Contribution of 2010 World Cup To Local Businesses - Term Paper Example

Contribution of 2010 World Cup To Local Businesses Introduction South Africa hosted the 2010 FIFA world cup. These mega events have great economic impact since they require great research and planning. Most of the impact is felt by the local businesses. This event had both positive and negative effects on South African local businesses. Given the impact of the event on the economy, several scholars have analyzed these issues. Their articles show the impact during preparation, during the tournament, and after the tournament. The main area of consideration in this review is the impact on local businesses. There are several expenses incurred during preparation and several benefits result from the events according to Maennig & Zimbalist (2012). The first article by Andrew Carlson discusses the heavy spending during the stadia construction. The government spent several millions for the stadia at the expense of local projects. The tournament attracted investment from foreign companies and local companies were excluded from participating at the event. The big companies benefited from the constructions and FIFA partnerships. The second article discusses the marginalization and injustices experienced by the informal traders. They were driven out of the cities and the municipality authorities increased the licensing fee. This locked out several traders from benefiting from the event. Some of their goods were confiscated by the authorities and some traders were arrested. Workers in the construction companies were also underpaid. The third article focuses on the benefits brought about by the link between the beachfront and the stadium in Durban. These infrastructural developments brought both positive and negative effects on local businesses in Durban. The transport business was improved, and there were short term job opportunities. Negative effects such as criminal activities were also attributed to the tournament. From: Carlson, A. (2010). A Theoretical Analysis of South African Identity and Audience for the 2010 FIFA World Cup. Preamble, 6, 1-18 Carlson discusses the impact of the world cup on the country’s identity. The world cup was an historic event that would change the image of the country and continent in the global economy. The world cup is defined as a mega event that has both long term effects, both positive and negative. The government hoped to alleviate poverty levels and boost its economic development agenda. The expected economic windfall was more compelling for the country to host the tournament as suggested by Matheson and Baade (2004). Carlson examines the identity and negotiation in the post modern era. Some of the impacts were increased tourism, improvement of infrastructure, and short-term business growth. Infrastructure improvement and job creation occurred at the expense of local projects and finances. The aim was to improve the national pride and unity. The country was required to construct stadiums that met the FIFA standards. This meant constructing new stadia instead of renovating the existing stadia in the country. In Cape Town, the government had to forego the smaller and accessible Athlone stadium and construct a larger Green Point stadium. Athlone is the home to Ajax football club. It is located on the Cape Flats, which would increase accessibility for local fans. The Green Point stadium was more expensive than Athlone upgrades. This construction cost was borne by the local municipality and the government. However, Green Point provided a better view of the ocean and the Table Mountain. This construction was aimed at enhancing the World Cup value instead of contributing to the development of the local area according to Alegi (2007). Several companies were given contracts for the construction work. These companies benefitted from millions of rand set aside for the stadia projects. Some of the construction companies that greatly benefited from these constructions were Aveng, which received about 3.3 billion rand, Basil Read received 296 million, and Cashbuild received 245 million. Group five construction company received 666 million and Murray & Roberts Company received 2.5 billion. Pretoria Portland Cement Company benefited from 2.2 billion and WBHO received 1.0 billion (Eddie, 2010). These constructions drained funds from local football programs and the local communities. As noted by Allegi (2007), these world-class stadia constructions led to the dearth of resources for grass root football. However, many residents believed these constructions and the tournament would improve the image of the country. The improved image would have social and economic advantages. The country improved its image after the Apartheid era. This event helped the country revive its Africa Renaissance project. The stadia development cost the government R13 billion. A high speed rail link, Gautrain, was connected to ling Pretoria and Johannesburg. This railway is estimated to have cost R25.5 billion. The rail would improve business people operating between the two cities and other towns in between. This rail would facilitate transport between OR Tambo international airport, Johannesburg city centre, and other world cup points. It was projected that the tourism industry would generate R11 billion from this construction. The foreign direct investment would also increase. For example, Wal-Mart purchased 51% stake of Massmart, a local retail business in South Africa. German printing company Roko Labels also invested in Cape Town. These companies increased competition for local businesses. However, some local companies were contracted to supply raw materials and other products to the investors. The rights to broadcast the soccer matches are estimated to be at least R25 billion according to South Africa info (2009). The world cup event was televised by several media companies. The South African Broadcasting Corporation (SABC) was the official partner of the world cup. It was the ultimate booster for the event. Other broadcasting companies such as Super sport, located in South Africa, were also awarded broadcasting rights. Many companies were locked out of the world cup benefits. Small scale restaurants, hotels, and tour