Why the 2014 FIFA World Cup may Triple-Strike Sao Paulo by amazonbella

Uncounted Public Costs: Why the 2014 FIFA World Cup may Triple-strike Sao Paulo Jesse Nascimento

Photo Credit: Rivaldo Gomes/Folhapress

Brazilian government officials at federal, state, and city levels insist that public investment in the 2014 FIFA World Cup fosters GDP growth and provides social economic development.1 Authorities in Sao Paulo claim that construction of a stadium called Arena de Sao Paulo (popularly known as Itaquerão), will successfully showcase Brazilian capabilities/pride prior, during, and after the 2014 games. Out of the government’s disclosed cost of US$478,546,085.08 to build the new arena, the city of Sao Paulo pays US$225,889,032.76 in fiscal incentives,2 the state of Sao Paulo incurs US$37,638,456.05, and subsidized loans by federal government owned and operated National Bank for Economic and Social Development (BNDES) provide US$225,830,756.21.3

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http://bit.ly/s12KFr City of Sao Paulo official website. Municipal Secretary for Economic Development and Labor, Dr. Marcos Cintra. http://tinyurl.com/85wg9dt City of Sao Paulo’s tax payer’s investment in local currency is $420 million Brazilian Reais. http://tinyurl.com/cnqgucp Data published by Veja Magazine. Currency exchange rates as of 12/15/11 by http://www.xe.com

Missing in this equation are additional fully independent private funds. Designed to host the opening match (plus five other games at the tournament, one of them a semi-final),4 and to benefit the centennial and highly popular Corinthians Football (Soccer) Club, the sixty-eight thousand-seat venue is promoted as a unique growth opportunity for the Itaquera5 ward, located in the neglected East Zone. This region now hosts a population of almost 4 million people6 plagued by the lowest per capita income in the largest, most prosperous city in Brazil. While baseball is a quintessentially American national pastime, its “three strikes and you are out” formulation best characterizes the major development fiasco poised to occur as Brazil unleashes its plans for playing its national sport, soccer, in a stadium large enough for hordes of fans cheering on international competitors. The three strike predictors of failure--expensive public subsidies, environmental degradation, and destabilizing social costs--significantly endanger the home run hit the Brazilian government hoped for by investing in an oversold, stadium-driven social economic future for Itaquera. Unless ethically and economically sound measures are taken now, the Brazilian government may be setting up a 2014 FIFA strike-out before they even approach the plate. Albeit costly, Brazil’s hosting a World Cup is a legitimate source of pride, and as a short-term project, optimism. Still, the Arena de Sao Paulo project looks increasingly like a classic example of trumpeted short-term benefits turned into undesirable long-lasting legacies. Even short-term postulations, such as hordes of tourists flocking to Itaquera, bear scrutiny. Franz Beckenbauer, head of FIFA’s 2010 inspection team lectured Cape Towners that over one million tourists swarmed 4 5 6

http://www.fifa.com/worldcup/news/newsid=1537854/ A Native American (Tupi Guarani) word which means: hard rock. http://tinyurl.com/745bwc9 - FIFA’s Website

Germany in 2006, thus, money invested would return to their city. He omitted that his team vetoed a stadium location unattractive to Europeans.7 South Africa received little over three-hundred thousand tourists. Unlike Cape Town, Itaquera has no beaches, mountains, and is far from being an epicurean or postal-card destination; yet, their citizens deserve respect and the confidence of a lasting legacy, not fairy tales. According to ESPN, Ronaldo Nazario, Brazil’s 2002 Penta-champion striker,8 recently appointed as diplomat of the 2014 World Cup declared that hospital and stadium projects are recipients of equal levels of government concerns and investments by Brazilian agencies in preparation for the nation’s most anticipated event. The soccercelebrity turned business-mogul shows his preference for stadium construction by asserting that “a lot of money is being spent on health, safety, but we will be hosting a World Cup. Without stadium[s] there’s no World Cup. You don’t have a World Cup in a Hospital.”9 Ronaldo may not have intended to establish a value judgment between a hospital and a stadium; yet, his words represent a startling choice, considering the health care needs of Itaquera’s population. Funds for Arena de Sao Paulo may not be enough to pay for sixteen well-equipped and fully staffed hospitals; nevertheless, in the more than fifty-five square kilometers of Itaquera, there is currently one single municipal hospital. Once the thirty-day World-Cup games are over, Itaquera will have a new stadium and not a single new hospital facility. Opponents challenge Ronaldo’s claim for

