Authors: Dr. Christos Anagnostopoulos and Professor Simon Chadwick*
Two years ago, four academics convinced some of the world’s leading scholars to contribute to the first ever book focusing on the business of the FIFA World Cup. It also answered the call for scholarly action at a time when planning for the 2022 World Cup – one of the most unique editions in the tournament’s history – was underway.
The Business of the FIFA World Cup takes the reader from the initial stages of bidding and hosting decisions, through planning and organization, to the eventual legacies of the competition. One of the biggest events globally, the World Cup is a tournament that generates massive coverage, attracts millions of fans, creates multiple commercial opportunities, and poses an array of challenges for host nations that students, academics, and practitioners need to understand.
By examining the World Cup in the context of global sport business, what can we understand about its role in Qatar’s economic development journey?
The setting for Qatar’s hosting of the 2022 tournament
It is well established that Qatar has the motives and the means for staging the event. The country has the third-largest natural gas reserves in the world and is highly dependent on the hydrocarbon sector. According to the Qatar Planning and Statistics Authority,[1] the share of hydrocarbons in Qatar’s GDP increased from 29 percent in 2020 to 36.8 percent in 2021, mainly fueled by rising hydrocarbon prices. The contribution of hydrocarbons to the nominal GDP of the country increased from US$41.8 billion in 2020 to $66.1 billion in 2021. Not surprisingly, the 2020 International Monetary Fund report names Qatar as the richest[2] country in the world.
The World Bank reports that Qatar’s GDP is expected to grow in 2022, making it the fastest-growing state in the Gulf Cooperation Council (GCC) in 2023 and 2024. Moreover, according to the latest Global Economic Prospects report for June 2022,[3] the real growth of the country’s GDP is forecast to be 4.9 percent in 2022, 4.5 percent in 2023, and 4.4 percent in 2024. Qatar’s GDP growth is attributed to a 10 percent increase in hydrocarbon exports, as well as the country’s North Field expansion project. With a budget of more than $2 billion ‒ the project is the largest of its kind in the world ‒ which aims to increase the country’s annual liquefied natural gas production capacity from 77 to 126 million metric tons by 2027.
Given the above conditions, the Rentier State Theory (RST) offers an apt framework to understand the impact for Qatar’s development. The rentier state – based on a scholarly definition – is one that regularly receives a significant amount of external income mainly derived from exporting raw materials to other states.
Towards becoming a sports hub
While natural resources have contributed significantly to Qatar’s prosperity, the market forces that dominate hydrocarbon exports also lead to revenue volatility. Consequently, and in line with the National Vision 2030, which lays the foundations for a diversified and competitive knowledge economy, Qatar aims to develop the non-energy sector of its economy, aspiring to become a regional business and tourism hub, with sport being the common denominator for both these hubs. Hosting the FIFA World Cup is the key to realizing these ambitions.
By way of example, consider this: aspiring to become a global sports hub is both enabled and represented by the national airline (which is instrumental in transporting sports tourists into the country). At the same time, the national airline helps in establishing Hamad International Airport as an important global transit hub. All this occurs while the airline has been FIFA’s official airline partner since 2017.
According to the Qatar Chamber of Commerce and Industry, the share of hydrocarbons in the country’s GDP fell from 55 percent in 2013 to 39 percent in 2018, partly reflecting increased public capital spending linked to World Cup preparations. This mega-event supported developments in critical non-energy sectors, and their continued development will be a priority for Qatar after the tournament is over. More specifically, the Qatar Planning and Statistics Authority reports activities in several sectors, with an emphasis on sports. The report showed a growth rate for 2022 of 4.1–5.6 percent (surely reflecting the added value of the activities related to the organization of the 2022 World Cup) before returning to 2.3–3.1 percent in 2023.[4]
Qatar also aims to attract foreign direct investment (FDI). A recent report by the American-Qatari Chamber of Commerce[5] noted that, in 2018, in order to facilitate FDI inflows, Qatar allowed foreign investors to own up to 100 percent of the capital of companies in all sectors of economic activity, abolishing a previous regulation that limited foreign ownership to 49 percent. In addition, in 2020 Qatar introduced a law on public-private partnerships that allows investors to co-own infrastructure assets developed under long-term concessions. The hope is that World Cup-related infrastructure, economic growth, and Qatar’s more attractive international profile will attract investors.
No doubt, the World Cup will provide a significant boost to Qatar’s economy, and reports that project the economic impact of this unique event abound. The most conservative ones[6] present a more “measured” perspective than officials. In short, the benefits come through two main channels: increased investment and higher consumer spending, particularly by tourists. Regarding the former, total government spending exceeded $200 billion, $6.5 billion of which was estimated to have been spent on constructing the sports facilities for the event. The Qatari government argues that much of this infrastructure spending would have occurred regardless of the World Cup, but the $200 billion is an astronomical amount compared to previous World Cup events. Regarding the second channel of economic development, ticket sales suggest that Qatar will welcome approximately 1.5 million tourists, with total additional tourism spending reaching $7.5 billion ‒ a figure that corresponds to about 6 percent of GDP, excluding hydrocarbon revenues.
A legacy that will grow
Apart from the two main channels mentioned, Qatar will host the 2030 Asian Games. The US–Qatari Chamber of Commerce reports that the multi-sport event is set to further boost Qatar’s tourism ambitions, mobilize the construction sector with projects worth $1.3 billion, and strengthen Qatar’s leadership as an international sports hub. Indeed, Qatar’s sports strategy is linked to other ‘enablers’. For instance, Aspire Zone, Aspetar, and the Doha Sports Tech Hub to name a few, play a critical role in an ever-developing industrial clustering that has sport (and tourism) at its core. Therefore, it is expected to be proven whether significant experience and expertise in sports matters will be able to contribute to Vision 2030 for a diversified and competitive knowledge economy that is strategically and gradually “weaned” from external annuities of energy raw materials and has established sport as one of the main pillars of its sustainability.
*Professor Simon Chadwick is a Professor of Sport and Geopolitical Economy at SKEMA Business School, France.
[1] Available online: www.psa.gov.qa/en/knowledge/Doc/QEO/English_QEO_2021-2023.pdf (last retrieved: 13 October 2022).
[2] Based on GDP per capita, adjusted for purchasing power parity (PPP).
[3] Available online: thedocs.worldbank.org/en/doc/18ad707266f7740bced755498ae0307a-0350012022/related/Global-Economic-Prospects-June-2022-Analysis-MENA.pdf (last retrieved: 13 October 2022).
[4] Available online: www.Psa.gov.qa/en/knowledge/Doc/QEO/English_QEO_2021-2023.pdf (last retrieved: 13 October 2022).
[5] Available online: www.usqbc.org/public/documents/upload/test/Foreign%20Direct%20 Investment %20in%20Qatar,%20Recent%20Developments%20and%20Opportunities.pdf (last retrieved: 13 October 2022).
[6] The Economic Impact of the Qatar FIFA World Cup, Capital Economics, 15 August 2022, MENA Economics Update.
