Putin likely to get little return on $11bn World Cup investment

economists say the huge effort won’t be enough to generate much of a blip in Russia’s almost $1.5 trillion economy

Soccer Football - World Cup - Group A - Russia vs Saudi Arabia - Luzhniki Stadium, Moscow, Russia - June 14, 2018 General view of a fan shop outside the stadium before the match REUTERS/Kai Pfaffenbach

A fan shop outside the Luzhniki Stadium before the opening World Cup match between Russia and Saudi Arabia. Despite the huge spend, the host country is unlikely to register any significant economic gain. Kai Pfaffenbach/Reuters

Bloomberg

Jun 14, 2018

President Vladimir Putin has spent six years and more than $11 billion preparing nearly a dozen Russian cities to host the soccer World Cup, the biggest such event the country’s held since the collapse of the Soviet Union.

As millions of fans spread out across European Russia over the next four weeks, the Kremlin is hoping to show a friendlier face and break some of the international isolation Russia’s suffered in the years since it annexed Crimea from Ukraine in 2014. From Yekaterinburg in the Urals to Kaliningrad on the Baltic Sea, the championship reaches cities few foreign visitors have seen before.

As high as the price tag is, economists say the huge effort won’t be enough to generate much of a blip in Russia’s almost $1.5 trillion economy. Moody’s Investors Service said last month that any boost will be limited and short-lived, well short of the fillip provided by the 2014 Winter Olympic Games in Sochi, which cost a record $50bn. Economists say the best Russia can hope for this time around is a modest gain in the rouble.

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FIFA World Cup 2018 will have limited economic gain for Russia, Moody's say

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Mr Putin plans to attend the opening game with Saudi Arabia's Crown Prince Mohammed bin Salman on Thursday between Russia and Saudi Arabia at Moscow’s Luzhniki stadium, which will also stage the cup final on July 15. The president has admitted that he doesn’t think the Russian team is going to do very well, and he told Chinese reporters last week that his favourites include Spain, Germany, Argentina and Brazil. Russia is the lowest-rated World Cup team in world governing body Fifa’s world rankings at 70th.

Whether the World Cup is enough of a draw to jump-start tourism in smaller cities like Saransk - itself the butt of jokes in Russia - and Samara after the tournament is over will determine how much payoff there is for Mr Putin’s investment.

“Raising Russia’s brand value with a welcoming, peaceful, and fun sporting event” may help provide a longer lasting effect from hosting the World Cup, analysts at UBS said in a report in May.

“Unfortunately, years of efforts and funds can be lost in a heartbeat when it comes to reputation, as recent geopolitical tensions show.”