Boom time boosts Brazilian football

Ever since football became more of a business than a sport, one thing was a given: Brazilian football was as disastrous off the field as it was successful on it. For every World Cup or Copa Libertadores triumph there was a team in debt or a director facing corruption charges.

At last that seems to be changing, thanks largely to a booming economy that has given fans and clubs cash to spend. New money is coming into the game through sponsorship, stadiums are being built and renovated for the 2014 World Cup, and a new television deal will give clubs significantly more cash.
 
Most importantly, new directors with business experience have replaced the amateur presidents who ran clubs like personal fiefdoms.

“Many Brazilian clubs have over the past five years tried to adopt a corporate model that is more like that of any other business,” said Alvaro de Souza, a former Citibank executive who now works at Pele’s former club Santos. “The old generation of directors has been substituted by people who have a more professional and longer-term vision.”

For fans, one of the most notable changes is that fewer players are going abroad and more are coming home, including players at or close to the peak of their careers.

Ronaldo, Roberto Carlos and Adriano at Corinthians, Luis Fabiano at São Paulo and Ronaldinho at Flamengo are just some examples of players who in the past might have dropped down a level and stayed in Europe but chose instead to return to Brazil.

The super-strong real means clubs can pay them salaries rivalling those in the Premiership, La Liga, and the Serie A. Player acquisition spending in Brazil shot up 63 per cent to $79m last year, according to sports marketing group Prime Time Sport.

Amid growing competition in Europe, older Brazilian players – even those still in their prime, such as Ronaldinho, prefer to return to the comforts of home knowing they can still earn good salaries rather than to struggle to remain competitive abroad.

And the strong real means Brazilian clubs can afford to keep younger players longer. Neymar, for example, the 19-year old wonderkid of Brazilian football, has so far resisted overtures from Real Madrid and Chelsea, in large part because Santos keeps upping his salary.

The club went from paying him R$25,000 a month in January 2009 shortly before he made his first team debut, to around R$500,000 a year ago. Today, he earns R$1m a month, de Souza said, one-fifth of which comes from Santos and the rest from sponsorship deals.

“Before, clubs like Corinthians would have been desperate to make money so they would have sold him,” said Alex Bellos, author of Futebol, the Brazilian Way of Life.

Deals like Neymar’s are increasingly common at Brazilian clubs. The general rise in living standards – 48.7m Brazilians have entered the middle or upper classes since 2003, according to a recent study – means more people have cash to spend and companies are vying desperately for their custom.

“As the European economy has shrunk, the Brazilian economy expanded,” said Patricia Amorim, president of Flamengo and one of the new generation of professional directors. “People have more money, salaries are up, they can spend more on tickets and shirts. Our revenues have increased.”

Flamengo’s revenue is expected to go from R$145m last year to R$180m in 2011, she said. Overall, the revenue of Brazil’s 12 biggest clubs rose by 199 per cent between 2003 and 2010, according to a study released by Crowe Howarth.

That trend looks set to be reinforced next year with the introduction of a new television deal to replaces the existing collective agreement. Under the incoming system, clubs negotiated their own deals. Big teams such Flamengo and Corinthians will triple their annual income but even smaller clubs will benefit.

“The broadcast deal with TV Globo for the years 2012 to 2015 is worth around 1 billion reais per year,” said Carlos Falcão, vice-president of finance for the Vitória club of Bahia. “Last year it was around R$300m. Last year all our games were live either on terrestrial or pay-per-view television. That greater visibility allows us to charge more for sponsorship.”

If there is a down side to all this, it is the fear the changes will lead to a less competitive league as the gap between the richer clubs and the rest widens. And some clubs, and particularly the game’s governing body, are still run by dinosaurs.

Like many of the changes taking place in Brazil today, the reforms are impressive. But they are only the start.