The 21st FIFA World Cup hosted by Russia is eagerly anticipated by hundreds of thousands of Russian fans and preparations are progressing at full speed.
Construction of new stadiums and the large-scale reconstruction of existing stadiums were initiated specifically for the event and work is well underway. In addition to the stadiums, each of the 11 host cities is also making significant investments in hotel and transport infrastructure.
Usually, the outlook for an event of this scale is positive – television commercials promoting the cities, expansion of tourism and hospitality businesses, long-term benefits associated with new infrastructure and modern, flexible sports facilities. There is no doubt that the World Cup will also bring many intangible benefits to Russia and the host cities, not least the national pride associated with successfully hosting such a high-profile international event. However the evidence from other recent World Cup competitions suggests that many Russian host cities, and especially those in the regions, will be left with significant economic challenges for many years to come.
Modern stadiums are expensive facilities to build and maintain, often remaining empty or underused for much of the year, and have become a major drain on local budgets for some previous World Cup hosts. This situation typically arises where the size of the stadiums being erected or redeveloped is based on FIFA’s capacity requirements, resulting in over supply which exceeds the city or region’s demand. Best practice is to design a stadium whose capacity will meet the long-term, local demand rather than to accommodate a one-off capacity that is unlikely to be repeated.
The development of high-capacity stadiums in capital cities is more likely to be sustainable from an economic standpoint as they will be the home stadiums for some of the best Russian Premier League teams with regular attendance of tens of thousands of fans. However, in the regions there is a much greater probability that similar stadiums will remain significantly underused. The South African, Japanese/Korean and Brazilian experience has shown that large stadiums in small or ‘’non-football’’ cities and communities are either heavily underused or become abandoned. The early signs are that Russia could be facing the same scenario in some of the regions.
Both Japan and Korea experienced problems of underuse resulting from the 2002 World Cup. The over-capacity of venues in Japan arose because they chose to build a number of new stadiums for 2002 World Cup rather than use existing ones, which were entirely suitable and featured in their unsuccessful bid for the 2022 World Cup. The Seoul World Cup Stadium (Sangam Stadium) opened in 2001 with a capacity of 67,000 and is the home stadium for the Seoul football club and the Japanese national team, but the stadium occupancy rarely exceeds 35 per cent, even during national team games.
In South Africa, five new stadiums were built for the 2010 event with the capacity to host 45,000 visitors each. However, the average attendance in even the strongest local football league is typically less than 7,000. At the same time, it should be noted that even before the World Cup, football already had major challenges attracting big crowds given that traditionally rugby has been the most popular spectator sport in South Africa. The Moses Mabhida Stadium in Durban has diversified following the World Cup by holding fairs in the stadium precinct on a regular basis, developing a SkyCar and viewing platform and offering bungee jumping from the stadium’s arch. Despite these initiatives, the local newspapers regularly speculate that the stadium could be demolished or redeveloped for retail.
Even in Brazil, host of the 2014 World Cup and one of the leading football nations of the world, some of the stadiums are already becoming neglected. Cuiaba football team only plays in the Brazilian third division and cannot sustain the 40,000 capacity of the Arena Pantanal. It is the same case for the 43,000 seat Amazon Arena, the home for the Nacional club from Manaus which plays in the regional championship of Amazonia, similar in scale to a championship within a single Russian region.
To help evaluate the long-term outlook for the stadiums now under construction in the regions, AECOM compared the seating capacity per 1,000 residents in legacy* operation mode with those in leading European football capitals. The simple comparison shows that the capacities of some of the 2018 World Cup facilities appear to be excessive and surpass those of acknowledged football cities around the world. For example, in London and Madrid the ratio of seating capacity is 50–60 seats per 1,000 residents, and in Milan it is almost 70. By comparison in Saransk and Kaliningrad, small towns with limited football tradition, there will be more than 100 seats per 1,000 residents when including existing football stadiums.
However, the economic viability of stadiums is not just about supply, it is also heavily dependent on local demand and this is usually achieved through good, consistent attendance for domestic football games. Analysis of historical attendance figures in Russia shows that for regional teams not playing in the Russian Premier League, average attendances at local games rarely exceed 4,000. Even in the main Russian league, only Spartak and Rubin can boast attendances that exceeded 20,000 during 2014/2015 season.
On this basis, the average expected occupancy of the stadiums in Volgograd and Nizhny Novgorod following the World Cup will therefore range from between 10 per cent and 20 per cent, and is likely to reach 60 per cent only for the most popular regional clubs, such as Ural from Yekaterinburg and Krylia Sovetov from Samara. By comparison, in Spain this occupancy indicator can be as high as 70 per cent and in Germany and England, more than 90 per cent. With attendance levels below 20 per cent for Russian stadiums and some of the lowest ticket prices in Europe, generating enough income to even meet operating costs, let alone the cost of finance, is highly unlikely. Improving occupancy levels in Russia will require a serious uplift in the quality of football and the marketing of the sport, especially given the popularity of ice hockey and basketball.
Given these challenges, modern, sustainable stadiums therefore host not only football or rugby matches, but also concerts and a wide range of other entertainment events such as X Games or other extreme sports championships, monster truck shows and festivals. It takes time and expertise, however, to build a more diverse event schedule and it is hard to envisage that some of the Russian host cities will be able to develop such an intensive event programme, at least during the first few years following the World Cup. Otrkritie Arena Moscow Stadium, for example, which was completed in August 2014 and is operated to a high standard, only held its first concert in June 2015. International stars who are able to fill stadiums to capacity rarely visit regional cities, and it will take time to include Russian regional million-plus cities in concert and other event itineraries. Weather is also a significant factor in Russia where the climate prohibits hosting open-air concerts for at least five months of the year.
Based on AECOM calculations, it will cost around 600 million rubles a year to operate a typical regional stadium with 45,000 seat capacity, 50 per cent of which will be accounted for by property and land taxes, paid to the local municipality. At the same time, stadium revenue based on the attendances referred to previously is estimated to be no higher than 400 million rubles a year. The difference will have to be met either through the local budget or legislative reduction of taxes for the stadium, which is also an encumbrance on the municipal budget.
Clearly, there is good reason to be concerned about the future of many of the Russian World Cup stadiums and their long-term impact on local budgets. So what measures could be taken to avoid underused stadiums? We believe the following actions should be taken now:
- Investigate the possibility of decreasing the number of seats in legacy mode during the design and architectural concept stages through greater use of temporary overlay
- Plan a multi-functional approach – ensuring maximum flexibility for the stadium and adjacent precincts, especially for sites and territories released after the World Cup
- Establish close cooperation with an experienced stadium operator, especially during the more challenging “transitional” period 18–24 months after the World Cup
- Form a dedicated marketing and event-management team to plan, develop and implement a comprehensive event schedule and entertainment program for the stadium to maximize year-round use.
- Combine all measures listed above
Russia’s challenge for 2018 is to avoid going the same way as other previous hosts, and with an estimated construction cost per seat nearly double of that in Brazil, the pressure for sustainability post-tournament is high.
Looking to the future, although host countries have a responsibility to choose which venues will be presented in their bids, FIFA also needs to play its part in working with these countries to focus on making the right venue selection from the beginning with a much stronger emphasis on sustainability following the event. Host countries should also take greater advantage of existing venues instead of building new ones that are unlikely to play a major role in the local sporting or cultural life after the World Cup.