The hosting of the FIFA World Cup 2010 in South Africa was presented as an opportunity to redefine perceptions of South Africa by demonstrating that an African country could successfully stage a major global event. It was argued that it would simultaneously lead to significant job creation and produce a legacy of improved infrastructure and transportation systems for South African communities. In addition to this, a successfully organized tournament could enhance confidence in the country, attract foreign investment and increase tourism on a longer-term basis.

However, initial forecasts of costs associated with the project were seriously underestimated. For example, consultants Grant Thornton originally estimated the costsof the stadia at R300 million which, in reality, amounted to more than five times that figure at R1.6 billion. The difficulty in producing reliable forecasts for longer-term projects were also highlighted by Grant Thornton's downwards revision of estimated visitor numbers for the event from 483,000 to 373,000, a result mainly of the global economic downturn. The overall reported cost of the tournament to the SouthAfrican government was approximately R3 billion. Some commentators argued that in a countrywhereincomeinequalityandpovertyarewidespread,themoneycouldhave been better utilised elsewhere.

FIFA gained approximately R3.5 billion in revenue from media rights and marketing, South Africa, the hostcountry retained the net proceeds from ticket sales plus a contribution from FIFA, which totalled R526 million. Ultimately, revenue from ticket sales was not maximised as evidenced by many empty seats throughout the tournament. Although more than 100,000jobswerecreated,themajoritywereshort-termjobsintheconstructionsector. However, South Africans stand to benefit from a strengthened police force as many of the newly recruited officers were retained permanently.

Concerns over crime, security, and lack of readiness for the tournament proved to be unfoundedand the eventwashailedasuccess.Withpositiveworldwide exposure,did foreigninvestmentandtourismriseasexpected?Moreover,willSouthAfricabeableto makeits six newstate-of-the-art stadiafinancially viable?

REQUIRED

1.1What were the opportunity costs for South Africa of investing in hosting the FIFA World Cup 2010?(3)

1.2Attempt to justify the costs of hosting the World Cup 2010 tournament by conducting a cost-benefit analysis that includes both qualitative and quantitative factors. (14)

1.3 Discuss the challenges that non-profit organizations face when making capital investment decisions.