Yesterday’s blog entry began a final series this academic year by looking into football finances in Brazil. Spurred by an article in the FT that suggested currency movements were reversing the trend of Brazil’s young soccer stars moving from their domestic league to Europe, I decided to investigate a little further.
Another article provides a little more detail of the Brazilian Real’s appreciation against the British Pound. A 35% increase in value in the past three years means of course that UK clubs have to pay proportionately more to gain the services of a player from Brazil. From the other point of view, though, clubs in Brazil can return their players from exile for a third of their value (in 2008 terms, all else remaining equal).
This explains why Brazil Serie A club Corinthians are able to afford to buy Carlos Tevez back from Manchester City, as the £40m estimated transfer fee is much more affordable for the Brazilian club than before the Real began to appreciate against sterling. To quantify things a little further: if Tevez was worth the equivalent value in 2008 as he is now, then Corinthians are able to spend a third less than his current £40m price tag to buy him. That’s a price cut of around £13m.
But even given this considerable discount, how is a club the size of Corinthians able to lay their hands on this sum of money? The 2011 Serie A championship, known as the Brasileirao is a competition between 20 clubs. This site has an excellent map of the clubs’ locations, together with details of their home stadia, capacities and average attendances in the previous year. Corinthians is one of four football clubs in the city of Sao Paulo. The city is Brazil’s largest, supporting Santos, Palmeiras and Sao Paulo itself in addition to Corinthians.
While Corinthians is the biggest club in Sao Paulo by attendance, its average gate in 2010 was only 27,542 – hardly sufficient you’d think to generate finance for a £27m blowout. It turns out that this is representative of football funding in Brazil, where clubs are highly dependent on sponsorship and other commercial sources of income, in contrast to European clubs’ more balanced revenue split in general:
European and Brazilian Football Club Revenue Sources
TV Matchday Commercial
Europe 40% 30% 30%
Brazil 30% 15% 55%
Sources: Deloitte Football Money League 2011 http://www.deloitte.com/assets/Dcom-Ecuador/Local%20Assets/Documents/Estudios%20generales/Football%20Money%20League.pdf and research from www.globoesporte.com.
In this blog’s next entry we’ll look at the prospects for this imbalance to be addressed and move on to consider club and player ownership issues in Brazil.