World Cup Brazil 2014

Does FIFA have more Power than the Brazilian Congress?

In September 2009, FIFA requested to the Federal Government an extension of tax exemptions; in May 2010, a law was approved to accommodate FIFA’s demands.

OK, in that case, the Government may say that there was a misunderstanding of the rules imposed by FIFA to all countries which apply to host the World Cup – Brazil knew the rules and should have obeyed them from the start.

In November of 2009, several newspapers in Brazil informed that FIFA requested the city Government of Sao Paulo to change the Clean City law, so that FIFA and CBF’s partners can advertise near the stadiums (the law isn’t exclusive for those partners, but CBF already showed that will take action against ambush marketing). The city of Sao Paulo (the only one in Brazil where such restrictive law exists) is still examining the matter.

Now, there is another case where the Brazilian legislation goes against FIFA interests.

Three days ago, a law was amended in Brazil to improve organization and increase safety of Sports events and fans. The law of amendment, in article 13a, reads:

“Article 13-A. These are requirements for access to and permanence in a sports venue, without prejudice of requirements determined by other laws:

II – not to bear objects, drinks or substances which are prohibited or are susceptible of generating or can possibilitate the practicing of acts of violence;”

That means that the law now prohibits alcoholic drinks in stadiums. Even before the law, CBF had already in 2008 signed a letter of compromise with the Public Prosecutors, to ban alcohol from the football matches.

The problem is that Budweiser is one of the main partners of FIFA – and the corporation which owns Budweiser is also owner of the major Brazilian beer brands, such as Brahma, Skol and Antarctica.

Yesterday, Brazilian journalist Ancelmo Gois, who publishes a column at influential newspaper O Globo, and who is known for having good sources inside CBF and the Government, informed that “FIFA asked the suspension of the law of protection to Sports events, which Lula approved recently – the contract between FIFA and Budweiser demands that the beer is sold in stadiums during the World Cup”.

In Brazil, to “suspend a law”, another law is necessary.

It remains to be seen if FIFA will get that law.

The Government of Bahia announced the date of the implosion of the  stadium Fonte Nova, in Salvador: August 29th 2010 (when a movie becomes available, it will be posted at this post).

The lower ring and part of the higher ring were already demolished mecanically; the implosion will accelerate the removal of the remaining higher ring.

The implosion will be conducted by American company CDI – Controlled Demolition Inc; engineers of the company estimate that the buildings will come down in 17 seconds. All residents living within 250 meters from the stadium will be evacuated.

The old Fonte Nova has been closed since 2007, after the structure collapsed killing eight people.

The new Fonte Nova will have capacity for 50,000 attendants, plus 5,000 VIPs and journalists. There will be also a Museum, a panoramic restaurant, 62 toillets, 46 sanitaries, and a parking space with 2,000 covered slots.

Read more news about the Fonte Nova, the World Cup in Salvador, and check out hotels in Salvador.

For the renovation of Fonte Nova, the Government opened a bidding process won by the Consortium Arena Salvador 2014, formed by giants OAS and Odebrechet (the Consortium was the sole bidder – both OAS and Odebrechet have headquarters in Salvador, and both have strong political connections).

Estimated cost is R$ 591 million (about US$ 330 million). As usual, BNDES will finance R$ 400 million, and the Consortium will finance the balance. The Consortium will explore the stadium for 35 years, and during the first 15 years, the Government will pay R$ 107 million per year; some Public Prosecutors say that the deal looks too good for the Consortium, and started investigation.

Below, an official press release by the Brazilian Government (which, of course, must have an optmistic view), with links and comments in italic.

Brazil will invest US$ 18.7 billion in infrastructure to host the 2014 FIFA World Cup, according to Brazilian Minister of Sports Orlando Silva Jr. Speaking on a teleconference today, the Minister stated that these resources will fund 50 projects in 12 Brazilian host cities (the figure mentioned by the Minister today is the same announced a few months ago: R$ 33 bn in infrastructure alone).

Nearly 78 percent of funding will be allocated by the public sector, with the remainder coming from private sector sources (even though that figure is questionable, it is certain that most funding will come from public coffers).

While stating that “we have to work hard” over the coming four years, the Minister emphasized that “Brazil will be ready on time to host a great World Cup.”

“We will work in a timely and transparent manner to prepare Brazil for the World Cup and for the future,” said Minister Silva (according to FIFA, work is not in a timely manner). “We are focusing on sustainable development, which will not only result in Brazil successfully hosting the 2014 matches, but also improve the country for the Brazilian people.”

