Welcome back to the Brazil Sports newsletter. This week, we talk about the inequality of earnings in Brazil’s football league (dominated by Flamengo and Palmeiras). A serious title contender emerges in Santos. The Brazilian delegation prepares for the Pan American Games in Lima. And much more. Happy reading!
Income concentration in Brazil’s football league
Back on May 8, our Explaining Brazil podcast discussed the business of Brazilian football. Marred by unprofessional administrations, teams are often engulfed by debt, with clubs systematically failing to turn the world’s most popular sport into a profitable business. We mentioned two exceptions: Palmeiras and Flamengo. A recent report by private bank Itaú BBA backs that statement, showing that the duo concentrated 24% of all income reported by the 27 most popular teams in Brazil.
That wasn’t always the case. Palmeiras and Flamengo lived through years of financial strains—which led to two relegations for the former, while the latter managed to barely cling on to a top division spot on a few occasions.
How Palmeiras got back on its feet
Back in 2013, austerity was the motto at Palmeiras. Without cash and buried in debt, the club opted for contracting cheaper players and going for productivity-based deals (which scared off many high-profile names). Only two years later, the club had a renewed and expensive lineup, and won the 2015 Copa do Brasil and the 2016 and 2018 league. The turnaround had three protagonists: former chairman Paulo Nobre, businesswoman Leila Pereira, and the Allianz Parque stadium.
Mr. Nobre, an eccentric billionaire, took over as chairman and put over BRL 200m of his own money into the club, interest-free. It helped the country scrap all of its debts to banks—an almost unheard-of feat. Then there’s Leila Pereira and her micro-credit firm Crefisa—Palmeiras’ main sponsor. The company has poured in money to bring in high profile players and coaches. At the beginning of the year, the two sides inked a 3-year deal that could earn the team BRL 400m.
Ms. Pereira, however, has been a divisive figure, as her sponsorship is not without an ulterior motive. She wants to become the team’s chairwoman, and has used her financial power to co-opt councilmen into changing Palmeiras’ statute to fit her ambitions.
The third protagonist is the club’s stadium, which has turned into a cash cow. The team has not paid for its new arena—instead handing its administration to construction firm WTorre. But while this forces the team to play some home games in other stadia, Allianz Parque raises around BRL 150m every year.
How Flamengo became a successful business
Back in 2013, Flamengo faced debts of BRL 730m, with little cash for anything at all. It was then that newly-empowered chairman Eduardo Bandeira de Mello hired consulting firm EY to establish a 7-year plan for the club. It involved professionalizing management, elevating revenue, and paying debts, in order to “restore credibility.” In two years, the club managed to renegotiate most of its debts, and began having more room to invest.
Since 2015, the club has increased its player payroll, now at around BRL 220m—only second to Palmeiras. Meanwhile, Flamengo has managed to avoid an over-dependence on revenue from TV deals, which now account for only 33% of its turnover. That was thanks to negotiating heftier sponsorship deals, developing its associate program, and improving matchday revenue. Even its belligerent relationship with the Odebrecht construction group—which runs the Maracanã stadium—didn’t hamper the club’s ability of raising money.
The major difference between Palmeiras and Flamengo, so far, has been in terms of on-the-pitch results. While Palmeiras has already won three national titles and reached the semifinal round of the Copa Libertadores in 2018, Flamengo’s business success has yet to translate into silverware. Both clubs were eliminated from Copa do Brasil last week. This week, they start the Libertadores’ Round of 16.
Santos suddenly a title contender after the Copa America
Brazilian coaches treated the one-month hiatus in the league during the Copa America as an opportunity to fix errors and improve performance. Palmeiras’ Luiz Felipe Scolari, however, was not so keen—with his team unbeaten, he said that the pause could take momentum away from the club. He wasn’t wrong. The team that had yet to lose in the league this season has now not won since returning to action, with a draw last week and a defeat on Saturday.
Meanwhile, Santos is tied at the top of the league, after five straight wins.
And while Palmeiras has a packed schedule—with Libertadores and the derby against Corinthians—Santos has only the league to focus on. Moreover, the team run by Argentinian coach Jorge Sampaoli has proven capable of varying its playing style, and has controlled its games with some ease. If a month ago Palmeiras seemed to be in an unattainable position, Santos now seems to be better placed to take charge of the league.
The trademark of this Santos team is its willingness to play offensive football. This led to inconsistency at the beginning of the year, culminating in embarrassing defeats like a 5-0 loss at the hands of tiny Ituano. But on Sunday against Botafogo, despite being down to ten men away from home, the team continued to attack and was rewarded with a winning goal in the 74th minute.