“The city had also wanted originally to locate the stadium in a black or Coloured area, both in order to encourage investment and jobs and to make it easier for the poor to attend matches. This immediately went out the window when the Fifa inspection team, headed by Franz Beckenbauer, visited Cape Town. One of the criteria they laid down was that the stadium should have ‘fine mountain views’. The team toured the poor areas, assumed the city had to be joking about choosing anywhere so obviously ugly and unsafe, and plumped for Green Point, an affluent white area with fine sea and mountain views and many good restaurants. This was hardly surprising. Beckenbauer is a rich German and rich Germans who come to Cape Town make a beeline for places like Green Point, not for Athlone.” http://www.lrb.co.uk/v31/n24/rwjohnson/diary 8 http://www.ronaldohome.com 9

http://bit.ly/sQBcIe ESPN Brazil Sports News website

stadiums’ prominence in the queue of a public investments bonanza for the World Cup and the Olympics. Concerned about creating white elephants where greater needs could be met, architect, urban planner, and United Nations special rapporteur on rights to adequate housing, Professor Rachel Rolnick argues that contrary to a hospital facility, which tangibly benefits local communities “a stadium does not offer the ability to positively foster the [desired] urban transformation.”10 The needed urban transformation would be welcomed in the form of new elementary/grade and high schools, good paying jobs, affordable housing, and athletic facilities, which would serve the immediate deprivations of the population and establish a long and sustainable legacy. Vividly encapsulating her view of stadiums’ inadequacy to provide the type of development promoted by mega-events’ organizers to hostingcities, Rolnick further asserts that Nowhere in the world [do] stadiums attract high density of uses and investments in their neighborhoods. Quite the contrary - in most cases, they end up creating a dead zone around them, because they occupy large areas, require large parking spaces and areas of escape and thus, block the urbanity.11 Arena de Sao Paulo is poised to produce the very opposite of what it has been advertised as capable of achieving, which is, a lasting legacy of higher standards of social and economic development for the people of Itaquera and the region. Brazil’s official auditing body of public funds expenditures, Union’s Tribunal of Accounting warns that the 2014 mega-event might generate undesirable legacies. Even the federal government’s own-designated executive supervisor of projects, Valmir 10 11

Rachel Rolnick, “Sao Paulo really needs Itaquerão?” http://bit.ly/utyF0K Blog Post Rolnick, “Sao Paulo really needs Itaquerão?” http://bit.ly/utyF0K Blog Post

Campelo, concedes his fear that “projects may inevitably be completed hastily, without due regard to technical details, and even viability. I worry about the risk of a legacy that does not meet the real needs of the population at the end of [the] games.”12 Such an overt assessment of the potential strikes haunting the planning and execution of the 2014 World Cup validates inferences that social injustices --in the form of uncounted social, environmental, and human costs-- and inequalities displayed in cities which have hosted mega events might be analogous to situations predictive in Sao Paulo for the 2014 World Cup, and Rio de Janeiro for the 2016 Olympic Games. Unintended and undesirable legacies have increasingly characterized narratives of similar mega-events in recent history. Writing in 2009 about Olympic Games, Gavin Poynter and Iain Macrury clarify the implications, meaning, and context of the term “for urban regeneration and economic development.”13 Establishing an important distinction and calling for a broad view of the post-event results and its implications, the authors caution that legacy is not to be confused with the ‘narrower’ evaluation of socio-economic impact whose focus is primarily upon the costs and benefits of the sports event itself. Its focus combines the direct Games-related evaluation of income/costs with a broader evaluation of the additional or indirect contribution to infrastructural, environmental, cultural, economic and social development.” In this sense ‘hard’ and ‘soft’, ‘tangible’ and ‘intangible’ legacies accrue over time. Indeed, the time span for evaluation should reflect the complexity of this process14 The desirable legacy of Arena de Sao Paulo must be intentionally and carefully built into the planning of the event, and because public funds are involved, interventions must be 12 13 14