The projects discussed during the teleconference include investments of US$ 6.5 billion to improve urban mobility, including the development of monorail lines, subways, light rail transit systems, transit terminals and other modes of transportation. Some of these projects, the Minister noted, are already under construction.

Minister Silva also reaffirmed that all planned stadiums will be completed in time for the 2014 World Cup, noting that construction has already started for the stadiums in the cities of Manaus, Cuiaba, Natal, Salvador, Belo Horizonte and Brasilia (only in Salvador is there some significant progress; Brasilia started today; in Natal, the process was suspended for suspicion of overpricing).

The other six stadiums are currently under the bidding process (everything is moving  very slow).

In the hotel sector, the National Bank for Economic and Social Development has assigned US$ 556.0 million to finance new ventures or remodel hotels with better terms than the market. The resources will be expanded according to demand from the private sector.

To address the aviation demands posed by the mega-event, US$ 3.1 billion has been assigned to enhance 13 national airports. The federal government forecasts a 10 percent increase in traffic through Brazilian airports during the World Cup (and they are already saturated). Investment in ports will be US$ 426 million.

Under the scope of the federal government, an executive group was created to supervise all of Brazil’s preparations as host of World Cup 2014. This group includes representatives of the Office of the Chief of Staff and the ministries of Sports, Planning, Finance and Tourism. In addition, the 12 host cities signed a Responsibility Matrix, which defines the responsibilities of each federative party for the organization of the 2014 games.

The federal government forecasts that the 2014 World Cup will generate an additional US$ 104 billion in economic activity for Brazil through investment, tourism, an increase in household consumption, and the recycling of resources.

Brazilian newspapers are reporting that President Lula approved a law which, supposedly, improves on safety and organization of sports events in Brazil; as commented on this other post, this new law is actually an amendment to an older law, which was already good enough.

The main changes brought about by this new amendment are: rioting is now a crime (it was an infraction, punishable with restrictions to attending events – now it is punishable with imprisonment); frauding results of games is now a crime (with this law, this referee would have been arrested); ticket scalping is now a crime.

Ticket scalping (the action of buying tickets for face value and sell it for market value) is common in Brazil. Given the lack of organization of Brazilian football, it is often better to buy tickets from a scalper, and save the time and headache needed to buy tickets at the official box offices.

The situation in Brazil is different from other countries, where ticket arbitrage is common – stubhub is just an online ticket scalper. In Brazil, it is common that people with privileged rights (for example, the staffs of the clubs involved in an important match) retain batches of tickets and pass them over to the scalpers.

So the law now consider as crimes:
- selling tickets for prices higher than face value: from one to two years in jail
- facilitating ticket scalping (i.e., providing tickets for ticket scalpers to sell): from two to four years in jail
- if the facilitator has privileged access to tickets: from four to six years in jail

Enforcement of this law is unlikely, EXCEPT, of course, during the World Cup, when FIFA will use their power to protect their financial interests.

Last year, the President of CBF announced that there was an idea to employ ex-convicts in the building of the stadiums of the World Cup 2014.

In Brazil, there is a huge supply of uneducated workers, which makes it very difficult for ex-convicts (most of them with little or no formal education) to find a job; using the World Cup to give a chance to those people seems like a good initiative.

Fortunately, the idea seems to be coming true.

The Governor of Brasilia announced that he just authorized the works in the National Stadium (the contract had been signed last week), and that 5% of the 1,500 workers will be ex-convicts (see also this CBF note).

These workers are in open or semi-open regimes, which means that they still have to report periodically to the prisons. Salary was not informed; minimum wage in Brazil is R$ 510, a bit less than US$ 300 – and workers have transportation and food assistance, plus social security.

Many foreigners see Brazil as a country without laws. That is not true. The problem in Brazil is that people do not obey the laws.

Brazil have several laws which are as advanced as their counterparts in developed countries.  The Brazilian Code of Defense of Consumers, for example, dates back to 1990, and has been proven effective to protect many consumers who know how to fight for their rights.

The Brazilian National Transit Code is another example of a modern law. If the nearly 300 articles were obeyed by drivers, Brazil would be one of the best countries in the World to drive. The law imposes duties to the Administration (unsafe cars should not be licensed), to drivers (even change lanes without blinking the lights is an infraction), pedestrians (jaywalking is an infraction in Brazil), the Police (alcohol limit is zero – the Police must fine or arrest drunk drivers), the Justice, etc. Nonetheless, per year, 42,000 people die in transit accidents in Brazil.

