Increasing Revenue in Brazil

[Canuck Oranje]

This is a developing story as there is some controversy brewing with some clubs choosing to negotiate television deal on their own (see article below). Nevertheless, as clubs in Brazil continue to see their revenues increase, it is likely that it will have an impact on the numbers and quality of players going overseas. I suspect you will continue to see the top class of player going to Europe if they are capable of getting on the roster of a Top-25 European club and those players who are not able to claim a playing time with a Top-15 Brazilian club. However, that situation is likely to continue to change. The Luis Fabiano and Ronaldinho moves to Brazil would not likely have happened if the situation was like it was five years ago.

It will also likely change the type of Brazilians seen in other leagues like the MLS but not really sure how because I suspect second tier Brazilian clubs will also see their revenues increase.

Brazil Soccer Clubs Increase Broadcast Revenue With Contract With Rede TV!

By Joao Oliveira - Mar 11, 2011 1:03 PM ET

http://www.bloomberg.com/news/2011-03-11/brazil-soccer-clubs-increase-broadcast-revenue-with-contract-with-rede-tv-.html

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Brazil’s top-division soccer clubs increased their revenue from television after Rede TV!, the only bidder in an auction for broadcast rights, agreed to pay 1.55 billion reais ($932.9 million) over the next three seasons.

The amount equals 516.7 million reais for each season, starting in 2012, up from the 460 million reais paid by the Globo channel for the current season. Fabio Koff, president of Clube dos 13, which represents the nation’s biggest teams, released the result in Sao Paulo today. The deal has to be accepted by the 20 teams in the top league.

Brazil’s antitrust agency, known as Cade, ended an exclusive agreement between the teams and TV Globo, country’s No. 1 broadcaster. Rede TV!’s bid was below the 1.3 billion reais a season that Ataide Gil Guerreiro, an executive director at Clube dos 13, predicted in an interview earlier this month.

“Brazilian soccer still can get more value,” Guerreiro said in the pre-auction interview. “We will improve our calendar, to sell more out of Brazil and then surpass the amount raised by some of the world’s major leagues.”

The clubs are still planning to auction Internet, mobile telephone, and pay-television rights to their matches as they seek to boost revenue and reduce debt. The clubs must also retain talent, such as Santos’s 19-year-old winger, Neymar, and midfielder Ganso, 21, to interest fans, player agent Wagner Ribeiro said in telephone interview on March 10 from Barcelona.

The country’s 26 major teams had combined debt of 3.1 billion reais at the end of 2009, 11 percent more than the previous year, while revenue grew 10.5 percent to 1.9 billion reais, according to accountants at Crowe Horwath RCS.

European Leagues

Rede TV! aims to boost its total revenue by 50 percent next year through its soccer rights, Joao Roberto Ramboli told reporters today in Sao Paulo. The network also plans to bid for the remaining rights, he said.

England’s Premier League got 1.179 million euros ($1.63 billion) a year for broadcast rights for this season and the next one, while Italy’s top division received 911 million euros ($1.3 billion). Brazil’s bid comes below those for France, which brought in 668 million euros and Spain, which gets 500 million euros, according to data compiled by Futebol Finance, a website specializing in soccer business.

Real Madrid and FC Barcelona, the top clubs in Spain, were the world’s richest teams by sales in the 12 months ended June 2010, according to accountant Deloitte LLP. Atletico Madrid was the 17th richest team in the period.

Corinthians

Corinthians, Brazil’s second-most popular team according to Ibope, Brazil’s biggest poll company, left Clube dos 13 on Feb. 22 because of disagreements about how broadcast rights will be shared by the teams, said Luis Paulo Rosenberg, marketing vice president for SC Corinthians, in a March 3 interview from Sao Paulo. Corinthians is holding separate talks with broadcasters.

“We can double our broadcast revenue,” Rosenberg said. “Our benchmark is Barcelona, not Atletico Madrid.”

Radio & Televisao Record SA, Brazil’s second-biggest broadcaster, decided not to bid for television rights because some clubs will negotiate separately.

Corinthians, where career World Cup record goal scorer Ronaldo ended his career last month, plans to double its television revenue this year from 54 million reais in 2010, he said. Its total revenue was 216 million reais last year.

Amir Somoggi, a consultant for Crowe Horwath RCS, said Brazilian clubs will benefit as pay-per-view gains a bigger share of its market, sports marketing expands along with the country’s gross domestic product and Internet and mobile telephone providers seek more context to attract users.

Pay-TV

The number of pay-TV subscribers in Brazil climbed 31 percent to 9.8 million in 2010 from 7.5 million last year, according to data compiled by the nation’s telecommunication agency, known as Anatel. Brazil has more than 200 million mobile lines, according to Anatel.

“The question is whether the clubs will boost revenue to pay debt and to invest in infrastructure such as stadiums and training facilities to generate more revenue, or they will burn out money on players of one season,” Somoggi said in a telephone interview on March 4.

“If Brazilian teams weren’t making more money, not only with TV rights but with sponsorship contracts, we would never seen Neymar or Ganso still playing in Brazil,” said player agent Ribeiro. “They are successful young players who have concrete offers from European teams.”

Real Madrid had revenue of 438.6 million euros in the 2009- 2010 season, according to Deloitte. Corinthians´s 216 million reais revenue would rank 30th, after Italy’s SS Napoli and ahead of England’s Fulham FC.