BRAZIL IS IN THE MIDST of its worst recession in a generation. At the beginning of the year industry professionals predicted that its economy would shrink 2.95 per cent in 2016.
Brazil overtook the UK in 2012 to become the world’s sixth-largest economy, but, instead of continuing its upward trend, it has fallen back to seventh. Unemployment also stands at a record 11.4 per cent.
Yet despite the myriad reasons to be down, there are those who believe Brazil will come out the other side stronger and that the current crisis is a mere bump in the road.
That, at least, is the view of Armenio Neto, head of sports at MBA Brazil. “In spite of crisis, we can see huge development among professionals, companies planning beyond media exposition and the whole chain (becoming) more mature,” he tells SportBusiness International. “I think that the positive consequences of these ‘sports years’ will be noticed during the following years.
“Brazil is a country of 200m people, among the 10 biggest economies in the world and No.1 in Latin America. We are a country formed by honest people and hard workers. We deserve a clean (sports marketing) industry. We are suffering now, but we will celebrate great years after.”
Brazil is home to some of the most marketable athletes and teams on the planet. At the time of writing, football superstar Neymar boasts 23.2m followers on social media platform Twitter. When it comes to footballers, only fellow Brazilian Kaká – whose career is entering its twilight years in Major League Soccer – and Portugal’s Cristiano Ronaldo have more.
— Ronaldo Nazário (@Ronaldo) June 17, 2016
Flying the flag
Other sports stars flying the flag for Brazil include mixed martial artists Anderson Silva and Lyoto Machida – who compete in the increasingly popular and lucrative Ultimate Fighting Championship – and the men’s and women’s volleyball teams. Add in Formula One motor racing drivers Felipe Massa and Felipe Nasr, and Brazil has a sporting cocktail as varied as any.
But the country itself has struggled to attract investment through sponsorship, as Guilherme Guimaraes, head of business for Ativa Esporte, a Brazilian-based sports marketing consultancy, explains. “A lot of sponsors have been put off by the sports industry,” he says. “A lot of big sponsors are looking elsewhere and sponsorship from private companies has not really risen as expected.
“When we see a rise in the amount of investment, expect brands to look at it with bigger interest and more detail.”
Brazil is aware of its need to move away from a football-dominated landscape. There is an increasing amount of importance being placed on securing sponsorship investment in other sports.
“There are many opportunities in futsal, rugby, basketball and other sports which will be on the stage during the Olympics, and showing that there is life beyond football,” Neto adds. “On the branding side, there is a new generation of executives thinking of sports beyond brand exposition and looking for their spots at these companies, as the old-school guys will not survive with their current mindset.
“This change will come and finally transform the industry, as brands have the budget. At this moment, values of commercial deals are not increasing due to economic difficulties. But Brazil will recover its economic muscle and values will increase naturally.”
Neto also feels it is important that brands do not spend their whole budgets investing in properties and instead use them sparingly to understand that sport can be used as a platform to connect with fans and customers. Digital activation is key, he says.
“I believe in connections between sports and digital,” Neto says. “I’m not only talking about esports, but also how digital platforms and broadcasting will be relevant for sports development.”
Although there is an acceptance that other sports markets must be tapped into, football remains the top dog in Brazil, with numerous teams in the country’s top-tier Campeonato Série A holding six-figure partnerships with shirt sponsors.
The Olympics will provide some useful exposure and may encourage the development of more sports
Philip Gray, director of the Brazil Business Hub and commercial director of Commercial Doctor, which helps companies break into the Brazilian market, feels that other sports will always be playing catch-up to football. But he says the Olympics will help bridge the gap.
“Clearly football is the strongest sector, with a vibrant, tribal fan base,” Gray says.
“The sport is deeply embedded in Brazilian culture and, along with samba, provides people with the chance to forget about economics and politics for a while.
“Other sports are struggling, especially if they are reliant on government funding. The Olympics will provide some useful exposure and may encourage the development of more sports, especially via the university and private schools sectors.”
In his current role Gray focuses on helping companies establish themselves within Brazil. It marks a change in strategy for Gray, who had worked during the London 2012 Games on investing in a legacy project in Brazil. As he explains, upon researching the country he realised such a project would not have proved beneficial long-term.
Issue of legacy
"I enjoyed working on the London 2012 project immensely,” Gray says. “My company, Commercial Doctor Ltd, was accredited as an official provider of consultancy and briefings covering supply chain engagement. The issue of legacy was one which I was keenly aware of and I came to the view that Brazil was a good place to create my 2012 legacy.
“I invested around a year, learning Portuguese and visiting the country, before coming to the conclusion that there was unlikely to be a longterm business opportunity in the sports sector in Brazil for my company following the 2014 World Cup and 2016 Olympics.”
Having founded the Brazil Business Hub, which supports companies looking to develop partnerships in the country, in 2014, Gray is well placed to offer advice to would-be investors in the country. Due diligence, he insists, is key.
“My advice is to talk to a lot of people and do a lot of thinking before taking any concrete steps,” Gray says. “It is very easy to make poor decisions, especially regarding partners, and to give insufficient attention to formalities such as regulatory approvals.
“These always come back to bite and can kill off a promising business plan.”
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