Today, Brazilian newspapers inform that President Lula approved a law to decrease violence and improve organization in the Sports events in Brazil.

This new law, Law 12.299, from July 27th 2010, is actually just an amendment to the Law 10.671, from May 15th 2003, which in the first article declares: “This Statute establishes norms for the protection and defense of Sports Fans“.  The law applies to all sports events, and not only football (events like the matches of the Brazilian Volleyball Teams or the Formula One GP should also observe this law).

Just like the Transit Code, the Sports Fans law is very detailed, but has been ignored by everyone.

Some articles of the law:

- all events should have an ombudsman, to whom all fans should have open access, and who should respond to all complaints by the fans;

- every fan must be insured, right from the moment he enters the venue; there must be one doctor, two nurses and one ambulance for every 10,000 fans (article 16); fact: there is not even room for more than two ambulances.

- it is a right of fans to be safe; a plan of action covering safety, transportation and contingencies must be implemented at every sports event (article 17); see here.

- venues with capacity higher than 20,000 must have camera surveillance (article 18);

- it is a right of fans that tickets must be put on sale no later than 72 hours before the starting of the match; a receipt of sale of tickets must be provided (article 20); see here.

- all tickets must be numbered, and there must be a seat matching the ticket number (article 22); in Brazil, this is impossible - see here;

- transportation system must be safe and organized; parking space must be available to all fans, and special means of transportation must be available to people with accessibility deficiencies (articles 26 and 27); fact: parking and accessibility is a major problem for most stadiums – the renovation of Morumbi would cost much less if Sao Paulo hadn’t to purchase lots to turn into parking space.

- food and sanitaries must be clean and hygienic (articles 28 and 29); ah, ah, ah.

- in case of violation of this law, the entities which organize the events will be penalized, and the President of the organizing entity shall be destituted (article 37); in the case of football, such entity is CBF;

- fans who promote riot, practice or incite violence, should be prohibited from attending sports event, for a period no shorter than three months (article 39).

So far, nobody cared about really enforcing this law.

If FIFA and CBF use their powers to oblige the Brazilian authorities to enforce the law, that would be an important legacy for Brazil post-2014.

The Ministry of Tourism in Brazil is still in the process of re-creating the Classification System of Means of Accommodation. Meanwhile, it is not easy for potential guests to find an unbiased evaluation of hotels in Brazil.

Veja, the most influential Brazilian magazine, published some time ago a guide of best hotels in Brazil; the guide sorts hotels by city and event (such as “the best hotel for the Sao Paulo Fashion Week in Sao Paulo“), and is still a good indicator of the finest hotels in Brazil.

In Sao Paulo: Hotel Unique (photo below),  Sofitel, Transamerica, Grande Hotel Senac. See other hotels in Sao Paulo.

In Rio de Janeiro: Le Meridien, Sheraton, Pousada Pardieiro. See other hotels in Rio de Janeiro.

In Santa Catarina: Plaza Blumenau. See other hotels in Florianopolis.

In Salvador: Bahia Othon. See other hotels in Salvador.

In Curitiba: Mabu Royal and Premium Hotel. See other hotels in Curitiba.

In Brasilia: Melia. See other hotels in Brasilia.

In Recife: Atlante Plaza. See other hotels in Recife.

In Natal: Serhs (photo below). See other hotels in Natal.

In Fortaleza: Bluetree. See other hotels in Fortaleza.

In and near Manaus: Tropical, Amazon River, Crowne Plaza. See other hotels in Manaus.

The President of Palmeiras (one of the most important clubs in Sao Paulo) informed that this week the club signed the contract for the building of the Arena Palestra. The contract was signed between Palmeiras and WTorre, one of the largest engineering companies in Brazil.

This stadium was not listed as one of the venues of the World Cup 2014; however, since CBF declared that Morumbi is out of the Cup, there has been undefinition about the stadium which will stage matches in in Sao Paulo – and Arena Palestra is one of the candidates.

Arena Palestra Italia will be a renovation of the current stadium Palestra Italia (Palmeiras was founded by the Italian community in Sao Paulo, with the name Palestra Italia; during the World War II, when Brazil sent troops to fight against Italy, the team was forced to change name to Palmeiras).

The capacity will increase from 28,000 to 45,000 people; according to FIFA requirements, this stadium can stage matches up to the quarter-finals of the World Cup (but won’t host the opening match).

The stadium was designed by Portuguese architect Tomas Taveira, the same who redesigned the stadiums of Sporting, Leiria and Aveiro, to be used in the Eurocup 2004 in Portugal.

