Posts Tagged ‘crefisa’

With roughly US$ 60 billion being pumped into sports through sponsorship deals every year, one would assume the average business model to be solid and well defined, securing that companies benefit from their investments. Well, think again. Research on the topic is surprisingly scarce and the main findings of the studies that do exist, surprising by their own merit.

Do sponsorship deals increase brand visibility and value? Sales? Company net worth? How could these and other indicators be better studied, fueling more qualified discussion on the topic?

Below, Douglas Monaco gives us his take on a highly relevant article, “Does football sponsorship improve company performance?”, inserting it into the context of the current (for Brazilian standards) controversial Palmeiras x Crefisa/FAM partnership. Enjoy!

  — ooo —

Improving the discussions on sponsorship of football clubs

  1. Introduction

In the last weeks, the relationship between Palmeiras and Crefisa/FAM has generated a new wave of media attention.

On the one hand, people have called for financial fair play, claiming that Palmeiras’ spending on players has to be curbed to avoid an otherwise uneven, unbalanced situation in which the tournaments will be tilted towards the club, artificially increasing the club’s odds of winning.

On the other hand, there is extensive coverage of the alleged rewriting of some parts of the partnership contract. According to repercussions in general, the changes would have been triggered by the Brazilian IRS (Internal Revenue Service) investigation of how Crefisa/FAM was accounting for the amounts paid in signing of players.
The fact is that since its beginning in January 2015, the partnership has been a customary subject in the TV sports news and internet sports outlets. The comments are purportedly making a technical assessment of football clubs’ sponsorship as a theme.

The truth though is that these discussions have generated much fuss, but nothing practical. In the words of the late and illustrious Palmeiras’ supporter Joelmir Betting, “much heat and no light”, an expression that used to pop up in his always clarifying chronicles.

Propelled by the last wave of comments, this post will bring to the discussion something unusual so far: results from a peer reviewed paper published in a scientific journal specialized in sports management. The paper was published in December 2016 and its results – rather counter-intuitive – are based on a 6-year analysis of 78 companies sponsoring clubs in 7 (seven) of the major European leagues.

The objective of the study has been to measure the effectiveness of sponsorship to the sponsor, i.e. does sponsoring a football club make the sponsor more successful in relation to key indicators like sales and market capitalization?

The goal of the post though is not so much to emphasize the results, but to suggest an approach to discussing sponsorship in football: analytical rigour, conceptual formalism and relentless objectivity. By improving the analyses, conclusions about the subject will at once be more reliable and more useful.

  1. Results experienced by 78 European sponsors between 2006 and 2012

2.1 Context of the study

There are many reasons to study the effectiveness of sports sponsorship to the sponsoring company.

First of all, according to the Handbook on the Economics of Professional Football, sports sponsorship as a business is estimated to have drawn in 62 billion dollars in investments during 2017, with football assumed to have received sizable parts of it.

Beyond this quantitative aspect though, the notoriety of the phenomenon in the whole world seems to be only increasing. Brands – well-known as well as up and coming – are seen in shirts of leagues in a variety of sports, with football as a front runner in the context.

Given this combination of economic size and prominence, the question is unavoidable: does such a cost draining, prominent activity actually generate value for those investing in it? Do sponsors increase sales, become more profitable, do they increase their wealth due to their investments in sponsorship?

One basic difficulty in studying the phenomenon is to reach a consensus in defining sponsorship: is sponsorship “paying to be seen”? should it allow the investor a say in sponsored entity’s affairs?

Studies about the sponsorship seem to follow a line of applying surveys to capture public opinion’s perception of sponsor, detect consumption intentions, mapping the repercussions of brand visibility both in conventional as well as in social media.

The study reviewed in this post adopts the usual “pay for visibility” concept. But it takes a different method: instead of the surveys, it attempts to quantitatively measure the impact of amounts paid by sponsors on their result-variables, things observable in the sponsors’ balance sheets.

2.2 Results of the study

The main conclusion of the study is: for the six years analyzed, there is no evidence that investing in the sponsorship of football clubs brings measurable benefits to the sponsor’s balance sheet.

And this finding is verified for practically all countries analyzed by the study. The sampled 78 companies are present in clubs of England, Spain, France, Italy, Scotland, Netherlands and Turkey, seven of the main European leagues.