http://tinyurl.com/cmp4wwh “O Estado de Sao Paulo” Newspaper website Gavin Poynter and Iain MacRury. Olympic cities: 2012 and the remaking of London (London: Ashgate Publishing Limited, 2009), xiii. Poynter; MacRury, xiii.

evaluated against the backdrop of serving the interests of the populations involved, including underprivileged groups. As it stands, the construction of Arena de Sao Paulo seems to pay cursory attention to the complex impact of multiple legacies while both the narrative and the debate are reduced to the level of the immediate feel-good effect afforded by the pride of hosting the event in a country known for its absolute reverence to the soccer game. Strike one. In considering what may become its own legacy, Brazil may reflect on other members of the BRICS (an economics acronym that refers to Brazil, Russia, India, China, and South Africa) that have experience with hosting international sports events. South Africa has firsthand knowledge of legacy-failed dreams stemming from the 2010 World Cup. At a cost of US$1.6 billion spent on stadiums alone, South Africaâ&#x20AC;&#x2122;s event contributed a meager 0.1 percent to the GDP.15 On the GDP alone, the event did not achieve the advertised and much anticipated goals. In spite of Brazil and South Africaâ&#x20AC;&#x2122;s similarities (both considered the most developed of the developing countries, yet, both presenting dismal abysses in income and purchasing power as compared to developed countries), Brazil expects to spend US$3 billion on stadiums alone, including Arena de Sao Paulo.16 Such a large public investment would raise expectations of substantial returns in the form of improved infrastructure, job creation, and environmental consciousness. If the returns were comparable and reliably guaranteed, it would be a mistake to deny the perspective of economic benefits of Brazil hosting the World Cup. 15

Stan Du Plessis and Cobus Venter. "The Home Team Scores! A first assesment of the economic impact of the World Cup 2010." Sport Und Okonomie (2010), 48-49. 16

Luiz Martins De Melo. "Experiences from World Cup 2010 in South Africa - first thoughts about implications for Brazil 2014." Sport Und Okonomie (2010), 60.

An independent study by the Getulio Vargas Foundation (FGV) and Ernest & Young Consulting17 points to the multiplier effects and impacts of expenditures of the mega-event and its effects through the Brazilian economy. The detailed study estimates a fivefold increase in investments with a staggering figure of over US$79 billion to be pumped into the economy. Breakdown of this figure includes over US$12 billion in direct investment need for infrastructure; almost US$4 billion in general and tourism spending; and close to US$63 billion from multiple sources of the economy. Estimates of tourists travelling to Brazil are highly encouraging, with projections of over US$8 billion for the industry, a sizeable jump from the record almost US$6 billion in 2010.18 GDP is expected to reach above ten percent from 2010 to 2014, influenced by aforementioned expenditures alone.19 The numbers--exceedingly challenging to fathom-- paint an extraordinary opportunity for the country to invest in transportation, telecommunications, public equipment, and infrastructure. However, the FGV study completely ignores that cost-count is consistently underestimated, including in Brazil’s case, as Long demonstrates that governments pay significantly higher amounts “than is commonly understood due to the routine omission of public subsidies for land and infrastructure, and the ongoing costs of operations, capital improvements, municipal services, and foregone property taxes.”20 As an example, the two million square feet piece of land on which the stadium is to be built was donated to Corinthians. Prosecutors estimate the price tag at US$16 million, while an agreement was made for Corinthians to invest a 17

19 20

http://www.slideshare.net/lavieri1/sgm-brazildigital Also a Business magazine article pointing to FGV’s study http://tinyurl.com/cv9nhlv

