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Brazil Scrambles to Get Ready for World Cup and Olympics

Thursday, 28 Apr 2011 | 9:36 AM ET

Nothing inspires more passion in Brazil than soccer.

A fan blows a vuvuzela at the 2010 FIFA World Cup.
Getty Images
A fan blows a vuvuzela at the 2010 FIFA World Cup.

But a Brazilian infrastructure expert says the 2014 World Cup in Brazil will be a disaster and a journalist who runs a website dedicated to covering the biggest event in soccer says it is likely to be catastrophic.

Brazil is dramatically behind schedule when it comes to getting 12 stadiums in 12 cities up and running — nevermind airports, local transport and other infrastructure required for when 600,000 visitors descend upon the country.

The situation has raised concerns about the Olympics, which are to be held in Rio de Janeiro in southeast Brazil just two years later, in 2016.

Three years after being appointed as the next World Cup venue, and with only three years to go before the event, not even one-third of the $20 billion in announced infrastructure spending has been spent.

The state-owned development bank BNDES has allocated $2.2 billion specifically to the World Cup stadiums but so far only 0.5 percent of the figure has been used.

Access: Brazil - A CNBC Special Report
Access: Brazil - A CNBC Special Report

There are severe delays in the construction because the stadium projects have not yet been approved by the bank, which is concerned the projects, as designed, aren't financially sustainable after the World Cup ends.

Originally government officials said most of the funding would come from the private sector. But in some cases not a single private company came forward to bid on projects, forcing the state bank to get involved.

CNBC visited the site for the stadium in Sao Paulo, which is to be the venue for the opening match — they have barely broken ground.

Infrastructure experts say it takes roughly 40 months, on average, to get a stadium built. If that's true of Sao Paulo's stadium, it won't be completed until after the tournament ends.

Brazil, the World Cup & the Olympics
CNBC's Michelle Caruso-Cabrera takes a look at Brazil's efforts to build a stadium for the 2014 World Cup, and expand its infrastructure before the 2016 Olympics.

Also, a government report out last month says the airports will be crushed by visitors because they are already operating over their designed capacity, and renovations just aren't going to get done on time — even though the government committed $3 billion to improving them.

Anand Hemnani, director of Madison Williams investment bank in Sao Paulo says the World Cup is potentially going to be a disaster.

"If you look at the state of our airports, the state of our highways and the state of our urban mass transit you'll see that you simply cannot have more people using the system than we already have now, let alone the demand that comes in from these other events such as the World Cup and the Olympic Games," he says.

Marcos de Souza, director of Portal da Copa 2014, an independent website that covers all news related to the World Cup, says the event is likely to be catastrophic.

"Now we have a very, very short time to work, and probably a lot of money will be spent and wasted in new arenas without planning, without good projects and maybe we'll have a legacy, for the next 10 to 20 years, of problems and debts for the country," he says.

Back in 2007, Rio de Janeiro made the same mistake when it spent far more than originally forecast on the Pan American Games, with little to show for it in terms of new infrastructure.

South Africa fans show their support during the FIFA Confederations Cup match between Spain and South Africa at the Free State Stadium on June 20, 2009 in Bloemfontein, South Africa.
Getty Images
South Africa fans show their support during the FIFA Confederations Cup match between Spain and South Africa at the Free State Stadium on June 20, 2009 in Bloemfontein, South Africa.

Though Brazilian officials deny this, Brazil looks increasingly destined to make the same costly error in regards to the World Cup. The situation has lead to sniping back and forth between FIFA, soccer's governing body, and local Brazilian soccer officials.

However, Souza says that just because the World Cup situation looks dire, one shouldn't conclude the Olympics will not go well in 2016. Rather, Souza is optimistic about the Olympics.

He says the Olympics committee is far more organized and the planning is far better. Rio is working and thinking for the long term and planning with care; the result will be very nice for the city.

Other advantages include more time to prepare and Olympic events that will only take place in only one city, Rio de Janeiro, not 12 like the World Cup. Visits by CNBC to several Olympic venues in Rio showed sparkling new facilities that already appear ready to go.

Three's a lot on the line for Brazil. First there is the money. The government has committed to $200 billion worth of infrastructure spending between the two events.

Second, is the nation's pride. Brazil very much wants to use the two events to enter the world economic stage, much like China did with the Olympics in 2010.

Watch Michelle Caruso-Cabrera's report about Brazil's massive construction projects for the World Cup and Olympics, Thursday, April 28, on Squawk On The Street, 9-11am ET, Power Lunch, 1-2pm ET and Closing Bell, 3-5pm ET on CNBC.