The study uses regression analysis to measure causality between invested value and performance of the company. For all tests made, the result is that there is simply no causation, i.e. companies that invest in sponsorship don’t achieve better economic outcomes than those that don’t invest in sponsorship.

The variables of the model are quite straightforward: total amount invested in each year versus result-variables in the following year. The result-variables are of two kinds: sales income and market capitalization.

The choice for sales-income aims at reflecting the effect of sponsorship over the sponsor business primarily in the next year. The choice for market capitalization – share price multiplied by the number of shares in circulation – captures the expectation that the capital market has about the general profitability of the company also for the future years, so measuring the impact of the whole enterprise strategy, inclusive the investment in sponsorship.

Results relative to Sales

The regression analysis used – considered a powerful tool to test this type of quantitative relationship between variables – makes important methodological adaptations aiming at vulnerabilities intrinsic of the situation, e.g. the “chicken and egg problem”: are companies that sell much more prone to sponsoring? Or companies that sponsor end up selling more?

In spite of allowing for this limitation, in its almost totality, the results indicate that there is no impact of sponsorship over sales.

The only admissible exception is the league as a differentiator: the French league presented a slight impact on sales. If this aspect shows to be replicable, a stream of research may be indicated.

Another aspect analyzed by the report was how “acting for the first time as a sponsor” could make the company more likely to benefit from the investments. Unfortunately, here too, results don’t show any significant impact on sales.

Results relative to Market Capitalization

For this variable, the results are uniform in all circumstances: investing in sponsorship has decreased the market capitalization of the studied sponsors.

Market capitalization is a long-term indicator that reflects the average expectations of the capital market investors. Capitalization takes into consideration the expected net cash flows, discounted by the adequate rate, when income and payments are estimated, inclusive of the payments to sponsorship.

Losses in market capitalization translate into actual reduction in a company’s net worth, i.e. the loss in market value has to generate an entry – debit and credit – in the books that will be reflected in the company’s balance sheet.

The study does not give details of which countries show more pronounced losses, neither which sectors of the economy the sponsors belong to. Still, the correlation is deprecating enough to prompt a reevaluation of the strategy.

Other results

The study also controls for the global economic crisis of 2008 – to avoid the crisis being disguised into the lack of impact by sponsorship.

Another important point was to test which characteristics make a company more likely to sponsor: size and type of ownership are the factors more associated in the study.

Bigger companies and companies individually controlled seem to be more prone to engage in a sponsorship contract. Companies from the financial sector, those of more pulverized ownership and government companies are less likely to.

The study cogitates that the utility function of the sponsor owner seems to benefit more from sponsoring than any commercial benefit the company may derive from the contract.

The most unexpected statement made by the study is that “football sponsoring is more charity than business”.

2.3 Comments about the results

For many reasons, the results of this study have to be considered as surprising, to say the least.

First of all, the global investment in sponsorship is huge. So, there seems to be a strong contradiction as how can so much investment be made into something that doesn’t produce return?

The geographical and contextual reach of the study accentuates the surprise nature of the results.

In “contradiction to the contradiction”, the Brazilian case seems, to some extent, to confirm the study as in late years, Brazilian clubs have faced more difficulty in recruiting new sponsors than in the past. The cases of “clean jerseys” and one-off sponsorships have been more common.

The exception in Brazil really appears to be Crefisa/FAM whose amounts invested have only grown since January 2015. Beyond the increase in value, the scope of the investments has also varied – not only the brand is shown in the commercial properties of the club, but football costs have been directly covered by the company, e.g. signings and paychecks of certain players.

Not only have the investments grown: the general impression is that the visibility of Crefisa/FAM has been catapulted to record heights – much like Parmalat’s in the 90s. In addition, the sponsor’s performance data seem to indicate strong practical impact of the partnership. According to internet information published[1] at the beginning of 2017, the Crefisa/FAM group enjoyed a 30% increase in the enrollment of new students, coupled with the acquisition of 400,000 square meters of land in the eastern zone of the city of São Paulo, where a new campus will be built.

All this strengthen the impression that the partnership between Palmeiras and Crefisa/FAM could be an outstanding exception to the 78 companies study; with the obvious caveat that further verification regarding sales and net worth of the sponsor is necessary in order to affirm the exception.

