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Trickle-Up Economics

Mega Profits from Sports Mega-Events Entrench a Legacy of Inequality in 2010

by Rachel Elfenbein

Green Point Stadium in Cape Town, the US$600 million stadium where construction worker, Sivuyele Ntlongotya, incurred injuries that brought about his death in January 2009
Green Point Stadium in Cape Town, the US$600 million stadium where construction worker, Sivuyele Ntlongotya, incurred injuries that brought about his death in January 2009
Subcontracted public sector workers remove and clean bucket toilets in one township of Cape Town. Photo courtesy of the Industrial Health Resource Group and the South African Municipal Workers Union.
Subcontracted public sector workers remove and clean bucket toilets in one township of Cape Town. Photo courtesy of the Industrial Health Resource Group and the South African Municipal Workers Union.

While Canadian protesters shout “Homes, Not Games!” to the Olympic torch procession, the same slogan could be shouted at the opposite end of the world, where this year South Africa will also be hosting a different sport mega-event: the 2010 soccer World Cup. In South Africa, over 13% of the population lives in informal housing, and informal housing rates rose in 2008– the year that the food, energy, and financial crises simultaneously rocked the country. Furthermore, 29% of the population cannot afford to pay for water and almost 8% of households in South Africa continue to use bucket toilets, an apartheid leftover that successive democratic national governments have both pledged and failed to eradicate as an issue of immediate concern. According to Eddie Cottle, Coordinator of the Campaign for Decent Work and Beyond 2010 in South Africa, the amount of South African public money being spent by the South African government on World Cup preparations “is equivalent to the amount that the state spent on housing delivery over a ten-year period”.

Across the globe, the rhetoric employed by government leaders to exalt the potential of these sport mega-events bears striking similarities. On October 30th, 2009 British Columbia Premier Gordon Campbell announced at the Olympic Torch Relay Celebration that “the Olympics bring us together”. In South Africa, the government has announced that the World Cup is an unprecedented “unique opportunity” to build “unity and pride amongst South Africans”.  While Gordon Campbell was proclaiming the unifying potential of the Olympics, the UN Secretary General, Ban-Ki Moon stated that the South African World Cup is a “time to present a different story of the African continent, a story of peace, democracy and investment”. His statement was met by a unanimous resolution passed in the UN General Assembly to endorse the World Cup in South Africa as a “platform for social development and peace across the African continent”. Are these mega-sporting events really opportunities to bridge divides and build unity amongst citizens within and across nations? Or are they vehicles for perpetuating neoliberal socio-economic processes that widen the gap between the rich and the poor within nations and across nations? Furthermore, what socio-economic impact does the hosting of a mega-sporting event have for countries of the Global South, and for South Africa, in particular, which is not only adjusting to globalization, but also dealing with massive material inequalities and ideological differences produced by the combined legacy of colonialism and apartheid?

As Cottle points out, the costs of sport mega-event infrastructure are substantially higher in Southern than in Northern countries, where much of the necessary infrastructure is already developed. While the US spent less than US $30 million in 1994, France spent less than US $500 million in 1998, and South Korea spent US $2 billion in 2002, the South African government will be spending at least US $4.1 billion by the end of the World Cup. Moreover, since 2004, when South Africa won the bid to host the World Cup, the cost to the South African public of building infrastructure to host the event– the most expensive item in the public’s World Cup expenditure– increased by over 750% of the original budget.

Danny Jordaan, the CEO of the South African World Cup Local Organizing Committee, claims that the benefits of this massive public expenditure will trickle down to South Africans through job creation and the development of public infrastructure. But does such a use of public money actually benefit workers and the general public?

For Maytome Tachi, a construction worker at Ellis Park Stadium in Johannesburg: “the World Cup creates jobs, but not better working conditions”. What kind of jobs does it create then? While World Cup construction has created 22,000 jobs, 70-80% of these jobs are subcontracted positions in which workers are on limited duration contracts, typically lasting three months.  While Building and Wood Workers International (BWI) research uncovered construction workers working for as little as approximately US $1/ hour, the net wages of an average construction worker in 2008 was approximately US $2/hour. Since World Cup construction began, four construction workers have lost their lives at World Cup construction sites and workers at one of the hallmark sites, Moses Mabhida Stadium in Durban, embarked on an 11-day strike in 2007 in part due to unsafe working conditions. The 2008 strike in Durban is not unique; throughout South Africa, World Cup stadia have been plagued not only by poor working conditions, but they have also been sites of resistance for workers and their organizations. They have organized and struggled to improve their working conditions, culminating in 26 strikes throughout the country since World Cup construction began. In 2009, 70,000 workers embarked on a national strike– the first of its kind in a sector that is fragmented and represented by different labour organisations– to demand a 13% wage increase. In the end, because of current public transport and food inflation standing at between 10% and 15% in South Africa, their demand and the employers’ subsequent agreement to settle at 12% does not amount to a substantial increase or a living wage for the average construction worker.

