Saudi Arabia hosting FIFA World Cup 2034 – preliminary cost benefit analysis

The Kingdom is rapidly becoming one of the world’s top venues for sporting events as part of Vision 2030.

Saudi Arabia’s FIFA World Cup in 2034 will showcase the Kingdom’s progress – exemplifying its cultural depth and administrative capabilities, as well as its attractive tax regime and investment opportunities for FDI.

However, the cost of building state-of-the-art facilities is expected to be high. A cost-benefit analysis of the Saudi dream of hosting the world’s largest sporting event is worth examining.

What are the projected economic benefits for Saudi Arabia from hosting the World Cup?

The World Cup in Qatar was a significant investment, with the country spending $200-300 billion on infrastructure over a decade.

The short-term benefits from visitors’ spending and broadcasting rights are estimated to be about 1 percent of the country’s gross domestic product.

Qatar’s visitor expenditure on tourism and other revenue from WC-related programming is projected to be between $2.3 and $4.1 billion, representing 0.7-1.0 percent of GDP in 2022.

Indirect benefits include higher foreign direct investment and increased tourism resulting from the event.

Qatar managed to increase non-hydrocarbon income by 40 percent during the decade of preparation for the World Cup by investing in infrastructure and diversifying the economy.

How will the World Cup influence Saudi Arabia’s infrastructure development, including stadiums, transportation and hospitality facilities?

Saudi Vision 2030 emphasizes the importance of investing in the sports sector, as it can support host nations and lead to social and economic development.

The Kingdom plans to build 15 new stadiums or refurbish existing ones in Riyadh, Jeddah, Alkhobar, Abha and NEOM.

In Riyadh, six out of eight stadiums are completely new, a significant development compared to London’s 22.

Jeddah is expected to build three new stadiums and refurbish an existing one. The new NEOM Stadium, located more than 350 meters above ground, is expected to provide a unique experience and increase the non-hydrocarbon share of GDP.

Upkeep and using these stadiums is crucial for long-term gains, as maintenance costs could be substantial.

New hotels for the tournament will include FIFA HQ hotels in Riyadh’s New Murabba district, FIFA VIP and venue hotels in Khobar’s Al-Olaya District, and a proposed VIP and venue hotel west of Abha.

King Salman International Airport is expected to be extended to accommodate 100 million passengers per year, a 170 percent increase compared to 2023.

In what ways can the event economically impact local businesses and tourism in the long term?

Saudi Arabia experienced significant growth in foreign tourism in 2023, according to the UN’s list of countries with the highest growth rate.

Large sporting events can improve a host nation’s reputation globally by encouraging travel and cross-cultural interaction.

These events can also boost a country’s self-awareness, drive and economic progress.

Short-term economic gains, such as increased consumer spending and job creation, can be achieved.

Hosting a mega sporting event like the FIFA World Cup can lead to increased GDP, jobs, tourism and a stronger national brand image.

Dr. Yaseen Ghulam

However, the actual outcomes of previous World Cups vary. For example, the South Korean World Cup brought more than 2 million extra foreign visitors, while Qatar saw a significant increase in tourism post-WC.

Russia received 570,000 tourists during the event, while some regional centers saw a 90 percent increase in numbers.

Sporting events can also draw away potential tourists from popular areas, potentially causing negative short-term impacts. Smart marketing and rewards for Muslims spectators could help mitigate this impact.

How might organizing the World Cup contribute to job creation and workforce development in Saudi Arabia?

Job creation is uncertain, but some figures suggest a 5 million increase. Previous World Cups have predicted 50-60,000 more jobs, with Russia estimating 220,000.

Qatar’s authorities predicted 1.5 million new jobs in the construction, real estate and hospitality sectors.

The event in Qatar contributed to 850,000 additional jobs in the residential sector between 2010 and 2022.

Saudi Arabia’s event could result in more than 1.5 million new jobs, accounting for 10 percent of the current workforce.

The NLO estimates a 21k/year job deficit, and Saudi universities produce 200k graduates annually.

A significant portion of this workforce could be employed in World Cup 2034-related projects, with female workers best suited for the administration and hospitality sector.

How could hosting the World Cup support Saudi Arabia’s efforts to diversify its economy?

Hosting a mega sporting event like the FIFA World Cup can lead to increased GDP, jobs, tourism and a stronger national brand image.

By showcasing administration skills and offering incentives, foreign direct investment can be increased in the financial, manufacturing, IT and tourism sectors.

The Kingdom must follow FIFA guidelines for infrastructure construction, such as stadiums, transport and hotels, which can boost income from the hospitality and tourism sectors.

Although the upkeep of new infrastructure may be costly, the incremental cost is not too much, as the Kingdom is working on Vision 2030 and FIFA World Cup preparations are considered a positive externality of its vision.

• Dr. Yaseen Ghulam is associate professor of economics and director research at Al-Yamamah University, Riyadh.