Deterioration of the Palmeiras brand

While the signing of Carlos Alberto on Sunday took an unexpected turn, then crashed and burned (officially the player’s salary demands were incompatible with Palmeiras’ offer but it’s widely known that a possible/probable chronic injury was confirmed in his pelvic region) we yesterday had the first glimpses of Daniel Carvalho in Verdão’s training gear (to the left, with also newly contracted Román on the right). A bit out of shape, the attacking midfielder was involved in a swap with Atlético/MG where the Belo Horizonte team were allowed to keep Pierre provided that they also presented an undisclosed amount of money in addition to handing over Carvalho. While Pierre signed a three-year contract with Atlético, Palmeiras are taking it a bit slower with Carvalho: the contract runs until December with the option of a two-year extension.

28-year-old Carvalho is a good player, skilful. His best moments so far were while playing for CSKA Moscow, where he won eleven trophies between 2003-2008. He’s served the Brazilian national team. Let’s see if he’s capable of resurrecting in the hands of Scolari and in the Palmeiras jersey.

— ooo —

Palmeiras. Eight times Brazilian champion. One of the “Big Four” in São Paulo.

If we’d look only at national titles won the last 15 years, sustaining that Palmeiras is still “big” would prove impossible. While the three other major teams in São Paulo compile 25 titles in the Paulista, the Copa do Brasil and the Campeonato Brasileiro since 1997 (Corinthians 11, Santos 7, SPFC  7), Palmeiras have won 2 titles: one Paulista and one Copa do Brasil (which, important to stress, eventually led to the Libertadores Cup title in 1999). Still, the last decade and a half has not been much to brag about for any palmeirense.

Fortunately Palmeiras are still “big” because they remain in the top division; because of their glorious past; because of their large supporter base. But the brand is deteriorating, i.e. losing value, by the day. It’s no coincidence that drafting new players has proven an ever more difficult task. No coincidence that Palmeiras are starting up the season without a major sponsor. No coincidence that results on the pitch are disappointing to say the least. The club is run by amateurs and their legacy – decades of mismanagement – is starting to affect the very core of the institution.

A few weeks back, Marcelo Santa Vicca made convincing arguments in an article posted on Verdazzo. The article is based on recent research carried out by leading market analysts. Below you find key points taken from Vicca’s article – with a few comments of my own interlaced – illustrating the problems that Palmeiras are facing.

GFK Custom Research Brazil
People were asked to judge a team’s correlation with 13 different qualities listed, including intelligence, authenticity, trustworthiness, education, honesty, sophistication, charm, bravery, etc. Palmeiras ranked low, almost bottom low, in ALL categories. Out of the teams surveyed, only Vasco da Gama had a score comparative (i.e. equally low) to Palmeiras’. This shows that Palmeiras are bad at unveiling and spreading knowledge about the club’s past and present, which is packed with outstanding examples of positive, brave and ethical conduct.

BDO/RCS yearly study on brand value
The company uses 18 variables to measure and rank football brands. Ever since the first survey in 2004 Palmeiras have held fourth position, but the problem is that the gap to lower ranking teams is closing in while the top three are moving further away. It’s also worth noticing that teams with considerable weaker brands (and with less revenues) in the last years have succeeded in assembling stronger teams than Palmeiras.

Pluriconsultoria’s study on player value
Here it gets really ugly: of the teams that remained in the first division after the end of last year’s Brazilian championship, Palmeiras’ squad showed the worst appreciation index of them all: less than 0.5 per cent. In comparison, Vasco’s squad appreciated 23 per cent, Corinthians’ 17 per cent and SPFC’s 5 per cent. Santos’ squad is valued at a little over US$180 million: three times that of Palmeiras’. And when we take into account that Santos have inferior revenues and a much lesser supporter base than Palmeiras…

BDO/RCS study on club income
In 2010 Palmeiras cashed in US$78 million, the fourth largest revenue among Brazilian clubs. We could compare this to Vasco da Gama’s US$46 million (comparing with Vasco is good; they are a team with roughly the same number of supporters and also on the Rio/SP axis). Palmeiras’ revenues were 70 per cent higher than Vasco’s and the Palmeiras brand has an estimated value of 178 per cent of Vasco’s. Even so, Vasco in 2010/2011 put a team together that in the end was worth 49 per cent more than the Palmeiras squad, won the Brazil Cup and finished as runner up in the Brazilian championship.

Football business in Brazil is underdeveloped: a recent study conducted by the Getúlio Vargas Foundation found that in 2010, football generated US$6.1 billion in revenues. However, if the administrative structure in Brazil would resemble the European, a whopping US$34.4 billion could have been generated. In addition, the study concludes that Brazilian football teams on average generate only 29 per cent of their potential revenues. That being said, it is clear that a process of professionalism is happening in Brazilian football but that Palmeiras, as highlighted by the studies presented above, have failed to connect.

When will Palmeiras be run like a company and not a condominium board?

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