The President of Palmeiras say that Arena Palestra will be the most modern stadium in Brazil.

The estimated cost is R$ 300 million (about US$ 170 million); WTorre is to find funding for the project. According to the contract, Palmeiras will keep all the proceedings from matches staged in the Arena; WTorre will have, for 30 years, other revenues sources, such as shows, rentals, the restaurant, etc – of which they will still pass between 5 and 20% to Palmeiras.

The new Stadium should be ready by the end of 2012.

Ironically, the stadium which is not under scrutiny by FIFA and CBF and doesn’t depend on public money is the one which seems to be more prepared to host the World Cup 2014.

See more images and videos of Arena Palestra (registration required).

Mano Menezes, the new coach of Brazil, has just announced his first call up, for the match against the USA Team, in New Jersey, August 8th.

There are only four players who participated of the World Cup 2010: Robinho, Tamires, Thiago Silva and Daniel Alves. Ten players are first comers, including Neymar and Ganso.

The roster:

Goalkeepers: Renan (Avai FC), Jefferson (Botafogo) and Victor (Gremio).

Defense: Andre Santos (Fenerbahce), Daniel Alves (Barcelona), Marcelo (Real Madrid), Rafael (Manchester United), David Luis (Benfica), Henrique (Racing Santander), Rever (Atletico MG) and Thiago Silva (Milan).

Midfield: Jucilei (Corinthians), Lucas (Liverpool), Ramires (Benfica), Sandro (Internacional SC), Carlos Eduardo (Hoffenhein), Ederson (Lyon), Paulo Henrique Ganso (Santos FC), Hernanes (Sao Paulo FC).

Forward: Alexandre Pato (Milan), Andre (Santos FC), Diego Tardelli (Atletico MG), Neymar (Santos FC) and Robinho (Santos FC).

The investments for the World Cup 2014 will be made with public money.

In 2002, when Rio de Janeiro was chosen as host of the Pan American Games 2007, the estimated budget to prepare the city was R$ 409 million; in June 2007,  right before the opening of the Games, the actual cost was estimated in R$ 3.7 billion (see report here – the report was based on data provided by the National Accounting Office).

That means that the actual costs were nearly ten times higher than previously estimated. Lack of organization caused delays, which in turned resulted in several contracts without a bidding process. There were several suspicions of corruption.

Much because of this, in December of 2007, shortly after learning that Brazil would host the WC 2014, the Minister of Sports declared that there would not be public money to build the stadiums.

The implict idea was: stadium owners would have to look for private partners who, in exchange for the rights of usage of the stadium after the Cup, would bring money in to build or renovate the venues.

The problem, however, is that there are not private parties interested in investing in stadiums. The most notable case is Morumbi, which will probably be excluded from the Cup, because Sao Paulo FC can’t find investors.

Who comes to the rescue? The Bank for Social and Economic Development (Banco de Desenvolvimento Economica e Social), BNDES.

BNDES is a bank owned by the Federal Government. But it is not like Banco do Brasil, another giant State bank. BNDES doesn’t have street agencies, nor does it offer common bank services (such as current accounts, mutual funds, etc) to individuals.

All BNDES does is lending money to selected corporations, at low interest rates. BNDES charges the Long Term Interest Rate (TJLP – Taxa de Juros de Longo Prazo), defined by the Federal Government; currently, the TJLP is 6% per annum – see official values of TJLP. The Treasury borrows from the market paying a (target) interested rate called Selic; the Selic is always higher than the TJLP; today, the Selic is 10.75% per annum –  see official values of Selic. And if someone needs a loan from a bank, the interest rates in Brazil are the highest in the World.

This means that every time that BNDES loans money to someone, the bank is giving a subsidy to the borrower.

And where BNDES gets money to give away?

First, some of it comes from the return of previous loans (as explained above, this return is lower than any other option in the market). Next, by force of law, a part of taxes paid in Brazil goes towards Funds managed by BNDES – and we are talking of billions of dollars here.  And last, when even more money is needed, the Treasury transfers money to BNDES – this year alone, the Government transfered nearly US$ 100 billion to BNDES.

No wonder that BNDES have got so much money to loan. There were R$ 3.6 billion for public stadiums and R$ 1 billion for hotels (new hotels and renovation of old ones); private stadiums can’t get loans, but the contractors can (they received tens of billions in 2009); investments in technology, of course, will have their share from BNDES.

The investments for the World Cup 2014 will be made with public money.