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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
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Palmeiras v Internacional - Brasileirao Series A 2016

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by Douglas Monaco*
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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.

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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.
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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!
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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.
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Conclusion
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.
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CAMPEONATO BRASILEIRO DE 1994.
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*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.

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

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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.

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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).
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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!

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Impossible not to notice financial institute Crefisa and the Faculdade das Américas (FAM) whenever Palmeiras are in the spotlights. Their logos cover four different parts of the jersey, their advertising boards are all over the Allianz Parque and Palmeiras’ training centre, not to mention the inflatable pig manoeuvring over the pitch on match day. There is a reason for this omni-presence: nobody has put more money into a football club this year than Crefisa/FAM have put into Palmeiras: close to R$ 60 million (US$ 15 million) including sponsorship, buying of players, payment of wages and a major remake of the club’s training facilities.

It’s like going from 0-100 in three seconds. Why?

Because for these stakeholders, it’s not only business. Sure, president of Crefisa and director of FAM Leila Pereira says the increased visibility is doing good, that the number of new FAM students in mid-term has tripled. Still, it has never been a secret that the owner of Crefisa and FAM, José Roberto Lamacchia, is a palmeirense of the most passionate sort. A passion that has contaminated Leila, to whom Mr. Lamacchia has been married for over 30 years. Today, they share the dream of seeing Palmeiras once again a champion, to be part of the resurgence of a giant.
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Paulo Nobre flanked by José Roberto Lamacchia & Leila Pereira

Paulo Nobre flanked by José Roberto Lamacchia & Leila Pereira

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The reason Mr. Lamacchia is pushing chips into the pot is thus partly spelled business, partly spelled passion. But here’s a third crucial element that helps explaining the timing of the move: Palmeiras president Paulo Nobre. The couple believe in Nobre’s vision, competence and ethics, trusting him to make good use of the generous amounts involved in the partnership. Or in the words of Leila Pereira in a recent interview: I wish for this partnership to last forever, as long as Palmeiras is administered in a serious manner.

And what a partnership! Earlier this year, Crefisa placed Lucas Barrios at Palmeiras, having paid not only all expenses related to the transfer of the centre-forward, but also committed to cover all of Barrios’ pay checks during his three-year contract – a deal estimated at some R$ 37 million in total. Crefisa then proceeded to purchase the economic rights of Thiago Santos, Leandro Almeida and, most recently, Vítor Hugo – securing these players in the Palmeiras squad. Unlike Barrios, these three have their wages covered by the club, not Crefisa.

None of these four players belong to Crefisa, neither does Crefisa have any say regarding their staying or leaving the club. If any of them are sold with a loss, Crefisa takes the rap. If sold with a profit, Crefisa makes a profit. The important thing to remember: Palmeiras are receiving players the club hardly would afford on their own, and without taking any risks.
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I wish for this partnership to last forever, as long as Palmeiras is administered in a serious manner.

                           Leila Pereira, president of Crefisa & director of FAM

In addition to players, Crefisa is investing heavily in the remaking of Palmeiras’ training facilities. The comprehensive reform will ensure comfort to players for years: new pitches; better lighting; a new and complete sports complex including indoor hall, pool and gym; first grade medical equipment including for dentistry, accommodation for 44 athletes… Palmeiras’ training grounds, expected to stand ready by December this year, will be second to none in Latin America.

1992-2000 is known as the “Parmalat Era”, a period during which the Italian multinational poured in money at Palmeiras and even co-managed the club. It is considered one of the most successful periods in Palmeiras’ history, with no less than eleven important trophies won: three São Paulo championships, two Brazilian championships, two Rio-São Paulo tournaments, one Brazil Cup, one CBF Champions Cup, one Mercosul Cup and one Libertadores Cup.

Compared to the Parmalat deal, there is no co-management involved in the Crefisa/FAM/Palmeiras partnership. Which is actually a good thing. Now, in term of results, there’s no reason why the partnership couldn’t be just as successful over time.

Scoppia che la vittoria è nostra!

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As this year’s edition of the São Paulo state championship took off last weekend, Palmeiras were still adding pieces to the squad puzzle. Probably the last player to arrive, at least before the Brasileirão, former Santos keeper of choice Aranha (spider) joined the squad after having signed a one-year agreement with the Verdão.
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aranha.
Aranha is no doubt a good keeper and should give Fernando Prass healthy competition for a spot in the starting eleven. His arrival was celebrated by many, while others consider him a bit too old: at 34, will he be content with warming the bench? Wouldn’t grooming a younger keeper be a better option for when Prass, now 36, retires in a few years’ time? These are valid points, but personally, I believe Prass and Aranha will bring out the best in each other, and for a few good years still (that is, if their contracts are renewed).

