Russia Leads World Cup Race; Putin Won’t Join Cameron in Zurich

Russia's Prime Minister Vladimir Putin
Russia's Prime Minister Vladimir Putin. Photographer: Jochen Eckel/Bloomberg

Russia is the bookmakers’ favorite to host soccer’s 2018 World Cup, though Prime Minister Vladimir Putin said he won’t join his British counterpart, David Cameron, at the announcement in Zurich to push Russia’s case.

Bookmakers William Hill Plc, Ladbrokes Plc and Paddy Power all had Russia as the front-runner to host the tournament this afternoon, followed by England and joint bids from Portugal and Spain and Belgium and the Netherlands. The Federation Internationale de Football Association, or FIFA, soccer’s world governing body, will announce the hosts of the 2018 and 2022 competitions tomorrow.

Putin said today that he won’t fly to Zurich in order to give FIFA’s selection committee “the chance to make an objective decision calmly and without external pressure.” Cameron said on Nov. 12 that he’ll attend the ceremony.

Russia’s bid includes construction of 13 stadiums and renovation of three more at a projected cost of $3.8 billion and an operating budget of $641 million for 2017-2018. Russia committed to make “major upgrades and capacity increases” at most airports serving the 13 proposed host cities, including Sochi, home of the 2014 Winter Olympics.

FIFA assessed Russia’s ability to provide requisite airports and international connections as a “high risk” in its bid evaluation report. All aspects of England’s bid are rated as “low” or “medium” risks.

‘Dragged Through the Mud’

Putin today criticized a “campaign” against members of FIFA’s executive committee involved in the selection as “unfair competition.” The officials are “being compromised and dragged through the mud,” Putin said at a government meeting in Moscow. “Such methods are entirely inadmissible.”

FIFA suspended two executive committee members last month following a corruption probe into bids to host the World Cup. Its decision-making body was reduced to 22 members as Nigeria’s Amos Adamu was suspended for three years and fined 10,000 Swiss francs ($10,120) and Tahiti’s Reynald Temarii was banned for a year and fined 5,000 francs.

London-based bookmaker William Hill had Russia as a 4/7 favorite to host the tournament at 3:30 p.m. Moscow time today, with England at 2/1, Portugal and Spain at 9/2 and Belgium and the Netherlands at 40/1. Paddy Power gave 8/11 odds for Russia and 2/1 for England, while Ladbrokes offered 5/6 for Russia and 13/8 for England.

‘Tens of Billions’

A successful Russian bid may speed infrastructure development and boost airlines and steelmakers, though it could cost “tens of billions” of dollars, analysts said.

“Russia’s success would be very positive for stocks such as OAO Aeroflot, the steel companies, media companies and the banks as a Russia proxy,” Chris Weafer, chief strategist at Moscow-based UralSib Financial Corp., wrote in a note to investors. “While the cost would likely run into the tens of billions, World Cup 2018 would inject a great deal more urgency, and a stricter timeline, into the government’s modernization program.”

The “very intensive development of infrastructure and heavy investments” may boost demand for steel products, Alexey Bulgakov, an analyst at Moscow-based Troika Dialog, said on Nov. 29 in a note to investors.

“If the volatility on international markets diminishes, some investors next week may start experiencing warm feelings toward Evraz Group Eurobonds and to a lesser extent Severstal should Russia emerge as the winner,” Bulgakov said.

‘Going to War’

Talk about the economic benefits of hosting the World Cup are illusory, said Simon Kuper, a co-author of Soccernomics, a book about the economics of the game.

“The main reason for hosting the games is that it gives the whole country something everyone cares about, almost like going to war,” Kuper said by telephone from Paris. “It’s a great togetherness. And it’s great for the political elite and for the construction companies.”

Kuper said his study of previous tournaments yielded no evidence that hosting the World Cup makes countries more attractive for investors. Russia is likely to end up with “a lot of empty stadiums,” he said. Average attendance at games in Russia’s Premier League was 12,343 this season, according to the league’s website.

England and the U.S. are the only countries bidding to host the 2018 and 2022 World Cups that can meet FIFA’s revenue targets, a study commissioned by soccer’s governing body said. The confidential report, prepared by McKinsey & Co. and seen by Bloomberg News, was sent to FIFA’s Executive Committee. It didn’t detail FIFA’s projected revenue target.

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