Honors Capstone Project
Date of Submission
Yildiray Yildirim Chair, Associate Professor of Finance
Kenneth P. Walsleben, Adjunct Professor of Entrepreneurship and Emerging Enterprises
Capstone Prize Winner
Won Capstone Funding
Economics | Finance and Financial Management | Growth and Development | International Business | International Economics | Tourism and Travel
Brazil is soccer. The game is so deeply ingrained in daily life - in Brazilian identity and self-esteem- that they define each other. Soccer is so profoundly intertwined with Brazilian culture that familiarity with the sport begins early, producing a bottomless pool of talent. Year after year, soccer stars seem to roll out of Brazil like cars off a factory assembly line; it’s a natural talent that grows in almost every Brazilian child. Soccer means passion to Brazilians; it is the symbol of their nationality, as they have proven to be very the best at it.
Now, Brazil finally has been chosen to host the world’s largest sport event, one that Brazil has won five times (more than any other country in the world), the 2014 World Cup. After dedicating their hearts and souls to the sport, the World Cup will be brought to the Brazilian country, as passionate crowds will cheer for their favorite team.
But as the event gets closer and closer, Brazil finally understands the implications that come along with hosting something as big and powerful as a World Cup. While the sport event itself might bring the country several benefits, such as job creation with additional economic activities, Foreign Direct Investments, tourism and infrastructure improvements, it is also forcing Brazil to spend beyond its capacity. With a lack of commitment coming from the private sector, Brazil finds itself in a desperate situation, where the country is required to utilize public funds to make sure that it will be ready in time.
This, obviously, is not the perfect solution. After analyzing the model used by the United States (a well-established country with a successful history of hosting major sporting events and in funding sport facilities), I propose an alternative way for Brazil to proceed with 2014 World Cup infrastructure funding. I have come to the conclusion that there is no way that the present Brazilian model will work. Given that stadiums do not generate great economic revenues, in the long run, Brazil will find itself embedded in even greater debt. Currently, the Brazilian Development Bank is funding at least 45% of all government - owned stadiums (not a public good). This, however, is not sustainable, given that this money will have to be paid back. So what do I propose? Tax holidays to the private sector to spur critical private investment.
To date, the lack of participation from the private sector comes from (a) the belief that stadiums do not generate enough revenues to significantly cover all the costs, and (b) the “Brazilian cost” of doing business in the country. Reducing or exempting the private sector from state and federal taxes on revenues generated would incentivize private entities to invest in projects that the government is not able to fund, and as a consequence, it would also give businesses room to grow, as the private sector has proven to be more efficient in stimulating progress.
Brazil has all the necessary tools to succeed and show the world that it can, too, promote a life-changing event. All it needs to do is use its resources right. It is Brazil’s turn to shine as it presents its most beautiful sport, one which Brazilians know how to play as no other country does. Brazil is soccer. It’s the country’s culture, identity, and nationality. Brazil will be hosting an event that defines it in every single way, and it cannot go wrong.
Barreto, Bruna Almeida Lopes, "FIFA 2014 WORLD CUP: Brazil’s Unending Headache: An Economic Investment that Challenges the Country’s Future" (2012). Honors Capstone Projects - All. 167.
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