Dec. 3 (Bloomberg) -- Soccer’s governing body chose the risky options to host the World Cup in 2018 and 2022, picking Russia and Qatar as it tries to expand the sport in emerging markets.
FIFA selected the pair during a secret vote yesterday in Zurich. They were the only nations out of nine candidates that didn’t get an overall “low risk” rating from FIFA’s technical assessment team. The Gulf state was the sole “high risk” bid, with Russia the lone “medium risk” candidate.
The decision means that the world’s most-watched sporting event will be in developing nations four times in a row. South Africa held the World Cup this year, and Brazil is preparing for the 2014 tournament. Russia, which will be the first Eastern European host, beat England and joint bids from Portugal-Spain and the Netherlands-Belgium for 2018. Qatar’s victory over the U.S., Japan, South Korea and Australia moves the event to the Middle East for the first time four years later.
“I can say FIFA opens to new worlds, I cannot be unhappy with that,” said Michel D’Hooghe, a Belgian member of the executive committee who didn’t reveal who he voted for. “That’s the decision of a democratic majority and everybody has to respect that.”
Hosting the tournament is worth about $5 billion, according to U.S. estimates.
Russia had to overcome operational concerns over its airports and international connections, which are rated as high-risk. The country still has to build 13 of the 16 proposed stadiums. Qatar will build nine of its 12 stadiums, and air-condition them all to deal with temperatures of 46 degrees centigrade (115 degrees Fahrenheit).
‘Balance of Power’
“The balance of power is shifting, and FIFA wants to be on the right side of history,” said Stefan Szymanski, a professor at Cass Business School in London. “When FIFA gives the World Cup to young, emerging markets, much of the world thinks that sounds like a good idea.”
It was the second time in a year that the U.S. failed to land one of the world’s biggest sports events. The American bid for the 2016 Olympics was eliminated in the first round of voting by the International Olympic Committee, which picked Rio de Janiero.
The Russian victory gives Prime Minister Vladimir Putin his third success in attracting global sports events to boost the economy and rebuild the country’s image as an athletic superpower. He’s already delivered the 2014 Winter Olympics and a Formula 1 Grand Prix car race starting in 2014.
Putin didn’t attend yesterday’s ceremony, and flew to Zurich to meet with FIFA President Sepp Blatter after the vote.
“A lot of stereotypes are rooted from the Cold War era and fly all over Europe and they frighten Europe,” Putin told reporters. “The reality is different: you will come to Russia, you will see how we prepare for the World Cup, you will visit cities, go to matches, communicate with people, you will have a better perception of the country.”
As with South Africa, the award will probably improve sentiment about the winning nations and boost the construction, steel, cement and tourism industries, Troika Dialog Chief Strategist Kingsmill Bond said in a e-mailed note.
‘In From the Cold’
“The Russian market is coming in from the cold,” Bond said. “This victory both symbolizes and is likely to reinforce this trend.”
Russia’s bid includes construction of 13 stadiums and renovation of three more at a projected cost of $3.8 billion. Russia committed to make “major upgrades and capacity increases” at most airports serving the proposed host cities.
Qatar, projected by the International Monetary Fund to have the world’s fastest-growing economy this year, plans to build nine stadiums and refurbish three others and construct a rail and metro network for the tournament.
“I think FIFA took that bold step forward to say we need to expand the game we need to include people that have not been included in the global football family before,” Qatar bid chairman Sheikh Mohammed bin Hamad Al-Thani said.
Holder of the world’s third-largest gas reserves, Qatar is using petroleum wealth to transform itself into a sports and cultural capital with plans to invest $100 billion on infrastructure projects in the next four years, Finance Minister Yousef Hussain Kamal said in June.
“It should give the economy not less than $150 billion” in revenue over the next 12 years, Raghavan Seetharaman, CEO of Doha Bank, said. “This will change the dynamics of the business model here.”
Qatar, which has never played in a World Cup, plans to spend $4 billion on the stadium construction and refurbishment program. Each facility will be designed with a solar-powered air-conditioning system.
The country also plans to build a rail and metro network, costing more than $25 billion, in Doha and extending to cities outside the capital.
“It’s hard to imagine that 30 years ago, this country was nothing but a big patch of sand,” said Ahmed Al Hammadi, who works as a financial professional in Qatar. “It’s a final pat on the back from the world community that we have accomplished a lot. This is not just for Qatar but for the Middle East as a whole.”
The vote for the two events was marred by FIFA’s suspension of 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.
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