Sports

Income concentration in Brazil’s football league

Income concentration in Brazil's football league

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.

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