- Brazilian state building society spending was as much as 20 per cent of the 2018 shirt sponsorship market in Brazil
- Pulling out of football sponsorship with immediate effect leaves many clubs with revenue holes to fill
- Experts expect one result to be an acceleration in rising trend of short-term and ‘lightning’ sponsorship deals
When the 2019 Brazilian Série A season kicks off on 28th April, about half the league’s clubs will lack a front-of-shirt sponsor. The reasons are both short-term: Brazil’s new government; and slow burn: a general stagnation in the clubs’ approach to optimising partnerships.
Clubs yet to fill the inventory include Flamengo, Brazil’s most popular team and one of the few with a national fanbase.
Just three clubs struggled to strike a front-of-shirt deal in 2018. The difference is the decision of the new Brazilian president, Jair Bolsonaro, to reign in public spending in sport, the arts and entertainment.
One of the biggest examples of public investment was Caixa Econômica Federal’s involvement in football sponsorship. Brazil’s state building society pumped BRL 128m (€30m/$34m) into 25 clubs last season, 12 of them in the top flight: América Mineiro, Atlético Mineiro, Atlético Paranaense, Bahia, Botafogo, Ceará, Cruzeiro, Flamengo, Paraná, Santos, Sport and Vitória.
The building society’s total investment amounted to 20 per cent of the football shirt sponsorship market in Brazil last year, according to a study by São Paulo consultancy firm Sports Value.
An exit would be painful in normal circumstances. Hasty as it was – Bolsonaro was elected in October and announced the new rules in December, before he was even sworn in – Caixa’s retreat is causing serious problems for clubs.
Flamengo, for instance, earned BRL 25m from Caixa in 2018, almost six per cent of its total revenue for that year. For some minnows the impact will be worse: Ceará will lose 25 per cent of its total income if it can’t find a sponsor to replace the building society.
Caixa’s control led to stagnation
Caixa’s dominance of front-of-shirt space was unmatched of in any of the world’s big leagues. In 2012, before the building society entered the frame, 13 different companies were front-of-shirt sponsors at the top level. Six years later, there were only five.
“They passed a sense of security for the clubs, who basically just relaxed. The market stagnated,” says sports marketing analyst Duda Lopes.
Caixa’s undemanding relationship with the clubs bred an easy dependency that will make its departure doubly difficult to ameliorate.
Experts have been for years warning that clubs were failing to develop relationships with commercial partners that went beyond having their names on a shirt.
In the 2018 season, 111 companies held sponsorship rights of some form in Série A, but the only recognised global name was Uber: the ride-sharing company struck deals with 14 Brazilian clubs in which, apart from shirt space (mainly inside the shirt numbers), the company reverts the club a percentage of the fares paid by supporters who use Uber to get to matches.
“The truth is that the other South American countries – as well as Mexico – have a more relevant presence of global brands in comparison to Brazil,” says Jose Colagrossi, executive director at Brazilian research company Ibope Repucom.
Global brands like Coca-Cola, Qatar Airways, Kia, Chevrolet and Huawei all have club deals in neighbouring countries. In Argentina, for instance, Boca Juniors has a deal with Qatar Airways that will last till 2023. In Ecuador, 2008 Libertadores Champions LDU wear Chevrolet’s logo at the front of their shirts.
“Why?”, continues Colagrossi. “I have spoken to several sponsors and the more common reasons are the lack of professionalism from directors and the inflation in prices because of the 2014 World Cup.”
Broad but shallow
Total sponsorship revenues for Brazilian clubs amounted to only BRL 196m in 2007, when the World Cup was awarded to the country by Fifa.
Values increased rapidly thereafter, to BRL 500m in 2012 and BRL 734m in 2017. But that increase was, in the opinion of experts, more quantitative than qualitative – as well as marked by a hugely uneven distribution between clubs.
“Big multinationals are not really into investing in Brazilian clubs. They’d rather advertise in traditional media,” explains Ivan Martinho, vice-president of commercial partnerships at Fox Networks Group in Brazil. “That happens because most Brazilian clubs do not work properly with brand activations and customer relationship. This makes it hard to negotiate.”
A glimpse of the shirt sponsors in the Brazilian top flight during 2018 shows a total dominance of financial services companies. Of 17 teams, only Chapecoense advertise a different industry (meatpacking). That dominance is not only a reflex of the buoyancy of the financial sector in Brazil, but also of the scarcity of opportunities for clubs.
Brazilian legislation blocks the clubs from some of the more lucrative sectors enjoyed by their peers elsewhere: alcohol advertising is not allowed on shirts, and gambling, although operators are not barred from football sponsorship, is strongly curtailed in Brazil, limiting operators’ interest in commercial partnerships with clubs.
In Caixa’s absence, the 2019 season is likely to see an explosion in one of the more interesting strategies Brazilian clubs have used in recent years: short-term sponsorship deals, some of them – ‘lightning’ deals – as short as one or two matches.
Such deals started being used in Brazilian football during the last decade, albeit sparsely. Not now: there were least 40 in the 2018 season. Vasco da Gama sold its front-of-shirt inventory to three different companies – payday loan provider Help, bank BMG (pictured above) and oil refinery Refit – across the course of the season.
And Corinthians played the second leg of the Brazilian cup final with Renault’s name on the front of its shirt, reportedly earning BRL 800,000 for the one-game deal. The French carmaker was the fifth company to use that space during the season.