The smile evident on the face of Ukraine during the Euro 2012 finals draw last month has been wiped away by a prediction that the co-host – which struggled to meet UEFA’s generously extended deadlines – could end up staring at an event loss of $8bn.
Reports which may also be ringing some – albeit smaller – alarm bells in neighbouring Russia over the 2018 World Cup are blaming heavy cost overruns on the desperate attempt to make up for lost time over the past four years.
Stadia and supporting sports facilities in Kyiv, Kharkiv, Donetsk and Lviv have all been upgraded as the priority with hotel development and transport upgrading coming very much a bad second in terms of infrastructure priorities.
A summary of the problems published by Russia’s Pravda claims that “the situation with the hotels of international standards and transport infrastructure still leaves much to be desired; in [Donetsk] the capital of Donbass, for example, the attempt to finish construction of the subway before the championship has failed.”
The latest quarterly report from project analysis group Da Vinci has signalled that Ukraine will not be able to recoup heavy investment from football tourism and that the only prospect is of significant losses.
The report states: “The overall cost of the championship in Ukraine may be at least $14bn. The losses may amount to between $6bn and $8bn. These funds are unlikely to return to the country’s economy in the medium term.
“We do not expect an increase in the flow of tourists after the championship in the second half of 2012 that would dramatically change the situation in the recreation area. At the same time there will be no boost to tourism in the country or development of small and medium businesses.”
Further analysis raises issues which indicate that UEFA president Michel Platini may have been cavalier in insisting, in defiance of all cautions, in sticking by Ukraine. At least the Ukraine example may serve as a warning about the sponsor-driven rush by sports federations to take their greatest prestige events into unknown territory.
Chillingly, the report adds: “We draw attention to the dynamics of the gdp in countries which have implemented events of such a scale without having the appropriate infrastructure. Sporting events slow the growth of gdp in the corresponding quarter and then, to a great extent, cause it to slow down or crash . . . We believe that this dynamic is characteristic of [the likely situation] in Ukraine.”
These warning words about Ukraine follow a critical report of progress being made by the Russian authorities ahead of the 2014 Winter Olympics in Sochi. The Court of Auditors has stated that 76 out of 393 projects are running late.
Russia’s Deputy Prime Minister Dmitri Kozak told this writer at the weekend that the delays were “merely issues of paperwork.”
However, in a world where even western Europe – never mind the East – is treading on thin financial ice, the sum of warnings about Ukraine and Sochi should equate to concern about the World Cup. During the 2018 bid process, technical assessment leader Harold Mayne-Nicholls warned the Russians: “If you win the bid then you will need to start work immediately to be ready in time.”
As far as Euro 2012 is concerned, Ukraine did not even do that. Football supreme Grigory Surkis said in Kyiv in December: “We have had to create an entirely new national infrastructure not only for sport but for all the other segments of our society – airports, runaways, new motorways. We have had to modernise the entire country.
“In the days of the old Soviet Union they managed remarkable achievements through the use of five-year plans but what Ukraine has managed has been to an 18-month plan. Never in the past 20 or 30 years had there been such pressure to upgrade a country’s entire infrastructure in so short a time.”
Next June all the attention will focus on the football. But what happens off it could have intriguing further consequences for Platini and whatever ambitions he may harbour in the corridors of power.
By Keir Radnedge