  1. Final comments

Though not conclusive, the results reviewed in this article offer important insights into understanding sponsorship as a phenomenon.

For the time being, despite the huge investments made in sport sponsorship worldwide, one quantitative study covering a highly significant sample of European leagues indicates that sponsoring a football club does not constitute good business strategy.

At least not in a conventional way, i.e. paying a fee, inserting your brand and expecting your profits or at least your sales to grow as a result.

Counter-examples to the reviewed study would have to be researched.

But cases like the Palmeiras x Parmalat in the 1990s and Palmeiras x Crefisa/FAM now suggest that to derive tangible benefits, the level of investment must be above average and that apart from exhibiting the brand in the club’s commercial properties, the sponsor must somehow share in the business of club’s football department, vis a vis the co-management experiment with Parmalat and the signing of players by Crefisa/FAM currently taking place at Palmeiras.

Another aspect that the 78 companies study highlights is the “satisfying the utility function of the sponsor’s owner” as the primary goal of conventional sponsorship.

Interestingly, the occasional strengthening of this hypothesis – by further studies – could prove right the “benefactor” accusation that has victimized Palmeiras in the Crefisa/FAM partnership. Maybe, the so much criticized arrangement is actually a model to be followed instead of the “wrong example” to be avoided.

Anyway, what the remarks above suggest is that we’re still at an incipient stage in the scientific knowledge about sponsorship in sports/football.

Further studies will prove these and or other remarks right or wrong. Whatever the final results, what matters is that they be reached with appropriate methodology in a way that lends legitimacy and credibility to the output.

— — —

Reviewed article

“Does football sponsorship improve company performance?”

European Sport Management Quarterly, 2016. Vol 16, no. 2, pp. 129-147. Published by Routledge, Taylor and Francis Group. Written by Iuliia Naidenova, Petr Parshakov and Alexey Chmykhov; all from the Laboratory of Intangible-driven Economy, National Research University Higher School of Economics, Perm, Russia

[1] http://www.1news.com.br/noticia/5629/futebol-brasileiro/leila-pereira-comemora-sucesso-em-parceria-com-palmeiras-confira-os-lucros-das-empresas-07022017


Read Full Post »

A well-conducted transfer if you ever saw one. Yesterday, centre-back Vitor Hugo held his last press conference (for now) at Palmeiras, before moving to Europe and Fiorentina. The Italians had been eying the 26-year-old for some time, but Palmeiras managed to hang on to the player, a central piece of the 2016 champion squad. In total, Vitor Hugo played 131 games for Palmeiras, finding the net 13 times – one short to make the club’s top 10 list for scoring centre-backs.

With the aid of sponsor/partner Crefisa, Vitor Hugo was brought to Palmeiras from second division side América Mineiro in 2015 for €1.5 million for 50% of his economic rights. Now sold to Fiorentina for €8 million, Crefisa recovers the initial €1.5 million, with the remaining being split between Palmeiras and other stakeholders – a neat little revenue indeed.

Crefisa actually chose not to cash in, but to redeploy the €1.5 million into the acquisition of promising 22-year-old centre-back Juninho, from Coritiba. Prior to Juninho, Crefisa also helped in the acquisition of Luan, the 24-year-old Olympic gold medallist, previously at Vasco da Gama. Palmeiras’ medium to long-term planning is clear: Vitor Hugo just left, Edu Dracena might retire in a year or two and Yerry Mina will move to Europe after the 2018 World Cup. In their place, we have Antônio Carlos (24), Thiago Martins (22), Luan (24) and Juninho (22).

Anything Palmeiras wishes Vitor Hugo the best of luck overseas: this talented, hard-working and charismatic lad deserves it like few others!

Scoppia che la vittoria è nostra!

Read Full Post »

Interviewed in September of 2015, owner/president of Crefisa and Faculdade das Américas Leila Pereira refuted rumours she held intentions to become president of Palmeiras. “I cannot run for president now. I only recently became a member of the club and the statues say a person needs to have completed two mandates in the Deliberative Council [before being eligible for presidency]”, she told a reporter of Diário de São Paulo. Mrs Pereira knew she was looking at, at least, 16 years to fulfil any aspirations of the sort: eight years of club membership before eligible for the Deliberative Council, then two turns there, each mandate spanning four years.