According to Central Bank (BC), 2010’s actual record figure is US$ 5.919 billion. http://tinyurl.com/d92z6wx De Melo, 63. Judith Grant Long. "Public Funding for Major League Sports Facilities Data Seires (5) A History of Public Funding, 1980 to 2005." 2005.

policy.rutgers.edu/faculty/long. 7 December 2011 <policy.rutgers.edu/faculty/long/LongDataSeries5History.pdf>.

modest US$6 million in social programs in lieu of any payments for the donated land. As a result of the fuzzy mathematics, the real cost for taxpayers and whether it is included on the total tally of the government’s package of concessions is yet to be determined. Urbanist and transparency advocate Vitor Nisida reveals that Brazilian “governments only issue official statements regarding evictions and public funds used for the World Cup.”21 The hidden costs of Arena de Sao Paulo are yet to be fully uncovered as authorities seem resolute not to share information. Full disclosure would help bring transparency and aid to identifying and estimating any uncounted public costs. On the subject of environmental costs and management, FGV’s document presents an idealized picture while shying away from demonstrating concrete evidence of steps the government has taken to address environmental issues in a comprehensive, efficient, and organized way. Strike two. Most important, the human costs of building the mega stadium have been ignored by the study. According to the independent Brazilian press,22 human costs created by Arena de Sao Paulo are especially manifest on the evictions and displacements that have been either underestimated or unpublished by public authorities. Over 5 thousand people living in or around favelas (shantytowns Vila da Paz, Fatec, Três Cocos, Goiti, Caititu e Rio Verde) near the new arena in Sao Paulo alone will be removed, while recent estimates point to upwards of 60 thousand in other states. One lady facing eviction associates a numerical figure to her feelings of rejection and 21 22

LabCidade | Equipe de Apoio à Relatoria – Communication by email with Dr. Raquel Rolnik’s staff in response to a request for information. Newspaper Correio Braziliense http://tinyurl.com/dxq7whh

eyesore stigma, “the [expanded] road may serve as an avenue for those who go to the stadium. I think it looks ugly to people who come from abroad to see a slum by the side of the road, so they [government] come in, pay us US$2,000.00 and tell the family to get out and hurry to find another place. What can you possibly buy with this money?”23 Municipal authorities vehemently rebuke the allegations. Architect Aline Cannataro denies that any relocation --she refuses the use of the terms evictions/removals-- is executed with the purpose of clean-up, as she explains that they are part of an urbanization plan that precedes the World Cup, yet, she did not elaborate on the social costs of these relocations. Beyond any monetary figures, removal for clean-up purposes offends the dignity of human beings. The government of Rio de Janeiro, in anticipation of 2016 Olympic Games, is also accused of illegal clean-up removals from Vila Harmonia and Vila Autódromo which caught the attention of international organizations.24 Rio, however, has plenty of company in the evictions business. Olympic Games around the world have displaced more than two million people in the last 20 years.25 Strike three. The moral and ethical transgression of building mammoth structures on the backs of millions of individuals, mostly from socially vulnerable backgrounds and

http://tinyurl.com/6v82lxc “Corinthians’ Stadium will evict more than 5 000 people.” Dollar amount cited is an approximate currency exchange of originally quoted amount of R$ 4.300,00 Brazilian Reais. Reuters’s report on evictions in Brazil and China due to Olympic Games http://www.reuters.com/article/2011/05/11/us-brazil-worldcup-slums-idUSTRE74A09720110511 24 http://www.thecrimson.com/article/2011/2/3/university-rio-government-janeiro Engineering and the Urban Environment - Collaborative Field Course in Brazil (January 2011). This field course was a joint initiative of Harvard's School of Engineering and Applied Sciences (SEAS), the Escola Politécnica of the Universidade de São Paulo (USP), and the David Rockefeller Center for Latin America Studies' (DRCLAS) Brazil Studies Program. 25 http://tenant.net/alerts/mega-events/Olympics_Media_Release.pdf – Some estimates: Seoul 1988, 720,000 people were forcibly evicted; Barcelona 1992, housing became so unaffordable that low income earners were forced to leave the city; Atlanta 1996, 9,000 arrest citations issued to homeless persons, mostly racial minorities, as part of an Olympics-inspired campaign to, quote, “clean the streets”. Additionally, some 30,000 persons were displaced in Atlanta by Olympics-related gentrification and development; Beijing 2008, alleged 1.5 million evicted to make room for Olympic avenues.