While most of the remaining title contenders have games to focus on this week, Sampaoli has the entire week to plan for a game against struggling Avaí.
Pan American Games to kick off in Lima
The Pan American Games start on July 26 in Lima, which Brazil will go into at almost at full strength. While the Brazilian Olympic Committee (COB) doesn’t officially talk medals targets, the expectation is that Brazil can fight for second spot in the medal board—a position Brazil only managed once, in 1963. Eventually, COB wants the country to break its own record of 52 gold medals earned at the Rio 2007 Pan American Games.
Athletics, swimming, sailing, judo, and gymnastics are where Brazil has earned its most medals in Pan American competitions. Experts project between 26 and 30 gold medals. A few individual athletes are also poised for great performances in Lima: Ygor Coelho (badminton), Henrique Avancini (mountain bike), Ana Sátila (slalom canoe), Isaquias Queiroz (sprint canoe), Fernando Reis (weightlifting), and Hugo Calderano (table tennis).
Closer look: Brazil is far from an Olympic power (sitting in 25th place in the all-time medal board), which makes the Pan American Games the best chance for international glory for most Brazilian athletes (especially since countries like the U.S. send college athletes to compete). At the same time, however, the competition is used by local Olympic authorities as a sort of palliative, with gold medals there serving to hide shortcomings in how preparation is run in Brazil—creating a perhaps false sensation of achievement—which often leads to Olympic disappointment.
Also worthy of your time
Panic. Flying to Mendoza (Argentina) for its Tuesday game against Godoy Cruz, Palmeiras experienced a tense flight. The pilot unsuccessfully tried to land in Mendoza twice, with violent winds impeding a safe touchdown. Many players and coaches felt sick during the maneuvers. In addition to the scare (which may have brought unwelcome memories of the tragic 2016 Chapecoense plane crash), the problem interfered with the club’s preparation for the match, as Palmeiras had to land in Rosario, and will only arrive today in Mendoza.
4th division. After four months of disputes, Serie D (Brazil’s fourth division) has reached its semifinal stage—with all remaining clubs (Manaus, Brusque, Jacuipense and Ituano) securing a spot in next year’s third division. With nothing more to play for after the league is finished, the teams will most probably undergo a complete squad overhaul, as the Brazilian calendar does not guarantee matches all year long for lower divisions.
MMA. This weekend, Brazilian mixed martial arts fighters achieved a positive result at UFC San Antonio—fighting in a preliminary card. Klidson Abreu defeated Sam Alvey in a referees’ decision; Jennifer Maia won against Roxanne Modafferi; and Felipe Cabocão got his first UFC win, against Domingo Pilarte. The negative note for Brazilians was Gabriel Silva’s defeat at the hands of Ray Borg.
F1. At 17, Caio Collet might be Brazil’s biggest hope to return to F1 glory. A Brazilian pilot hasn’t won the title since Ayrton Senna, in 1991, and hasn’t contended for one since 2008, when Felipe Massa, driving for Ferrari, lost the title in the last lap of the last race. Managed by Nicolas Todt (son of former Ferrari boss Jean Todt), Collet is racing in the Renault Eurocup, and has followed in the footsteps of French Monegasque driver Charles Leclerc.
Swimming. Brazilian swimmer Nicholas Santos won the bronze medal in the men’s 50m butterfly in the World Championships. The 39-year-old swimmer was the oldest competitor in the race. American Caeleb Dressel won gold and Russian Oleg Kostin came in second.
Goal of the week
With a thunderbolt from outside of the box, Santos’ Marinho secured a 1-0 win for his team against Botafogo—taking Santos to the top of the league on points, tied with Palmeiras, though goal difference puts Santos into second.
Copa do Brasil
- Flamengo 1-1 Athletico-PR (1-3 on pens)
- Inter 1-0 Palmeiras (5-4 on pens)
- Atlético 2-0 Cruzeiro (2-3 agg.)
- Bahia 0-1 Grêmio (1-2 agg.)
- Ceará 2-0 Palmeiras
- Botafogo 0-1 Santos
- Corinthians 1-1 Flamengo
- River v. Cruzeiro (Tue 7:15 pm)
- Nacional v. Inter (Tue 7:15 pm)
- Godoy Cruz v. Palmeiras (Tue 9:30 pm)
- Athletico-PR v. Boca Jrs (Wed. 9:30 pm)
- Emelec v. Flamengo (Wed. 9:30 pm)