Ukraine May Face $8 Billion In Losses From Hosting A Soccer Tournament

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The Euro 2012 soccer championship, held jointly in Poland and Ukraine, is only five months away, and the excitement is palpable — according to the UEFA website, more than 12 million requests have been made for tickets. But there’s one place where excitement has been replaced by worry: the host country, Ukraine.

Instead of expected and much-needed profits, the much-awaited sporting event will result in a loss of $8 billion for Ukraine, according to a quarterly report by experts at the Da Vinci Analytic Group in Kiev.

“Initially it was planned that private companies will be the main investors of Euro 2012, but now the state invested the major funds in the sports and infrastructure projects for the tournament,” the head of Da Vinci AG, Andriy Kolpakov, said in an interview with Xinhua News.

“Return on Euro 2012 sites is very low. In addition, we do not anticipate increasing tourists after Euro 2012. In the medium term, we believe that these projects will not return,” Kolpakov said, adding that the Olympic stadium in Kiev was one of the facilities that would never be repaid.

It gets worse. The analysts cite economic development data of countries with poor infrastructure that have hosted sporting events, showing a trend: Events of this magnitude slow the growth of GDP in the quarter of the competition, sometimes leading to a crash. GDP growth before the tournament is always higher than after. “We believe that such a dynamics is typical for the Ukraine,” says the report.

Kolpakov said that Ukraine’s GDP may fall after the Championship, because the economy will not receive adequate injections from tourism. After all, most tickets for the Championship were bought by the domestic fans (nearly 88 per cent of ticket requests were from the co-hosts).

This is dangerous news for Ukraine, which, not possessing the infrastructure to hold such a large event, has budgeted nearly 16 billion dollars to construct roads and renovate stadiums, airports, and complete other infrastructure projects, according to Xinhua.

Ukraine is still recovering from another financial crisis, which saw the departure of its finance minister over failed attempts to secure a $15 billion loan from the IMF. The organisation has frozen aid to Ukraine since last year over Kiev’s refusal to raise household gas prices, cutting government expenditures. The central bank has had to spend its reserves to support the Ukrainian currency, the hryvna, the AP reports. Only time will tell if Ukraine’s budget will be able to take this added stress.

Ukraine and Poland won the right to host the championship in 2007, in an attempt by UEFA President Michel Platini to develop soccer in Eastern Europe, Pravda reports. Euro 2012 runs from June 8 to July 1.