No small surprise then when Mustafá Contursi, one of the club’s most senior oligarchs, in February of 2016 announced Leila Pereira was not only a club member, but had been so since 1996. Mr Contursi claims having made her an honorary member that year, while he was president of Palmeiras. However, no records of such an act have been found. And even if they were, the statutes does not give the club’s president the mandate to appoint honorary members at will: the procedure is actually fairly complicated, culminating in a decision taken by the plenary of the DC.

However, faced with the explicit threat of a non-renewal of the extremely lucrative sponsorship deal with Crefisa/FAM unless Mrs Pereria was allowed to run for a seat, newly elected Palmeiras president Maurício Galiotte granted Mr Contursi’s request for a revised entry date for Mrs Pereira. In Mr Galiotte’s thinking, the decision to bar Mrs Pereira was not his to make, but should be left to the DC, sometime after the voting (scheduled for early February) but before the newly elected took their seats in March. A few days after Mr Galiotte made his decision public, Palmeiras and Crefisa/FAM renewed their sponsorship agreement, worth an estimated 25% of Palmeiras’ total revenues in 2017-2018.

Why is having a political role at Palmeiras so important for Leila Pereira? Perhaps to please her husband and business partner José Roberto Lamacchia, a hard-core palmeirense (Pereira herself was born in Rio a Vasco supporter). Perhaps she enjoys the power rush. Perhaps it is in all the attention she receives while transiting from a very wealthy but anonymous businesswoman into someone who, in her own words, is recognized on the streets even outside of Brazil. Likely, there is a combination of the above and more; this unknown “more” factor making some of us rather nervous.

leila_mustafaIn any case, at the DC elections in February, Mrs Pereira did indeed run for a seat, as one of the candidates under Mustafá Contursi’s ticket. She was elected with a record 248 votes – several times the number she needed – and the extra votes spilled over to Mr Contursi, who thus reinforced his position in the DC with some 6-8 loyal names. In order to understand the impact of this, I quote Marcelo Santa Vicca: “The easiest way to understand how Mustafá Contursi’s head works is recognising he hates football and only cares for the social club”.

Today, 6 March, the Deliberate Council met to determine on the legitimacy of Mrs Pereira’s candidacy. On paper, a rather straightforward matter, one would think: void candidacy and therefore, void election. Nonetheless, she passed the trial like a breeze, only some 45 of the 228 gathered members of the DC opposing her inauguration.

The club´s statute was shredded in the most vulgar way. The immediate effect is the shame felt by many an honourable palmeirense, many of these outside the political sphere of the club. The medium to long-term effects are impossible to predict.

In addition to the above, the DC also elected two gentlemen as president and vice-president of the Council – Seraphim Del Grande and Carlos Faedo – both linked to Mr Contursi.

A moment of hesitation, and Palmeiras’ political landscape just recedes 15 years. Some thought the dragon had been slayed. It was not even sleeping.

Read Full Post »

Palmeiras and Crefisa last week announced the renewal of their sponsorship agreement, securing the highest amount paid to any club in South America and the 10th highest in the world, pushing Juventus (US$ 19 million/year) from the list. Although figures were not disclosed by Crefisa president Leila Pereira and Palmeiras president Maurício Gagliotti at the announcement, they are known to sum approximately US$ 24 million/year, for two years, bonuses for championship titles not included.

In addition to the sponsorship deal, Crefisa continues to boost Palmeiras’ contracting power. The acquired outstanding 50% of Dudu’s economic rights is an example, the recent signing of Miguel Borja, at a US$ 10.5 million price tag, another.

In 2016, Crefisa saw a record profit, some US$ 325 million. It is hard to calculate the impact of Crefisa’s increased visibility on its profits, but without doubt the deal with Palmeiras brought the company into the spotlights. Some sports journalists insinuate money laundering to explain the relatively high sponsorship deal, ignoring the splendid results Crefisa presents. It is rather revolting how a well-established private financial institution suffers accusations, while state-run companies like Petrobras and Caixa use public funds to sponsor many a team in Brazil, little questions asked.  

Below, a list of the ten biggest sponsorship deals worldwide in football (according to Forbes).

