Brazilian football – where money talks, part II


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Taking off from James Young’s article featured in a recent post, I will contextualize the immediacy of Brazilian football directors and fans, based on an exchange of tweets I had earlier today.

I’ve been sustaining the argument that you cannot spend money you do not have. You cannot risk the life of an institution that has been around for a hundred years, buying expensive players in the belief trophies and additional revenues will come and take care of the deficit. That would be irresponsible. Unjustifiable.

The ferocity of the argumentation from my twitter “opponent” took me somewhat by surprise. Yes, I know he’s a fervent palmeirense, but he’s also a recognised historian, and specialised in, would you guess, Palmeiras. I thought he, if any, would seal for the longevity and stability of the institution.

Instead, he let me know he is a supporter first and foremost and what matters to him is seeing Palmeiras strong on the pitch. Football first. “Inverting the pyramid is suicide”, he claimed. He concluded that it was a matter of ambition: either you invest aggressively in order to win, or you invest nothing and fight against relegation. For this particular man, “fiscal responsibility” is a swearword. He’s not alone. Far from it.

I imagine this to be the exact reasoning behind the massive debts most Brazilian clubs sustain. In fact, club directors don’t even make an effort to hide it. In the words of Corinthians’ chief financial director, Raul Correa: “We decided on a policy to set things straight. First, we invested in football. That left us with no money to pay taxes. Then, when we were in a better shape, we started paying. Today we pay regularly. But there’s this residual to pay.” By “residual”, Correa is referring to a US$ 77 million trifle. Now, what Correa is in fact saying is “Corinthians opted for for not paying taxes in order to reap benefits on the pitch.”

What about Maurício Assumpção, president of Botafogo, openly admitting he opted for not paying taxes for eight months (!) awaiting the approval of a Bill of Law expected to benefit precisely those clubs who have failed to pay taxes? Botafogo’s tax debts amount to US$ 155 million. Mind you, in 2012, Scottish traditional club Ranges were relegated from first to fourth division due to their US$ 30 million in tax debts.
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Andrés Sanchez, Raul Correa, Maurício Assumpção… These men, and so many others, should be in jail. These clubs should be relegated. But none of that will happen, because in certain aspects, Brazil is a Mickey Mouse country.

Palmeirenses proudly boast their new arena – the Allianz Parque – is being built with nothing but private investments, with no public money or tax breaks. That sets us worlds apart from Corinthians. Paying all our taxes should also be setting us worlds apart. In addition to steadily be implementing sound and professional financial management routines and policies. Sounds like obvious steps to take for a football club with a couple of hundred million of yearly turnaround. Not obvious in Brazil. Not quite yet.

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2 Comments

  1. Great text, Kristian.

    É impressionante como os torcedores são vulneráveis às vontades de curto prazo. Todo mundo quer um timaço, a qualquer custo. O problema é que a consequência de montar um super-esquadrão super-oneroso pode ser ter que pagar por ele mesmo quando ele já não estiver em campo. Nós, por exemplo, estamos pagando pelo super-time de 2009 até hoje. Vale a pena? Se tivéssemos sido campeões em 2009 teria valido a pena?

    O ponto principal é que não tem fórmula mágica: quem se endivida uma hora vai ter que pagar, seja pessoa física, seja pessoa jurídica. Eu, particularmente, acho que vale muito mais a pena ter um time de mediano pra bom, no longo prazo, do que montar um esquadrão pra jogar um ano, talvez ganhar alguma coisa, e pagar por ele pelos próximos cinco, correndo ainda o risco de ser rebaixado, como nós conhecemos bem.

    Ser solvente no longo prazo tem ainda outra vantagem, principalmente quando se fala em Brasil: muitos clubes já estão mega-endividados. A despeito disso, ainda se metem em contratações astronômicas, como o Seedorf no Bota, ou o R10 no Flamengo. Daí não conseguem pagar os salários, o cara sai de graça e vai pra onde? Pra outro clube, que pelo menos pague os salários. É isso o que tende a acontecer com Fla e Bota no curto prazo, e Galo, Grêmio, Vasco e até SPFC no médio/longo prazo.

    O Perin prometeu montar um super-time pra Libertadores caso fosse eleito. Onde estaríamos agora se ao invés de poupar toda a grana que poupamos tivéssemos gasto ainda mais com jogadores que, se bobear, sequer ficariam pra disputar a segunda divisão de 2013?

    O fato é que nesse caso não tem remédio doce, e acredito sinceramente que a partir do ano que vem o Palmeiras vai começar a sentir os efeitos da tão vituperada ‘austeridade nobrista’.

    Abraço.

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