Poland scores!
With billions of euro to be spent on infrastructure, the event could see Poland gain state-of-the-art hotels, highways, airports and stadiums. However, hosting the event could also mean soaring apartment prices and a worsening of the country's labor shortage
When UEFA's General Secretary, Michel Platini, announced that Poland and Ukraine would host the 2012 European Championships, soccer fans around Poland erupted in joy. The news was in practically everybody's lips, though the actual repercussions of winning the bid may take some time to fully grasp.
Michał Nykowski, the head of Euro 2012 Project Staff, which helped bring the tournament to Poland and Ukraine, was naturally optimistic about the chance. "It is a huge promotion for the country, of its cities, of investments," he enthuses.
Business circles also celebrated the announcement. The Warsaw bourse reacted exuberantly to the news from Cardiff, with the blue-chip WIG20 index jumping 30 points to reach an all-time high of 3,675.18 points. The construction and travel-company indices experienced the largest growth - travel firm Orbis saw its share value increase by 10 percent just minutes after the decision.
"Giving Poland and Ukraine the right to host Euro 2012 is a chance for a long-term economic revival," said Emil Szweda, an analyst from advisory firm Open Finance. Facts and figures suggest he's right.
UEFA's verdict means that in five years' time Poland could look quite different. Between 2007-2013, the country will take in around R37 (zł.140) billion worth of EU structural funds, a significant portion of which could now be spent on the infrastructure needed to properly host the tournament. This includes R19 (zł.72) billion from regional development and cohesion funds on transport infrastructure, R16 (zł.60.7) billion on companies from the hotel and food-service industries and R2 (zł.7.6) billion on building and modernizing stadiums.
"Boom is a good word to describe what we can expect in our economy," Szweda concludes.
Lasting benefits
No sector of the economy has greeted UEFA's decision with greater joy than the construction industry. Preparation for Euro 2012 will require the building of three new stadiums and rebuilding of another three. "We have already carried out sports infrastructure projects. We are ready to take up the challenge of building a stadium together with renowned partners," says Krzysztof Kozioł, the spokesperson for construction company Budimex.
But that is just the tip of the iceberg. Facing the prospect of one to two million visitors coming to Poland for the event, the Polish government will have to seriously step up the pace of highway construction. Some estimates suggest that around 1,000 km of highway needs to be built in order to accommodate all the fans trying to reach the host cities.
According to the current plan, Gdańsk, Poznań, Warsaw and Wrocław will play host to the Euro 2012 matches in Poland, with Kraków and Chorzów (in the Katowice metropolitan area) as back-up cities. Another four stadiums (with two back-ups) will be required in Ukraine. However, Adam Olkowicz, the Polish Football Federation's (PZPN) representative on the Euro 2012 Project Staff, points out that while the most recent Euro Championship, Euro 2004, was played in 10 stadiums, it was also hosted by the much smaller Portugal.
"We will appeal to UEFA to let us play the championships in 12 stadiums," he promised. This would mean that all six Polish candidate cities would have a chance to see Euro 2012 action.
Aside from the obvious long-term benefits of Euro 2012, such as stadiums and infrastructure, hosting the tournament itself is a real goldmine. Revenue from tourism related to Euro 2004 in Portugal amounted to E800 (zł.3,036) million. The Portuguese government estimates that thanks to the promotion of the country during the tournament, its tourist industry grew at three to five percent annually thereafter.
Michał Nykowski sees the promotional aspect as the most important advantage of hosting Euro 2012. Others concur. "The image of Poland in the eyes of the world will change," says Katarzyna Draba, spokesperson for the Polish Tourist Organisation (POT). She adds that that the competition should enhance the image of Poland as a "modern country with a high standard of services." According to Draba, POT's foreign offices already began receiving requests for information about Poland on the day of the decision.
"We can only imagine what will happen just before the tournament," she says.
Meeting the challenge
The challenge awaiting Poland is great. The country has only 670 km of highways, 300 km of express roads and just one modern stadium (in Kielce), which is too small to host European Championship games.
Nevertheless, Nykowski doesn't agree that UEFA has taken a big risk by giving Poland and Ukraine the rights to host the event. "It is not a beauty pageant, there is no place for sentimentality, it is a thorough decision based on [application] documents," he claimed. He states that behind Poland's application were national and local government guarantees, backed up by concrete sources of funds. "The decision was based on three criteria - large markets, social support for the tournament and developing football in new regions," he sums up.
Can Poland handle the investment burden and complete all the investments on time? Building a stadium takes two to three years. However, experience shows that it is the highways that we should be worried about. Again, Nykowski disagrees.
"The only differences between building highways in Poland and Germany lie in getting funding and in [project] organization. It is just a matter of good organization now," he said. "The funds will be here." President Kaczyński himself sees no financial problems.
Nykowski acknowledges the issue of buying land for investment could take a while. But he hopes that all Poles will feel that they are personally hosting the event and thus the investment process may go more smoothly. As evidence, he points to the example of Gdańsk, where Mayor Paweł Adamowicz has gained so much support for the event that the purchase of land for the new Baltic Arena is facing no problems.
Just a game?
But what about the essence of the tournament - the game itself? Is there a chance that hosting Euro 2012 will somehow help Polish soccer join the continental elite? The President of the Polish Football Federation (PZPN), Michał Listkiewicz, says that apart from the stadium, training facilities would also have to be built. "Poland needs this infrastructure badly Our soccer [prowess] will make a civilizational leap," he says.
Apart from training grounds, Polish soccer can also count on a serious injection of funds. "It's hard to imagine that hosting such a tournament and the creation of new, modern infrastructure won't bring money into the game in countries [like Poland and Ukraine] where football is the most popular sport," Nykowski says. He pointed out that the city of Wrocław has recently bought the local football club, Ślàsk. "There's a lot of money in Poland, and now a bridge has been laid between [money] and football," Nykowski claims.
The potential of strong football teams in Poland and Ukraine and their possible inclusion into the elite Champions' League would mean extra profits for UEFA. "This is one of the main reasons that they chose our candidacy," Nykowski opines.
Flies in the ointment
However, despite all the enthusiasm, Open Finance's Szweda notices a fly in the ointment - the construction sector already has to deal with a shortage of building materials. "What will happen when both housing and public-utility developers experience a boom?" he asks.
Moreover, the construction industry is already complaining about the shortage of skilled workers, and some firms are strongly considering bringing in foreign workers. "We are counting on changes in the law that would make it possible to hire workers from the East," Budimex's Kozioł says.
Szweda also expects everyday prices to go up during the tournament itself and fall afterwards, but not to the pre-tournament level. "This has happened in all cities which organized sporting events of this caliber," he says.
The increase in prices as well as in costs of labor and services could drive inflation. "The increase in inflation is inevitable," Szweda worries. He adds that the Monetary Policy Council (the central bank's interest-rate setting body) is already late in taking steps to curb inflation, and he therefore expects it could rise to 4.5 percent. "Not to mention that mortgage loans will go up to eight percent," Szweda says. This will further hurt potential apartment buyers, who will also have to deal with growing prices. Apartments will be more expensive due to growing building costs, but the promotional factor will also contribute to it. "Polish cities will gain a new brand in the world," Open Finance's analyst reckons.
In the end, the pros clearly outweigh the cons. "Inflation is something that can be limited, while the roads will stay," Szweda sums up.