communities, evokes the Ozymandias sonnet. 26 The poem confronts the foolishness of revering self-celebrating monuments built to last that are of temporal nature. The ruins of former empires such as Greece, Rome and Turkey (notwithstanding their beauty and history) constantly remind visitors about the legacy of the once imposing statues, palaces and stadiums. Nevertheless, governments continue to take over properties in order to forge legacies often contrary to citizensâ&#x20AC;&#x2122; wishes. In the United States, under a process called eminent domain, cities across the country have forced people off their lands, businesses and homes. Eminent domain sounds as if it were a call of duty, motivating citizens to place the public wellbeing of the majority above personal interests. The apparently noble and Socratic ideal morphs, however, as experienced first-hand by a classmate who explained that my family owns and operates a 94 room Howard Johnson hotel next door to Fenway Park that had been slated to be removed by eminent domain back in 2004. The previous ownership of the Red Sox wanted to take our property and others in the area so that they [could] build a new stadium. Actually, they were doing this to increase the value of the team for their sale down the road. The experience allowed me the opportunity to see how the politics of the whole thing works, pretty much the same as the Brazilian government [is] pushing for the World Cup. 27 It is arguably morally wrong for governments to take over property (even if compensation is afforded) against the wishes of owners, except where clear safety

Percy Bysshe Shelley Rosalind and Helen, a modern eclogue, with other poems. 1819. Google Books. 15 December 2011 <http://books.google.com/books?id=Zy0PYRAv4lsC&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false>. Ozymandias I met a traveller from an antique land Who said: Two vast and trunkless legs of stone Stand in the desart. Near them, on the sand, Half sunk, a shattered visage lies, whose frown, And wrinkled lip, and sneer of cold command, Tell that its sculptor well those passions read Which yet survive, stamped on these lifeless things, The hand that mocked them and the heart that fed: And on the pedestal these words appear: "My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair!" Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare The lone and level sands stretch far away. Poem cited in class by Professor Judith Murciano on 12/14/11. 27

Email testimony by Harvard University student William Sage. 12/4/11.

concerns are at stake. Forcing a business to cease existence, or a family to move from a shantytown--under pretense of eminent domain--in order to make room for the expansion of a sports arena with the purpose of driving third party profits in Brazil, USA, or elsewhere in the world, demonstrates how moral decay may be transnational. The utilitarian argument, conceived by Jeremy Bentham and John Stuart Mill-that the unique measure of morality is determined by its usefulness-- is exploited by governments, religions, corporations and other entities to justify infringing on the interests of a few in order to benefit or protect the majority. At face value, Fenway Park is a national pastime, thus, to benefit the broader society and foster unity, personal concessions must be made. Thus, extinction of a family owned hotel business in order to allow for multitudes to enjoy their pass time seems as an honorable action. The problems with utilitarism –the ends justify the means-- and why it must be outright rejected include the lack of objectivity of the utility, and the absence of a consistent moral framework, which leads to its tendency to slide into totalitarism and quenching of dissent. Evicting populations to make room for monumental temporal structures fits right into the utilitarian mindset, and as such, must be questioned. Harvard University Professor Amartya Sen, 1998 Nobel Laureate in Economics, coined the concept of equality of autonomy, which concedes institutions such as the state intervening on people’s lives, only if it is to “foster people’s self-creation, rather than their living conditions.” 28 Removal of the poorest in society for alleged clean-up

Amartya Sen QTD Todd May, The Political thought of Jacques Rancière: Creating Equality (University Park: The Pennsylvania State

University Press, 2008), 20.

