Investment & Economic Analysis: Can Qatar lose the rights to host 2022 Football World Cup?

No, not before until The Sunday Times alleges that FIFA’s Executive Committee members Issa Hayatou & Jacques Anouma took bribes of $1.5m each to vote for Qatar. Although, Qatar's official denied such act.

In reaction, FIFA president Sepp Blatter, who is standing for re-election, has refused to rule out a re-run of the vote to host the 2022 World Cup, if allegations that Qatar paid millions of dollars in bribes to secure its win are proven. He also said, “We are anxiously waiting for these evidences or non-evidences in order that we can take the adequate steps.”

There is a least possibility to snatch the world cup host-ship from Qatar now, even if bribery is proven it could stringent the rules of voting methodology & may add more transparency in awarding rights to host the World Cup for future.

We have seen that the decision to host the 2022 World Cup in Qatar was graded as having "high operational risk", generated criticism from media & some countries officials on the concern of Qatar’s suitability to host the biggest sporting event, with regards to hot weather, press control & human rights in Qatar, being an Islamic state, rule under Sharia laws.

Being an analyst, I cannot completely ignore the possibility of the other way around. If Qatar stripped of 2022 World Cup then it would be the biggest U-turn in the FIFA’s history & could be devastating for FIFA & Qatar’s reputation.

The decision to keep or reverse the rights to host the world cup would not solely based on inquiry commission set by FIFA, in fact Politics within the FIFA, international politics & economic considerations would play a major role in the decision.

Will the reversal change the Qatar’s Economic Outlook?

Qatar has pledged investments of up to ~$75 billion (60% of its GDP) for infrastructure, public facilities, sports facilities, tourism, communications and transportation. According to IMF, major infrastructure upgrades related to the FIFA World Cup 2022, such as the integrated metro/rail systems, roads, and airport, have already been taken into account in the medium-term expenditure profile, since they were planned notwithstanding the outcome of their bid to host the World Cup. Therefore, in case Qatar won’t host the world cup, I believe majority of the infrastructure investment would go as plan, though with delay, in less enthusiastic way & relatively on shorter scale.

The stadium where Qatar will host the 2022 World Cup final isn’t built yet, therefore, in case Qatar won’t host the world cup, the sunk cost won’t be too much. It could also reduce the pressure on fiscal balance, in case no world cup, vice versa.

Therefore, according to my analysis, if Qatar won’t host the FIFA World Cup in 2022, it would not fundamentally alter the Qatar’s medium term outlook.

If Qatar lose, who else?

In case Qatar won’t host the world cup then its hospitality sector will hurt the most. As Qatari government earlier announced to more than double hotel and apartment rooms to 84,000 & plans to build Lusail, a city of 200,000 hosting the final that will be linked to the rest of the country by new roads and railways would derail. (Even if they plan to build, I have a concern that post world cup, who will use this huge infrastructure?)

Many domestic, regional & global banks, property developers, construction, steel & cements companies would be in a loser list, in case Qatar won’t host the world cup.

Prominent losers will be Qatar National Bank, Deutsche Bahn, Orascom Construction, Emirates steel, Ezz steel, Hochtief AG, Barwa Real Estate Company.

Regional Tourism Impact:

Through this world cup, Qatar aims to transform itself into a global hub for business, foreign investment & tourism, to compete with destinations like Dubai and Istanbul.

In either case, Dubai will remain the regional hub for tourism, though reversal could be bit negative for it.