- Provisional Measure No. 984 gives Brazilian clubs total control over media rights to home matches
- Measure could expire in October, giving clubs a short window to exploit their gains
- Experts are split on whether measure will encourage collective sales blocs
The business of Brazilian club football is a minefield at the best of times, but a temporary change to the law by the country’s president Jair Bolsonaro has made it even trickier, especially for dominant media giant, Globo.
Provisional Measure No. 984, instated on June 6, dramatically changes how media rights are sold in Brazilian football. It has temporarily amended the law to enable the club playing at home to have sole discretion over the sale of media rights to a match, putting power back into the clubs’ hands.
Club football rights are sold on an individual basis in Brazil, but up until PM 984 a broadcaster was required to agree a deal with both the home and away team in order to show a live match.
This made it more difficult for clubs to band together and form negotiating blocs, as even if 19 of the 20 Serie A clubs were able to agree on a collective sale, none of them would be able to sell rights to all of their home matches during a season.
The law also prevented clubs from going it alone and selling their home matches individually or exploiting rights via their own platforms without a deal with the away team.
This system gave media groups such as Globo and Turner the leverage to impose their own versions of collectivised rights, complete with revenue share models favourable to the broadcasters’ margins.
The provisional measure wipes out that leverage and local experts say Bolsonaro – who has been widely criticised by Globo for his handling of the Covid-19 crisis – has used the move to strike back against the media group at a moment of weakness.
The economic effects of Covid-19 have hit Globo hard, forcing it to seek an injunction to block a $90m rights payment to Fifa on the grounds it could not afford to pay.
In the words of one local sports industry veteran: “That Globo is seeking to renegotiate football deals is very telling. Globo’s management would rather amend their wedding vows than renegotiate football deals.”
Flamengo in the driver’s seat
The effects of PM 984 have been felt immediately, as Globo’s lapsed deal for rights to Flamengo’s matches in the Campeonato Carioca (Rio de Janeiro’s state championship) was up for renewal from 2020. Globo held rights to the matches of all other teams in the competition but Flamengo’s rights are the most important due to the club’s huge fanbase.
Flamengo – Brazil’s biggest club and the primary lobbyist for the provisional measure – took full advantage of the power provided by the PM and decided instead to show its home Carioca matches on its own FlaTV platform, despite Globo’s protestations in court. After Globo lost its bid to block Flamengo’s broadcasts, it cancelled the rest of its deal for rights to the Carioca in protest.
While Globo’s cancellation will have a significant impact on smaller clubs in Rio that are more reliant on income from the Carioca, PM 984 has enabled Flamengo to use the competition as a pawn in a bigger game.
“Flamengo are trying to develop their own media platform via the Carioca,” says one Brazilian football industry veteran. “Flamengo receives a lot of money for its rights in the Brasileirão [Brazil’s top national league], so the club’s idea is to develop their know-how around directing, producing and distributing matches without putting their survival at risk. Income from the Carioca makes up just three per cent of Flamengo’s overall annual income.”
For Flamengo and Brazil’s other major clubs, PM 984 offers the opportunity to create premium streaming, pay-television and pay-per-view outlets of their own either once their media rights deals for matches in Serie A expire at the end of 2024 (should the club be signed with Globo), or are cancelled at some point before then (should a club be signed with Turner).
Going it alone would be most viable for clubs like Flamengo and Corinthians, which have huge fanbases and significant reach outside Brazil. Insiders says Flamengo is particularly enamoured by the media rights strategy established by Portuguese club Benfica over the course of the 2010s.
Portuguese club football also permits clubs to sell their rights on an individual basis, with the home team being the sole rights-holder of a match. For two separate three-season cycles, Benfica withheld its media rights from dominant Portuguese pay-television broadcaster Sport TV, instead setting up its own global pay-television channel and streaming service.
The size of Benfica’s fanbase at home and abroad ensured its media rights income remained the largest in the Primeira Liga, all while retaining complete control over its rights inventory.
While the provisional measure is not yet permanent – expert opinions differ hugely on whether it will successfully pass through Congress in October – several Brazilian sports lawyers spoken to by SportBusiness say it is highly likely that deals struck during the 120-day period in which PM 984 is law will remain binding beyond its expiration date.
This has given clubs an impetus to begin conversations about future media rights deals – either from 2025 onward after deals with Globo expire, or from the moment an exit plan can be agreed with Turner.
Recent discussions between Flamengo and e-commerce giant Amazon are understood to have briefly touched on the potential for future media rights agreements, but primarily dealt with a potential front-of-shirt sponsorship deal. One expert said Corinthians had also contacted Amazon about the potential for a future media rights agreement.
But while PM984 has given Brazil’s biggest clubs a golden opportunity to stretch their lead at the top of the financial table, experts warn that it has created yet more uncertainty for potential buyers of Brazilian football rights such as Amazon, DAZN and Disney.
“I think anything that breaks down a dominant player’s position and opens up competition is good for a market; once the 800lb gorilla of Globo is taken out of the equation, it opens everything up. But it’s not being done in an organised way,” explains a veteran South American football executive. “There is a huge opportunity here for a buyer, but if you consider the potential consequences or are a little more conservative, you can start to see that an individual sales process is going to be mayhem.”
Another Brazilian media rights expert agrees: “This is a mess for anyone trying to make investments from outside Brazil. At the end of the day, the only important thing is clarity.”
In a market that permits individual sales, it will be up to the salesmen to provide that clarity, and there are some local experts that are more optimistic about the future, near and far.
Opportunity, potential, uncertainty
By providing them with control over their home matches, PM984 will enable clubs to combine their rights into coherent packages – something that Brazilian business experts and consultants have been crying out for in order to increase Serie A’s attractiveness to outside investors.
Several Brazilian club presidents have expressed their support for PM984 on the grounds that it will enable some form of collective negotiation, potentially increasing the bargaining power of smaller and mid-sized clubs.
Bahia club president Guilherme Bellintani told Brazilian website UOL: “The best scenario would be collective bargaining for everyone. The second-best scenario would be club blocs.”
He continued: [PM984] improves the current situation because it encourages the formation of a bloc, whereas there was no advantage of forming a bloc under the old conditions. I have not seen a consistent thesis that it will stimulate more individual negotiations.”
Brazilian football has been a high-risk investment opportunity since the 1990s, and thus far almost every non-Brazilian company aiming to claim a piece of the pie has been stung. From the agencies and investment banks attempting to modernise clubs in the 1990s, all the way to Turner’s ill-fated investment in the 2010s, opportunity is often a mirage when it comes to Brazilian club football.
When such sweeping changes to media rights law can be made seemingly on a whim, Brazilian football’s reputation for being a dangerous place for companies to put their money will endure. Some form of collective bargaining would bring stability not seen since the Clube dos 13 bloc, through which most Brazilian club media rights were negotiated from 1986 until 2011.
Before any final decisions are made on the PM, the eight Serie A clubs tied to pay-television rights deals with Turner will lobby as many congressmen as they can to have the measure passed into law, enabling them to confidently begin the process of extricating themselves from the US media giant.
Once free, they will only have pay-television rights to sell – free-to-air, pay-per-view, streaming and international rights are all tied up with Globo until the end of 2024 either exclusively or non-exclusively, limiting their options until 2025 and almost certainly excluding giants such as Amazon and DAZN from stepping in before then.
Opportunity, potential, uncertainty. Despite its constant state of flux, Brazilian football manages to be the same as it ever was.