#1 Manchester United (Chevrolet) – US$ 80 million/year

#2 Chelsea (Yokahoma Rubber) – US$ 57 million/year

#3 Manchester City (Etihad) – US$ 57 million/year (including stadium naming rights)

#4 Liverpool (Standard Chartered) – US$ 43 million/year

#5 Arsenal (Emirates) – US$ 43 million/year (including stadium naming rights)

#6 Barcelona (Qatar Airways) – US$ 41 million/year

#7 Bayern Munchen (Deutche Telecom) – US$ 34 million/year

#8 Real Madrid (Emirates) – US$ 34 million/year

#9 Paris Saint-Germain (Emirates) – US$ 28 million/year

#10 Palmeiras (Crefisa) – US$ 24 million/year
Palmeiras v Internacional - Brasileirao Series A 2016

Read Full Post »

Although officially consistently denied by Palmeiras, a deal has been cooking since November. Atlético Nacional naturally want as much as possible for their star striker, but the insistence on too high a price resulted in the European transfer window closing without any serious option on the table. Big dollars are also available in China, but Borja is young and hungry and not at all keen on a move to Asia. Palmeiras’ director of football Alexandre Mattos seems to have played his hand well.

What additionally has tipped the scale in Palmeiras’ favour is Borja’s own wish: in a fresh-off-the-presses interview for a Brazilian newspaper, he admits having swapped messages with former teammate Alejandro Guerra and fellow compatriot Yerry Mina about Palmeiras and liked what he heard. He also mentioned the feverish Palmeiras supporters and that he had received many encouraging messages through social media, already feeling welcome at the club. And then, a rather bombastic statement from the recently turned 24-year-old: “My family has already packed the bags for Brazil. I expect a decision to be reached by tomorrow or the day after”.

Word is Palmeiras are paying US$ 12 million for 50%-70% of the player’s economic rights.

Tomorrow, Palmeiras and Crefisa are holding a press conference to announce a two-year renovation of the sponsorship partnership. Expect numbers rarely, if ever, seen in Brazilian football: approximately R$100 million per year (US$ 32 million) with bonuses for titles won. Considering recent developments, I would say there is a fair chance the sponsorship renovation be not the sole topic on the agenda.

Scoppia che la vittoria è nostra!

Read Full Post »

by Douglas Monaco*
A likely, eminent mixing of football sponsorship with club politics frightens some and leads others to, tentatively, pull legitimacy from a late XX century example. Clarification is in order.

Concerns about Palmeiras and Crefisa/FAM
On these early days of 2017, one theme has drawn the attention of Brazilian football followers in general and Palmeiras supporters in particular: the recent growth in prominence of Crefisa/FAM both in their role as sponsors of the team and in their political aspirations within the club.

The sponsorship contract is about to be renewed: a rumoured R$ 80-100 million (US$ 25-31) per year for the next two years, with additional bonuses for titles. If numbers are correct, it is by far the most valued sponsorship contract in today’s Brazilian football scene.

In the political realm, it is a given fact that the sponsor’s owner – Mrs. Pereira – is running for a seat in the club’s Deliberative Council with, some say, the ultimate goal to one day become club president.

This likely enmeshing of sponsorship with sharing in the club’s governance has made some – supporters, members etc. – worry because, as it stands today, there is no clarity about the configuration such a mixture of roles would end up having.

Another contentious point is the uncertainty about Mrs. Pereira having or not complied with all membership requisites to run for the Council, let alone to aspire becoming the president. Membership time needed to run for council is 8 years and then another 8 years as counsellor to be an eligible presidency candidate.

So, was she to be successful in these elections, her political involvement would be marred both by controversy in its functioning and by a possible breach of the club’s bylaws in its beginning.

Not good omens.

Some try to assuage these concerns, primarily eyeing the growth in cash injection that the renewed sponsorship contract would bring – however politically fuelled. They do so by citing the Parmalat Era as a precedent in this kind of arrangement in the club; a precedent that would legitimize the current situation.

In their 1992-2000 Partnership, Parmalat not only contributed millions of US dollars but was also involved in Palmeiras’ management. Why not allow Crefisa/FAM the same freedom now? the argument goes.

This article does not seek to question nor validate any current or future arrangement: after all, we do not know what it will look like if, and when, it comes into existence. This is simply an attempt to provide an accurate point of comparison. Those wanting to validate the present by quoting the past, must have a clear picture of what the past looked like.
Description of the Partnership

Below, the general characteristics of the Palmeiras/Parmalat partnership:

1. Per the contract, Parmalat paid Palmeiras a monthly standard sponsorship fee and, simultaneously it bought highly qualified players and made them available to the club, without charging for it.