If workers on World Cup projects are struggling to keep apace with the rising cost of living and taxpayers are footing the cost of this ever-expanding bill, who then is benefiting from this massive public expenditure?  According to BWI, “construction company annual reports for 2009 indicate mega-profits being made despite the downturn taking place internationally and in the local economy”. The largest South African construction companies report before-tax profits of 58% to 142%. So, while construction workers struggled for a 13% wage increase in 2009, the average CEO of a large South African construction company contracted for the World Cup was earning around 245 times the average construction worker, and many of these CEOs were awarded annual salary increases well above the workers’ 2009 increase. Not only does this represent a widening material gap between construction workers and managers, but as Cottle notes, this indicates that “the private sector has been awarded a mega public subsidy and the winners will be the construction and tourism shareholders”.

Moreover, the biggest winner from South Africa’s hosting of the World Cup appears not to be a South African business or shareholder, but FIFA. As Cottle notes, FIFA is guaranteed to make money regardless of what happens in labour disputes, because the South African government passed legislation treating FIFA and its subsidiaries “as diplomatic missions” and thereby creating a “tax-free bubble” around all their economic activities. Indeed, before the World Cup has even begun, FIFA has already reported profits of US $3.2 billion from the 2010 World Cup– the largest profit it has ever made in its pre-Cup economic activities.

While FIFA repatriates its profits from the 2010 World Cup and South African construction companies have not only made record profits but also secured the largest existing international venue to showcase their world-class stadia and thereby future opportunities for capital expansion, the South African public is left footing the ever-expanding bill for the event. This includes post-2010 World Cup-related costs, as Cottle states that there is no way that the stadia will generate enough revenue to be self-sustaining, and the costs of sustaining them, will be offloaded onto the municipalities where they are located, many of which are already cash-strapped and resorting to increasing public service user fees. As a result, which is now compounded by the world economic crisis, the South African government recently announced that it is entering into deficit spending and will be borrowing over US $1 billion from international financial institutions to cover its deficit. Meanwhile corporate analysts have recently warned that the once-projected massive boost to the South African economy from the World Cup will be “muted”.

Former South African President Thabo Mbeki wrote in the country’s 2004 bid to host the event: “We want to ensure that one day, historians will reflect upon the 2010 World Cup as a moment when Africa stood tall and resolutely turned the tide on poverty and conflict.” Contrary to Mbeki’s professed aim of unity and economic development, the legacy of the 2010 World Cup in South Africa appears to be one of entrenching the socio-economic inequalities of colonialism, apartheid, and neoliberalism, wherein a handful of multinational and national corporations will make massive profits on the backs of a reserve army of labour and through the generation of massive public debt.

In order to successfully execute this diversion of public resources from the provision of welfare and decent jobs to South Africans toward national and transnational corporations, the very same South African public that will be indebted because of the World Cup has had to be mobilized in support of it. The South African public itself was symbolically mobilized by the Local Organizing Committee to win the 2010 FIFA bid, wherein the recent struggle against apartheid was marketed to FIFA and to hedge against other African bidders for the event. This included the mobilization of key political icons in this struggle, such as Nelson Mandela, Desmond Tutu, and FW De Klerk, wherein Mandela in particular traveled to Zurich to lead South Africa’s final bidding presentation to FIFA’s Executive Committee. Moreover, in the bidding process, Danny Jordaan argued that the World Cup “is not only important for football, but it will help strengthen and consolidate our democracy”. These prominent figures therefore presented the hosting of the World Cup as a culmination of the country’s long struggle for democratic rights. Government and big business secured public support for the event by promising that the public revenue generated from the event would far exceed the costs of hosting it and that over 500,000 jobs would be created. Moreover, in order to guarantee this continued support, the South African government has spent over US$2.5 million in events that serve to “mobilize communities and create awareness and enthusiasm for the World Cup”. And while the government invokes the public in order to legitimize its expenditure for the World Cup, it has simultaneously spent close to US $100 million in security equipment to contain the same public during the event. Thus, while the government states that it will “leave nothing to chance in securing the event”, it leaves the security of its citizens to chance as it bequeaths them with debt and millions remain in need of housing, water, sanitation, and jobs.

While South African and Canadian leaders proclaim the nation-building impact of sports mega-events in 2010, as Cottle concludes, these are projects that locate national pride within a neoliberal framework. “The love of the game” therefore is deployed as a vehicle to legitimize increasingly denying citizens state protection in times of insecurity in order to secure the interests of national and transnational capital. Thus, while the hosting of these events materially widens the gap between rich and poor in these countries, the “unifying” potential of sport is ideologically employed to obscure the class tensions that they reproduce and exacerbate. As South African playwright, Mike Van Graan proclaims in his newest political satire, Bafana Republic 3: Penalty Shootout, sport– and in the South African case, soccer– is “the new opiate of the masses.”  

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