt billing

  1. Xanadu says:

    so this world cup is gonna be the event that broke Brazil?

    has SA ever got any profit from hosting the last world cup?

    • Bach's Thumb says:

      Just a bit of perspective,

      The total net financial benefit to the host cities of the 1994 World Cup in the United States was a negative impact of 9.62 billion US dollars.

      FIFA made bank. US Soccer made bank. The US economy was hit hard.

      link to umbc.edu

      • Ralph says:

        “The proposed budget for the 2010 games [South Africa World Cup] was about $225 million for stadiums and $421 million overall. Expenses have far exceeded those numbers. Reported stadium expenses jumped from the planned level of $225 million to $2.13 billion, and overall expenses jumped similarly from $421 million to over $5 billion.”

        A nearly 1000% percent cost overrun. That’s 1.3% of their GDP.

        Extrapolating that to the United States, the total costs in comparison to GDP would have been 156 BILLION dollars.

        • Increase says:

          1.3 of their GDP in cost overrun? That is pure madness. That is a huge amount for the Government to burn for SA. I don’t think much of Zuma as a leader and this kinda confirm’s my Bias. BTW I don’t really blame Zuma for the problems such as identify him as someone who wouldn’t be bothered to fix them

          • Bach's Thumb says:

            And those are just the official numbers.

            Did you know that countries extort host cities and nearby cities for ‘appearance fees?’

            In 2002, Brazil requested nearly a million US dollars from a town in Japan for the honor of practicing there or they were going elsewhere.

            • Increase says:

              Appearance Frees? Urg, sounds like what NFL teams but treating it like a 1 night stand.

      • kevino says:

        The author’s bias against soccer is apparent in the first sentence: “Thanks to extensive television coverage of the 2010 South Africa World Cup, soccer fever has temporarily swept through America, creating unrealistic expectations about the benefits of hosting a World Cup”

        Interest in soccer is only “temporary” and due to “extensive television coverage”? I’m pretty sure networks televise things extensively because there is extensive interest in the first place, not vice versa.

        To be fair I’m not doing any analysis of his economic bindings–just showing it is likely this guy is no friend to soccer in the first place.

        • Bach's Thumb says:

          It’s an economic take, as logical and removed as possible.

          And he’s right. World Cup interest is definitely temporary. The viewership increase during a World Cup in the USA is ENORMOUS.

          Notice how ESPN has ramped up World Cup TV commercials a ton?

  2. bob says:

    Better get used to it .. Qatar and Russia awaits

    • Ian says:

      Indeed. The Sochi Olympics cost Russia $50 billion, and the Olympic village wasn’t even complete when the games began (with athletes locked in hotel rooms, toilets not connected to plumbing, wild timber wolves (!?) walking thru hotel hallways, and much, much more).

      And we all know Qatar 2022 was one big bribe. If Brazil 2014 is an exercise in corruption, it really offers just a taste of what’s to come. Way to go, FIFA.

  3. bryan says:

    yikes. now the report that Brazil may lose the Olympics isn’t so surprising.

  4. Scott A says:

    “No disservice will be done to the people because of this Cup,” Rebelo said. “If any corruption is proven, it will go through our legal system and punishments will be handed out for anyone found responsible.”

    People have no shame.

    • Bach's Thumb says:

      And they wonder why Brazil has such egregious vigilante justice problems. People think we have corruption issues in our nation, but we don’t come remotely close to what happens in Brazil.

      Our corruption is known as non-disruptive as in the system functions very well and people skim where it has little effect on actual operations.

      Brazil is rank with disruptive corruption, whereas the politicians actually own the constructions companies they award contracts to–they then don’t build anything while taking money, and when it comes time for an event they then charge double for emergency building expenses and build horrible structures while killing many people in the process.

      There’s a reason a country with such vast resources and regional power remains a backwater nation on the international scale.

      • Travis in Miami says:

        “Our corruption is known as non-disruptive…”

        • Bach's Thumb says:

          What’s the issue?

          Governmental corruption is generally broken into two categories–disruptive and non-disruptive. Disruptive corruption interferes with the actual economic functioning of an entity mainly because so much is bled from the entity and its operation that it ceases to function. Non-disruptive corruption is more akin to light skimming of profits with bigger margins or quid pro quo whereas the actual corruption is done so in the decision making, not the actual operations.

          • Increase says:

            Pork happens but at least its legal, transparent and mostly given out to companies in the region of the representative rather than just straight to his cousins company.

            The cousin’s company has to go through an actual bid process.(Not that those bids are ever viable.)

            • Bach's Thumb says:

              Exactly.

              We’ve institutionalized our corruption in the most efficient manner.

              The cousin’s company is still a professional services company that does whatever it is they’re being paid to do. And they do it at probably slightly over market rates. Like you said, the corruption comes in simply deciding which professional business gets to do the work.