operators could not offer hospitality services to the tourists. FIFA had partnered with an international company, Match AG, to provide hospitality services to the tourists (FIFA.com, 2008). It was the only company authorized to sell onsite hospitality packages, services, and match tickets. Hospitality services included tour operations and bed-and-breakfast establishments. Local restaurants which wanted to provide these services had to be certified by Match AG. This locked out several informal and small businesses. From: Cottle E. (2010). A Preliminary Evaluation of the Impact of the 2010 FIFA World cup in South Africa. SAH, OSEO, SLA. The country had to bid fiercely for the chance to host the tournament. The bid received sponsorship from companies such as BMW, Avis, and Anglo American. Local firms were contracted in preparation of the bid document. For example, Grant Thornton South Africa prepared the economic section. This is a leading, independently owned and managed South African accounting and consultancy firm. This organization also estimated that the world cup would consume about R55.3 billion. The country received about 373,000 foreign visitors for the tournament. These visitors boosted the tourism industry during the tournament. However, the total number of visitors recorded during that year was less than that of June 2009, 706, 728 foreign visitors. This was due to displacement of regular tourists by the event. Some of these tourists were non-ticket holders, some of whom were there for a short visit. In renowned tourist destinations, the number of visitors during that period was lower than expected. For example, the occupancy rates recorded in Western Cape region were55%. This was below the expected number of visitors. The world cup had muted some of these destinations. The construction of stadia in the country deepened inequality. The big five construction companies (mentioned in Carlson’s review) benefited most at the expense of the smaller ones. These companies were in charge of constructing the major stadia for the matches. This unfairness was also felt by their workers. Twenty six workers’ strikes were experienced during the construction period. A quarter of the labor force is informal traders. These workers owned small businesses in the fast growing informal economy. These informal traders were the income source for their families according to Cape Street Traders Coalition (2009). In 2007, StreetNet International, informal traders’ coalition, approached the host cities. Their aim was to consult the government officials on the impact of the world cup on their lives. The cities marginalized the informal traders in some areas. This marginalization was aimed at cleaning-up the host cities. In Durban, a 99 year old morning market wanted to be demolished by the municipality. This market supported over 10,000 informal traders. The municipality wanted to build a shopping mall for use during the world cup. However, the demolition was stopped by a court injunction. In Rustenberg, informal traders were to be evicted from the city centre. This eviction was however blocked by a court order. In Cape Town, three hundred informal traders were removed from the Grand Parade. This was to pave way for the FIFA Fan Fest. These traders were relocated to other locations around the city. The municipality also hired more police to clamp down traders who resisted the evictions. These police officers would also confiscate world cup goods from the traders. Informal traders won rights to trade in selected areas of the soccer city Stadium in Johannesburg. This was after several months of protest. The officials imposed strict trade permit restrictions, which led to the arrest of several traders . At the Nelson Mandera Stadium, traders were allowed to trade at the stadium and the FIFA Fan Park. However, the municipality officials hiked the rental fee at the locations. These charges were too high for most of the traders. This locked out several informal traders from the world cup benefits. In Johannesburg, evictions took place at the Ellis Park Stadium. This project started at 2004 for world cup preparation. This region was marginalized and most of the poor business people and residents were evicted. These evictions and relocations caused losses worth several millions to the informal traders (Claire, 2009). From: McKenna, F. & Urmilla, B. (2010). Business perceptions of the 2010 FIFA World Cup and Related Infrastructural development: A case Study of the Moses Mabhida Stadium and the Durban Beachfront Development. Alternation, 17, 200-224. Several development projects were initiated during this period. These projects were aimed at improving the linkages and redesigning the cities as stated by Pillay and Bass (2008). One of them was to link the Mabhida Stadium to the Durban Beachfront. These developments are good for the city and local businesses (Li, Maclntosh& Bravo, 2012). This link was to improve accessibility between the two sites. The stadium would host the games and the beach front had the fan parks. Infrastructure in the cities was improved in order to accommodate the visitors and future tourists (Van, 2008). Development in the Durban urban centre was accelerated and the state provided some of the funds. Infrastructural developments had a budget of R6.7 billion. The architecture of the stadium would convey an image of the city. The stadium was to stand out into the skyline to attract future development around the region. It was located at the centre of the city to initiate future developments according to Maennig and Du Plessis (2009). Durban is the hub for sport tourism and this tournament acted as the facilitator for development. Local businesses would benefit from improved infrastructure, increased tourism, improved recreation facilities, and better quality of life. The developments would also increase their nation pride as stated by Maening (2007). Negative effects felt were price inflation, increased local taxes, destruction of natural environment, and increased crime (Kim et al. 2006). The area near the stadium and the beach hosts several businesses, which would feel the effect of the world cup. The businesses surveyed included restaurants, hotels, general sales, transport, health