A few weeks ago, the U.S. economy was rocked with the downfall of $20 billion company Bear Stearns. Americans hear worrying news reports on the state of the economy on a seemingly hourly basis, but Bear Stearns seemed to be surprising.
It was merely a span of a few days from the time Bear Stearns went national with assurances that the company was secure, to the news that J.P. Morgan had bought out one of its largest competitors. Confidence, some analysts stressed, is a large factor in driving the success of any economy or company. Bear Stearns lacked that confidence; they panicked, and the result was nearly a full collapse.
So with FIFA recently admitting that they are preparing a £400m contingency fund in preparation for the possible collapse of the 2010 South African World Cup, confidence seems, to say the least, to be a bit shaky. The governing body has at last looked in the eye some of the concerns that soccer fans have been outlining all along — a lack of solid infrastructure, shoddy safety for the players and the spectators, inadequate stadiums, and a lack of tourism appeal and hospitality to make this more developing country seem as alluring as the lodgings of the more recent Cups — Germany, the United States, Japan and Korea, and France are all considerably more developed than South Africa.
But that is certainly part of the allure of a South Africa World Cup. The world undoubtedly seems to hold their breath during the tournament, and to envelope the competition in a part of the world that is less traveled to the majority of the spectators and players changes the tenor of the tournament; away from the more commercial and familiar setting, to a backdrop that many of the smaller or less developed nations — whether recognized or not by Fifa – can identify with.
The instigation of this contingency plan stems from the insecurities of insurers, which led to indecisiveness in whether they will provide coverage for South Africa. At this point, a full commitment from the insurers is lacking. Because insurance is so essential to such a massive event, FIFA is smart to set aside a Plan B fund, but its not helping put anyone at ease.
The insurers are not simply hedging their bets. As told to The Guardian, Munich Re, the German insurance conglomerate who insured the 2006 World Cup, remains concerned about the actual physical progress of the stadiums. “The situation is quite difficult and fluid,” said a spokesman for Munich Re. “The problem is they need 10 stadiums and some of these are rugby grounds that are run-down and in a very bad condition.”
The Guardian also spoke with a Fifa insider who stated that security, transport infrastructure, and the local political climate were also of concern to the insurance companies. However, the most feasible feat at this point are the stadiums first, and the rest after. Remaining silent at least for now on the safety and the infrastructure, without the necessary stadiums, there is no place for the tournament to take place, making anything else simply icing on a hollow cake.
In a recent press release, Fifa stated they were working at making certain the money would be available so that a 2010 World Cup could take place — presumably in South Africa, but at this rate, anything appears possible. Fifa’s confidence is clearly shaken and while Bear Stearns was able to be bought out, there is no one but Fifa to help themselves – even if that means moving the tournament elsewhere, or pouring in £400 million of their own funds to make sure it happens.
South Africa is not static, however, and they maintain that their rehabilitative and construction plans for the stadiums should ensure they are ready by 2010. They have also initiated anti-crime initiatives in Johannesburg to promote more security. The country still intends to stage the Confederations Cup scheduled to take place in 2009, which is essentially a World Cup primer, but as told to The Guardian, its possible that, despite its projections, the country may still be unprepared. A Fifa spokesperson, however, insisted there were no internal concerns over the World Cup. Confidence, Fifa appears to be stressing, is key. In the longer run, however, Fifa’s decision about 2010 will undoubtedly impact insurance for future Cups, including Brazil in 2014 and possibly even England in 2018.
Hopefully South Africa will be worth all the trouble.
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