purposes is a moral issue and a severe blow to Brazil’s past years of populist aspirations fueled by a president who emerged from abject poverty to prominence in order to, as he used to claim, dispense social justice (or equality of autonomy) to excluded populations. Governments should strive to make a lasting contribution to the citizens of Itaquera by giving them equal chance of autonomy and empowerment. Itaquerenses should be motivated and equipped to make decisions about their own lives instead of being tossed around and wager their own future on soccer matches and stadiums. Selection of Brazil as country host of 2014 Fédération International de Football Association’s World Cup is a legitimate source of pride and optimism for the entire nation and friends in many parts of the world who expressed satisfaction with the outcome. The country will be the recipient of substantial tangible and intangible benefits associated with the ability to handle a large scale event with the coveted coverage by media from all corners of the world. Such a perspective alone elicits feelings of patriotism and enhanced image internationally, which can be beneficial to the economy and international trade. However, building Arena de Sao Paulo with public funds and municipal concessions would possibly have caused an outcry were it not for the prospect of hosting the World Cup. If Arena de Sao Paulo is to be built with the sense of multiple legacies and attending long lasting interests of the population, it must be fully funded by private investors to avoid the opportunity loss of public investments. Brazilian federal government should play the key role in working with FIFA, setting goals, monitoring, and demanding accountability on the allocation of private investments as to benefit the communities in which these stadiums are being renovated, or built from 11

scratch. In cases where populations must be removed because they occupy environmentally sensitive areas, the state and municipal governments should see to it that these removals are conducted in a humane way, providing adequate resources for resettlement of the displaced population with funds provided by the private sector, which would stand to benefit from the alleged guaranteed profits generated by the stadium. Whether private investors are unwilling to bid and build the venues on their own should cause suspicion that the trumpeted opportunity may turn-out to be not so exciting, unless the tax-payers foot the bill. In fact, the private sector has already demonstrated little interest in taking the brunt of investing. The federal government â&#x20AC;&#x153;failed to attract private partners to finance those investments in the renovation and modernization of stadiums.â&#x20AC;?29 Such a failure to attract private investors represents a strike on taxpayers who will fund the project and live with its uncertain legacy. Governments were able to impose only a one percent levy on builder Odebrecht, to mitigate transit issues out of the almost US$275 million it will receive to erect the stadium. The excitement of building a brightly shining venue in Brazil for the 2014 World Cup must not overshadow foreseeing and shaping the impact of multiple legacies (tangible and intangible) that will accrue overtime and directly impact the quality of life of members of the Itaquera ward and vicinities for many years after the thirty-day event becomes a distant record in history. When the games are over, the question of whether or not the Brazilian government has hit a homerun or struck out may be determined by

De Melo, 60.

how much community members have participated in self-determination and exercised their equality of autonomy in an economically, as well as morally, sound celebration of what a unified nation is capable of achieving. That historical record that is now being made will last forever.

Aerial photo of region where Arena de Sao Paulo is being built. Photo Credit www.blogdonavarro.wordpress.com

Works Cited

Â De Melo, Luiz Martins. "Experiences from World Cup 2010 in South Africa - first thoughts about implications for Brazil 2014." Sport Und Okonomie (2010): 51-67. Du Plessis, Stan and Cobus Venter. "The Home Team Scores! A first assesment of the economic impact of the World Cup 2010." Sport Und Okonomie (2010): 48-49. Long, Judith Grant. "Public Funding for Major League Sports Facilities Data Seires (5) A History of Public Funding, 1980 to 2005." 2005. policy.rutgers.edu/faculty/long. 7 December 2011 <policy.rutgers.edu/faculty/long/LongDataSeries5History.pdf>. May, Todd. The political thought of Jacques RanciĂ¨re: creating equality. University Park: The Pennsylvania State University Press, 2008. Poynter, Gavin and Iain MacRury. Olympic cities: 2012 and the remaking of London. London: Ashgate Publishing Limited, 2009. Shelley, Percy Bysshe. "Rosalind and Helen, a modern eclogue, with other poems." 1819. Google Books. 15 December 2011 <http://books.google.com/books?id=Zy0PYRAv4lsC&printsec=frontcover&source=gbs_g e_summary_r&cad=0#v=onepage&q&f=false>.