and many more. Most of the respondents were from the food and beverage industry. These businesses would have a large target requiring food. The region would receive more tourists. This would increase the income to these businesses. The stadium and the beach would create employment opportunities for local people. The construction and maintenance of the huge stadium required several employees. This workforce required services such as transport, food, recreation, and health care. The local businesses would provide these services to the workers. The improved roads would boost the transport business. Negative impacts such as crime and transport would be experienced. In the transport sector, traffic jams would increase due to the increase in vehicles. This would also strain the parking spaces in the city. Criminal activities would increase due to the mega event. These would involve petty crimes such as pick pocketing, and conning by local gangs. Carjacking incidents and robberies would also increase. These areas would attract several people during and after the world cup, and criminals would take advantage of the large numbers. Taxi business in Durban received a lot of criticism. Most taxi drivers in the region cared little about passenger safety. The taxis would be overcrowded and the drivers were reckless on the roads. They drove their customers rapidly to maximize the trips. This increased the number of accidents and negligence incidents on the roads. These incidents would give a bad impression to the tourists and visitors who came to watch the matches. The bus system was renovated due to the tournament. Prior to the world cup, buses would pick up and drop passengers randomly in the area. The authorities established places and a schedule for buses to operate. His was one strategy of improving the image of the host cities as discussed area. The present railway system was also refurbished. The government has established the Gautrain railway services. The officials established a measure called park and ride. People driving private vehicles were supposed to park them at a designated location. They would then board private transport vehicles to the stadium. This would reduce congestion and parking problems in the areas near the stadium. The project would also benefit the rich more than the poor. Informal traders were marginalized as discussed earlier, and contracts were awarded to big companies. The large amounts of money benefited the authorities and corporations partnering with FIFA. According to Saayman and Rossouw (2008), about R5 billion would be generated from business activities due to the tournament. Local businesses would receive foreign investment due to the tournament. Power failures were expected during the tournament period. Power requirements increased and there were uncertainties over the efficiency of Eksom to provide power. These power disruptions would affect business activities in the area. FIFA had the exclusive ownership of the event. Businesses and traders who did not partner with FIFA were excluded from the event. This disrupted business activities of small scale traders. Entertainment bands and dance troops would benefit from the tournament. The beachfront hosted several fan parks, which were entertainment spots. The tournament attracted several millions of people who would visit the parks for entertainment. These fan activities would benefit the entertainment businesses. Infrastructure developments opened up the interior parts of the city for business activities. Access to amenities and improvements of the road network would improve the access to marginalized areas. Local businesses faced advertisement restrictions from FIFA. The tournament provided a good opportunity for these businesses to advertise themselves. However, South Africa had to comply with the FIFA rules. The brands to be advertised and sold had to pass FIFA verification. The Trade and Industry amended laws to exclude local businesses and traders, not in partnership with FIFA, from advertising their brands (Greef, 2008). Conclusion The 2010 FIFA world cup had both negative and positive effects on the local businesses in the country. The preparation required several constructions for stadia and infrastructure. These contracts were awarded to the big construction companies. The small companies were locked out of the profit share. FIFA partnered with Match AG to provide hospitality services to tourists. The small scale hotels and restaurants were locked out of the services provision. Small scale businesses in Durban could not advertise or sell their brands. This was because FIFA had to certify companies whose brands were advertised during the tournament. The government also amended the laws, locking out small scale enterprises. A lot of injustices were experienced during the tournament preparation. The municipality authorities flushed out informal traders from the city centers. Evictions also occurred in the construction sites. Although some of them were blocked by the courts, some of the traders did not reap full benefits. The authorities increased license fee, which could not be afforded by many traders. Tourism increased during this period. The country hosted several visitors. They increased business opportunities for entertainment troops, tour companies, hotels and restaurants, transport companies, and other businesses. Employees of these companies were underpaid. The success of the tournament attracted foreign companies such as Wal-Mart, which increased competition for local businesses. The infrastructure improvements increased accessibility to marginalized locations. Business men could open new businesses in these areas. People would also move to the cities for trade activities. The construction and management workers required services such as food and transport. These services were provided by the local businesses. The infrastructure also paved way for future developments. References Alegi, P. (2007). The political economy of mega stadiums and the underdevelopment of grassroots football in South Africa. Politikon, 34.3, 315-331 Claire, B. (2009). In the Shadow of 2010: Democracy and displacement in the greater Ellis Park Development project. 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