          • Dan Daminko says:

            “Our Corruption is known as non-disruptive” – so the bank bailout was “non-disruptive”.
            Corrupt financial instruments. Over-leveraged to the point of insolvency. Credit rating agency (S&P) giving out AAA ratings to known toxic assets.
            The mf’ers drove their banks into the ground (through massive corruption) and then backed their trucks up to the Fed.Govt (TARP)/FedReserve and reloaded . Corruption in construction at Brazil and other WC’s is peanuts in comparison. See GAO report.
            Taking the cake,
            Libor Scandal = …dwarfs by orders of magnitude any financial scam in the history of markets.
            quote from Andrew Lo, MIT Professor of Finance

            • Bach's Thumb says:

              Those are scams, not economic corruption. The bank bailout wasn’t corruption in any way, shape, or form.

              You do realize what would have happened had those banks collapsed…? The world’s economy would have been essentially destroyed.

              There are good points about how those banks operate and why that’s dangerous, but that’s not corruption on a macroeconomic scale. That’s bankers buying politicians.

  5. NC Jeff says:

    Remember the “Continental Rotation” for the WC Finals? They went to Asia in ’02, UEFA in ’06, Africa in ’10, SA in ’14 … but, when only Brazil put in a qualifying bid, they decided to scrap it immediately. The protests of the USA and Mexico went unheard. Seeing this and the issues they’re having with Qatar, I’m reminded of a quote I recently heard on the radio: “Do you at least have the decency to be embarrassed?”

    • WiscFan says:

      Great quote!

    • Jamie says:

      Yeah that whole rotation plan was a joke wasn’t it. I still in my heart believe the US will end up getting the 2022 World Cup even though some say that’s crazy. We will host a fantastic Copa America in 2016 and horror stories will continue to come out of Qatar. In fact, ESPN will have a report on it tomorrow at 8pm on the E:60 show. I predict many won’t put up with a “winter world cup plan” as it unfairly breaks up the club seasons of the most popular teams. Just an opinion.

    • Mason says:

      Now we know what kind of radio listener you are.

  6. Troy in his apartment says:

    This is beyond ridiculous for the people of Brazil. In no way is it surprising but the fact that people, a lot of which are already having financial troubles, are going to have to cover the cost of a bunch of national team matches. FIFA has no shame and never will, Im sure if this report gets major traction, FIFA will make some announcement to change the focus.

    FIFA needs to stop doing this to countries. They literally give the politicians the rope to hand their countries in. Just stop already!

  7. RK says:

    I’m stunned…that Brasilia doesn’t have a team?

    • Travis in Miami says:

      Kind of the most surprising fact in this post.

    • Travis in Miami says:

      Just asked my Brazilian boss about this. Brasiila has a team. They are just in the lower divisions.

  8. Brad C says:

    Let’s face it, there are about 3-4 cities in Brazil that shouldn’t have got games: Manaus, Brasilia, Cuiaba, and probably 1 or 2 of the NE cities (Fortaleza, Natal, Recife).

    I’m sure that after the WC there will be a panel or tribunal set up to investigate corruption.

    • Paul A says:

      Are you crazy? Fortaleza and Recife are one of the larger cities in Brazil. They for sure should have games. The only cities I might agree with you is Cuiaba or Brasilia. But it is hard to argue that the nations capital shouldn’t have some games. The major problem is Fifa standards for developing nations. They expect too much of nations who can’t afford it. Brazil has been hosting soccer for years in big stadiums. But fifa wants everything perfect in order to host the games so they make the host spend millions to upgrade everything. How has WCQ for conmebol been happening all these years. In stadiums that are unfinished but are still capable to have game in them. Brazilian have been fine with it but those of us from developed nations won’t put up with it. The root of the problem is Fifa. Too high of standards.

  9. Alex H says:

    My biggest peeve about the WC is FIFA’s insistence on “State of the Art” stadiums which is just a code word for creature comforts for the worlds uber-rich and connected. So long as the players have a first class pitch and professional grade locker and training facilities and the fans can view the game in safety, the host country should be encouraged to spend as little as possible on stadiums. Soccer is the world game and most of the world does not watch from air conditioned sky boxes. Let the WC fans going to Brazil experience soccer the Brazilian way as much as it is possible and if that means that Sepp and his cronies have to watch the game sitting on an aluminum bench wearing a hat and sunscreen then so be it.

  10. Benjamin C. says:

    And that country still has to put on a Summer Olympics in two years. Wowza.

  11. Aguinaga says:

    Am planning to be at the first match in Brasilia. Not looking forward to the protests.. they will of course be right.

    • Travis in Miami says:

      No worries man. The Brasilian Senate is about to pass a law pretty much making protest illegal:

      “Humberto Costa, leader of the Workers’ party in the Senate, says an anti-terrorism bill is needed, but the bill now under discussion has failed to define exactly the crime of terrorism. “On the contrary, it has created a kind of open penalty with which the state is able to arbitrarily criminalise a considerable number of activities, including social protest,” he said.”

      link to theguardian.com