With Toronto set to host six World Cup games this summer, it’s still unclear just how much the city’s and country’s economies will benefit from FIFA’s flagship tournament, say economists and critics.
That concern has grown even more since FIFA “released” thousands of hotel rooms it had blocked off in host cities across Canada, the U.S. and Mexico. As well, the city backtracked on a plan to charge for all entries into fan zones as a way to recoup some of the escalating costs.
Despite forecasts prepared for world soccer’s governing body by Deloitte showing the tournament will generate $940 million in “economic output” in the Greater Toronto Area and $3.8 billion across Canada, those numbers are misleading, says Pedro Antunes, chief economist at Signal 49 Research, formerly known as the Conference Board of Canada.
“I would argue that’s very much double counting,” said Antunes, adding that even using the more conventional method of counting economic impact — gross domestic product — it’s still impossible to know just what the tournament will bring to Canada in general and Toronto in particular.
“We just don’t know what assumptions they’re making,” said Antunes of the Deloitte study’s forecast of a $1.9 billion increase in GDP across Canada during the tournament.
Asked for comment on the economic impact that hosting the six games will have on Toronto, FIFA sent a link to a news release with excerpts from the study.
Victor Matheson, an economist who specializes in studying the sports industry, was even harsher in his assessment of numbers coming from one of the world’s most well-known sports federations.
“This economic impact study is pure propaganda,” said Matheson, a professor of economics at College of the Holy Cross in Worcester, Mass. “The very fact that FIFA is releasing this study means that it was bought and paid for by FIFA to help Canadians believe they are getting a good deal from their spending.”
Among Matheson’s criticisms is that it’s impossible to tell whether the numbers account for what economists refer to as “crowding out” or “substitution,” which means tourists who might have otherwise been in Toronto, but went elsewhere this summer.
“FIFA will count up all of the spending by the soccer fans that happen in Toronto, but they won’t discount the activity that doesn’t happen because soccer’s there and crowds out or pushes out other activity that’s there,” said Matheson. “The World Cup is happening during prime tourist season in Canada and the U.S.”
In the third quarter last year, hotels in Toronto were at 80 per cent occupancy.
This summer, they had been looking forward to a boost thanks to the World Cup. They still are, but that enthusiasm has been tempered by concern about FIFA’s decision to “release” block holds — tentative reservations — in host cities, including Toronto, said the head of the Greater Toronto Hotel Association.
“It is disappointing as I do know from speaking with a number of hotels that the blocks were released,” GTHA president Sara Anghel said in an emailed statement.
The block holds were meant for FIFA staffers, journalists, and other “stakeholders.”
Still, Anghel is optimistic that there’s still time to have the rooms snapped up by other travellers.
“The hotels are resilient and plan for every circumstance and will do their best to pivot. This is what all host cities are currently facing,” said Anghel.
Matheson acknowledged that hotels and restaurants will likely be busier this summer than they were last year. But evidence from other sports mega-events indicates that other parts of the city’s tourist ecosystem will likely suffer. He pointed to the 2024 Summer Olympics in Paris as an example.
“We have very clear evidence from Paris, where all of the big cultural attractions had attendance that was down by about 20 per cent during the Olympics as sports fans displaced regular tourists,” said Matheson. “Even the Louvre was down 20 to 30 per cent.”
Given that the budget for hosting six World Cup games is already at $380 million — to be split between various levels of government — that makes the economic rationale for bring the tournament here even shakier, said Matheson.
“You know, if the investment number was zero, for sure I would always recommend a World Cup. But at the numbers that Toronto’s talking, maybe not quite as good as an investment as you’d hope,” Matheson said.
The cost of hosting the six games in Toronto was originally pegged at $40-$50 million, said city councillor Josh Matlow.
Those costs have since ballooned to $380 million, to be split between the city, the province of Ontario, and the federal government. The city’s current share is $180 million. The federal and provincial government will contribute $104 million and $97 million, respectively.
Matlow argued that the tournament will bring increased crowding and congestion to downtown streets, while the cost of attending games will be unaffordable for average Torontonians, with the top tier of tickets priced at over $3,000 per seat. The $380 million in spending would be better spent making the TTC run more smoothly, or fixing crumbling infrastructure, Matlow argued.
“Will it be a fun event? For people who can afford the seats, sure. But most people…won’t actually experience the joy and the fun of it very much, but they’re going to be left over with a lack of investments in things that actually matter to them,” said Matlow.
And, said sports economist Matheson, that’s par for the course with global soccer’s biggest show.
“The World Cup makes us happy,” he said. “There’s just not a whole lot of evidence that the World Cup is going to make us rich.”