Palmeiras’ debut in the Paulistão took place at the Allianz Parque last Saturday, against Audax. Palmeiras came in a 4-2-3-1 formation, coach Oswaldo’s favourite as of late, with Fernando Prass; Lucas, Tobio, Vitor Hugo and Zé Roberto; Renato, Gabriel, Allione and Robinho; Maikon Leite and Leandro Pereira in the starting eleven. With 35 minutes on the clock, Palmeiras were already up 3-0 after braces by Leandro, Robinho and Leite. Allione was on fire, dictating the creativeness on the midfield and pleasing the close to 25.000 supporters in the stadium. In the second half, Palmeiras took the foot off the gas, allowing Audax a goal on stoppage time. All in all a good debut, especially considering the absence of quality players like Arouca and Dudu. Highlights below.
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Everybody likes a winner, and in this pre-season, Palmeiras are attracting attention. After financial institution Crefisa, Palmeiras last week announced a second sponsorship deal, this time with insurance company Prevent Senior. The company admittedly was negotiating with other clubs, but in the end opted for sealing a deal with Palmeiras worth a little over US$ 2 million, their logo now on the shoulder of the team’s jersey until the end of the year.

Now, perhaps the greatest indicator of the optimism, even enthusiasm, currently surrounding Palmeiras is the spectacular growth of Palmeiras’ supporter membership programme Avanti. With 25.000 new members and counting in 2015, the Avanti reached 80K members ten days ago, overtaking Grêmio as the second largest in Brazil. Yesterday, the 90K mark was reached. If the pace is maintained, within two weeks Palmeiras enter the World Top 10 ranking, overtaking Manchester United’s programme currently sporting some 100K members.

Tomorrow Thursday, Palmeiras welcome Ponte Preta at the Allianz Parque for the second round of the Paulistão. Some 15.000 tickets have already been sold, in spite of these being far too expensive. This will be the topic of a future post.

Scoppia che la vittoria è nostra!

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As part of a recently signed sponsorship agreement with English language school “Minds”, the Palmeiras website will soon feature a full section in English. Not a day too early: the World is globalised and the World Cup is coming up, arousing and multiplying interest for anything Brazil and everything football. Take the signing of Lúcio: within hours of the rumours spreading that he was to leave SPFC to join Palmeiras, a Swedish journalist asked for my comments on the matter.

minds-english-school-logo-primary2The agreement with Minds also includes money to Palmeiras and language training to players and technical staff: a deal worth some US$ 800.000 in total. The Minds logo will feature between the Palmeiras and Adidas logos on the team jersey.

Personally, I’m very pleased with the announcement. Anything Palmeiras was created to fill a void, a void which, if everything works out as intended, now will be substantially reduced. I’ve been told that the growth and impact of Anything Palmeiras did play a part in the decision to format an English section on the club’s official website. Just try wiping the smile off my face.   

Scoppia che la vittoria è nostra!

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Fat-PigIt’s a fattened Palmeiras returning after the month-long Confederations Cup break. The already large squad – mostly due to the extinguishing of the B team – has been inflated by Mendieta, Menezes, Kardec and, in a matter of days if not hours, Eguren. With more than 40 players in the squad, Kleina has received the mission to deflate: even practice sessions suffer due to the exaggerated numbers. Maurício Ramos and Maikon Leite have already left for Sharjah (Emirates – for good) and Umm-Salal (Qatar – one-year loan) respectively. Expect more to follow.

Coach Kleina yesterday announced the 20 players traveling to Presidente Prudente to take on Oeste in the seventh round of the Brasileirão B on Saturday: keepers Fernando Prass and Bruno; centre-backs Henrique, André Luiz and Tiago Alves; wingbacks Luis Felipe and Juninho; defensive midfielders Charles, Wesley, Márcio Araújo and João Denoni; offensive midfielders Mendieta, Tiago Real, Valdivia, Serginho, Ronny and Fernandinho; strikers Caio, Vinicius and Leandro. Apart from the novelty of having Valdivia and Prass back from the medical department, Luis Felipe (previously on loan to Penapolense) replaces Ayrton on the right flank. Menezes and Kardec are not yet in physical conditions and were left out.

Yours truly expected the announcement of a master sponsor during the break, but drew a blank. Yesterday, president Nobre signed an agreement with the philanthropic institution Santa Casa: the logo will feature on Palmeiras’ jersey in the coming two home games at the Pacaembu – the 12th against ABC and the 30th against Icasa. The haemorrhage continues…

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