2. When these players were to be sold, Palmeiras had the right to a percentage in the profit – 20% – as a “showcase fee”.

3. The basic advertising spaces granted by Palmeiras were connected to the football team and, for some time, to the volleyball team: the company’s brand was printed alone in the chest-side of these sports’ uniforms.

4. There were also advertising spaces in the stadium: during a lengthy period, Parmalat’s brand was the only one in the placards around the pitch. Later, other brands were re-allowed.

5. The agreement also established co-management of the football department. Decisions about organizing, planning, directing and controlling of the football department were always to be shared among participants of the club and of the company, two each.

6. The figures were astronomical for the Brazilian market that, at the beginning of the Partnership, was still suffering hyperinflation:

  • The “standard sponsorship” raised a relatively reasonable monthly income to Palmeiras: 750,000 cruzeiros (the Brazilian currency at that time)
  • The player signings were outstanding: in 1992, Sorato, Cuca, Maurilio, Zinho and Mazinho; in 1993, Roberto Carlos, Antonio Carlos, Edilson, Edmundo and Cleber; in 1994, Rincon, Rivaldo, Alex Alves and Paulo Isidoro; in 1995, Cafu, Mancuso, Muller, Nilson, Djalminha and Luisão; in 1996, Junior, Sandro, Viola and the return of Rincon; in 1997, Oseas, Euller, Alex and the return of Zinho; in 1998, Arce, Paulo Nunes and Junior Baiano; in 1999, the return of Cesar Sampaio and of Evair, Asprilla… it’s a lengthy list of excellent players.
  • The average cost per signing varied between 700k and 3.5 million US dollars. Zino and Roberto Carlos cost around 700 thousand each, Antonio Carlos 1.4 million, Edilson 1.3 million, Edmundo 1.8 million, Rivaldo 2.5 million, Cafu 3.5 million (plus a fine imposed by a restrictive clause SPFC added to Cafu’s sale contract that forbade him to sign with Palmeiras for at least 1 year), Djalminha and Luisão cost together 5,5 million, Paulo Nunes a little above 3 million etc.

7. The results were remarkable: 3 State League wins, 2 National League wins, 2 Rio-São Paulo cups, 1 Brazil Cup, 1 Mercosur Cup, 1 Libertadores Cup; 10 titles in 8 years!
Analysis and theoretical foundations

Beyond the facts and figures, it is important to retrieve the meaning of the agreement for the Partners, i.e. which benefit they derived from the relationship.

For Parmalat, Palmeiras meant:

1. Quick visibility: a conventional sponsorship contract – one in which no players are lent by the sponsor to the sponsored – would have brought a degree of exposure significantly lower than the incandescent visibility the Partnership generated at the time. The media agency then in charge of tracking citations, said the number of spontaneous media was equivalent to 20 times paid ads in the same media outlets.

2. Brand positioning: the Parmalat logo and its attributes were perceived in a qualified way by the consumers’ market in general and also by media companies.

3. Impact on general growth of the company: the massive growth in Parmalat’s buying of milk in the primary market and the acquisition of factories were viable due to the rapidly increased visibility and brand positioning experienced by the company.

4. Impact on sales: milk and dairy products had tremendous expansion in sales.

5. Football as a profit centre: sometime down the line, the transactions with players generated net cash for the company. Sources at the time stated that parts of this net cash were reinvested in the Partnership.

For Palmeiras, Parmalat meant:

1. Human resources: quality players that Palmeiras could only dream of signing in those days.

2. Direct income: the sponsorship fee plus the showcase fee.

3. Impact of the other income sources: tickets, TV broadcasting and general football income were enhanced due to the technical level reached by the team – proportional to Palmeiras’ tradition – and made possible by the Partnership.

4. Managerial capacity: Parmalat’s expertise in managing sports was much more qualified than Palmeiras’ at the time. In the context of the Partnership, that competence was made available to the club.

5. Football administration was segregated from other activities in the club: the Partnership allowed the segregation and that alone mitigated the impact of the club’s politics on the management of the football team.

