Palmeiras vs the Paulista Football Federation: also money at play

The Paulistão 2018 final initiated a backstage war between Palmeiras and the São Paulo Football Federation (FPF) still far from its end.

In short, the sequence of events includes Palmeiras issuing a note, announcing the break with the Federation; the release of a video, showing the external influence in the game against Corinthians; and the club’s request for a formal investigation at the São Paulo Court of Justice for Sports (TJD-SP). The FPF responded by returning the box at the Federation’s disposal at the Allianz Parque.

For considerable time, Palmeiras supporters have demanded a firmer position from the Club concerning the frequent referee errors. Thus, in this case, they stand united, backing all decisions so far taken by the directors, including the no-show at SporTV’s Segunda Campeã after the game against Botafogo. On social media, it is common to see supporters advocating that the club do not dispute the 2019 São Paulo state Championship, or alternatively, line-up nothing but the U20 squad.

Opting out of the Paulistão would not be an easy decision. Even though most state championships are experiencing nothing short of a crisis, the São Paulo edition brings significant revenues to the clubs. Let us have a look at the numbers for 2018.

Broadcasting rights
The broadcasting rights of the Paulistão carry the highest price tag among all the state championships. In 2018, Rede Globo, through the PFP, distributed R$20 million to each of the big four (Palmeiras, Corinthians, São Paulo and, oh well, Santos) in the state.

Although the contract between the broadcaster and the Federation has never been disclosed in its entirety, it is considered “common knowledge” that clubs must play the championship with their main squad to receive their share.

Six of Palmeiras’ games were broadcasted on free-to-air television. In total, these games reached 187 rating points, as measured by IBOPE, corresponding to 13.4 million televisions tuned in. No Palmeiras sponsor would like give up such expressive brand exposure.
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Ticketing
Palmeiras had nine home games in the Paulistão 2018: eight at the Allianz Parque and one at the Pacaembu (semi-final against Santos). The Verdão headed both attendance and revenue rankings, with an average 31.399 supporters per game and a gross ticketing income of R$18 million and a net income of R$ 11.5 million.
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Prize money
The Paulistão hands out the biggest prize among the state championships: R$5 million to the champions and R$1.6 million to the runners-up (Palmeiras, in this case).

Adding up the numbers
Palmeiras’ net revenues from this year’s edition of the Paulistão, comprised of broadcasting rights, ticketing and prize money, surpasses R$ 33 million. This corresponds to roughly 5% of Palmeiras’ annual gross income and would pay a full month’s worth of expenses generated by the club’s professional football department. Not at all negligible.

If opting out of the Paulistão, part of the revenues could be recovered through a pre-season tour, adding to the ticketing of the U20 team competing in the state championship. Still, Palmeiras would hardly reach the R$33 million mark.

What about the Federation?
From the Paulistão, the FPF receives 7% of gross ticketing revenues from the big 4 and 6% from the other 12 participating clubs. This arrangement brought the Federation a total of R$ 3.3 million this year. In the chart below, we can see that a whopping 38% of these revenues originate from Palmeiras; it would certainly be a hard blow to the Federation should it lose its primary source of ticketing income.
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Furthermore, add to this the damage to the Federation’s reputation, potentially reducing the value sponsors are willing to pay for the Paulistão. One of the biggest teams refusing to play the championship is not a minor issue and should not be underestimated. Palmeiras’ refusal could signal the beginning of the end of the Federation, as we know it today.

The hearing that took place last Tuesday is a clear indicator that Palmeiras are not bluffing. The club wishes to bring the truth out. The Federation should prepare for acknowledging its errors and aid in the quest for transparency. We have seen nothing of the sort so far and, to be frank, odds are small, very small.

With the backing of their supporters, Palmeiras are in a position to play hardball. Stay tuned.

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by Augusto Anteghini Oazi