6. The presence of a blockholder:

  • In business, it is generally accepted that a blockholder is seen as a potentially positive factor in corporate governance.
  • The colloquial expression that portrays this situation says “the eyes of the master fattens his cattle”.
  • For club football, a blockholder is not a usual character because managers have a mandate and even the highest-level directors are not “owners of the club” (though some seem to believe they are….).
  • The system of co-management emulated the blockholder situation, thus making the decisions more aligned to football’s utmost purpose: convincingly wining.

This reciprocity in gains between the partners is recognized by the Economics of Contracts – a research line – as a bilateral dependency, a situation in which partners, by means of a contract, can extract continuous gains in a relationship without the need to a formal integration between the parties.
As seen above, the Palmeiras/Parmalat Partnership was constituted by a series of explicit rights and obligations between the parties, kept intact their legal constitution, had solid theoretical foundations, and produced concrete results for both participants.

Any comparison between that Partnership and the current situation involving Palmeiras and Crefisa/FAM must depart from the above-mentioned characteristics.
__ __ __

*Douglas Monaco is 57 years old, Brazilian, and the biological child of an Italian man and a Brazilian women. Early in life, Erasmo was adopted by a family of Italian descent: becoming a passionate palmeirense was definitely his destiny. Holding two university degrees (Economics and Administration), he works as project auditor for a Dutch humanitarian entity.

__ __ __

This text is a slightly modified version of the one originally posted, in Portuguese, at the Verdazzo! website.

__ __ __

From time to time, you will find contributions from guest writers, on a variety of topics, here at Anything Palmeiras. Feel free to leave your feedback – either directly in the comments field or contacting the author.

And if you yourself would like to contribute to Anything Palmeiras, enter in contact through anything.palmeiras (at) gmail.com.

Read Full Post »

Palmeiras, together with financial institute Crefisa and the Faculdade das Américas (FAM) today announced they are renewing their partnership for one more year. This was expected. After all, the owner of Crefisa and FAM, José Roberto Lamacchia, and his wife/director/president Leila Pereira have never hidden they are palmeirenses, dreaming of seeing Palmeiras a champion with their brand logos on the uniform. That dream came true a little more than a month ago, with the 2015 Brazil Cup title.

While the renewal was expected, the numbers were not. Palmeiras are landing nothing short of the largest uniform sponsorship in the history of Brazilian football. Crefisa and FAM are, together, scooping up every available space on the garments, pushing out Prevent Senior and TIM in the process: R$ 58 million for the jersey and R$ 8 million for shorts and socks, totalling R$ 66 million (US$ 16 million).
Absolutely brilliant, of course. But looking at the pictures, I keep wondering if it hadn’t been wiser of Crefisa/FAM to reign supreme not by covering up every single square centimetre of fabric they are entitled to, but rather on the contrary, by keeping the jersey uniquely clean.

The current layout guarantees the logos are exposed at whatever angle, close cropped or far. Maximisation, in the most rudimentary understanding of the concept. But sometimes, or rather often, less is more. And as humans, we are prone to take in what pleases the eye. This is no less true for sports jerseys, where supporters will treasure brand logos that become one with the jersey and that harmonises in style, colour and positioning. Logos that becomes part of the identity of the team for a certain era, of certain trophies and glories.

Certainly studies have been made, expensive consulting firms have given advice. Nevertheless, my gut feeling – and I know I’m not the only one – is for Crefisa/FAM to reconsider their “occupy every space” approach for a clean and stylish look. A look that will please the eye of the beholder. Evoke positive feelings among the millions of Palmeiras supporters who acknowledgedly go out and buy heaps of jerseys. Now THAT is visibility, merchandising, money well spent.

Speaking of money: supporters of rival clubs are everywhere on social media, questioning Palmeiras’ signings and where “all that money” is coming from. The math is simple: R$ 66 million for the uniform, R$ 19 million from Adidas, R$ 45 million from the Avanti supporter programme (2015 figures), R$ 50 million from ticketing (idem), R$ 137 million in TV rights. That’s R$ 317 million (USD 77 million) right there.

Palmeiras have been doing the right thing – financially speaking – ever since Paulo Nobre assumed control in 2013. After years of hardship, Palmeiras are today one fat, happy pig. Albeit a bit patched.

Scoppia che la vittoria è nostra!

Read Full Post »

Older Posts »

%d bloggers like this: