SPONSORSHIP TODAY

imradmin/reportimg/ Brazil sponsorship report
ISBN: 2050-4888
Price: 
£495
To purchase this report as a pdf or print issue
To purchase this report as a pdf or print issue
Subscribe To IMR To access all IMR reports and journals for one year, price: $795
To access all IMR reports and journals for one year, price: $795

Brazil - Sponsorship Analysis

Free Samples

The sample section is the introduction to the market overview and represents less than 3 pages from the 45 page report.

BRAZIL’S RAPID SPONSORSHIP GROWTH

Brazil’s sponsorship market has grown sharply since 2005 with predictions that it will exceed US$1 billion per year by 2014. Indeed it is possible that this will be achieved even earlier if major domestic deals for the Rio 2016 Summer Olympic Games meet targets.

Domestic deals for London 2012 reached approximately $1.5 billion with individual Tier One deals worth up to $140 million. Although only two such deals have so far been struck for Rio 2016, they are in the $300 million bracket suggesting that new Olympic records will be achieved for domestic sponsorship. Should this momentum continue, it could add another $200-$300 million to the total annual spend in the years leading up to the 2016 Games.

Currently the total spend (excluding kit supplier deals, which are considered as primarily merchandise, rather than sponsorship) is around the US$1 billion. Analysis of the top 328 deals in this report calculates that they amount to $761 million and it is estimated that the numerous smaller club and federation deals account for a further $200 - $300 million.

 Chart 1. Brazilian sponsorship rights expenditure 2005-2016 (US$m)
 Brazil sponsorship rights expenditure 2005-2016

Chart 1 demonstrates how the domestic deals for the Rio Games and the 2014 FIFA World Cup have already helped to create a booming sponsorship market and double digit growth is expected to continue until 2014. However Chart 2 (overleaf) shows that the growth rate already appears to have peaked with few major new deals signed since 2011 and the rate is expected to decline further after 2014 when the FIFA World Cup is over and the deals associated with the event have elapsed.

By this point, the majority of Rio 2016 deals will be in place and there is a strong possibility that actual expenditure will decline after 2016. This will, however, be solely as a result of the two largest sporting events on the planet having taken place in the country over a short period and in the process creating a huge, albeit temporary, increase in the domestic sponsorship market.

There is, however, strong evidence to suggest that the underlying health of the sponsorship market in Brazil is robust. Even without the 2014 World Cup and Rio Games, the market is likely to have grown significantly. Major deals signed in the past three years in football, volleyball and motorsports have shown significant growth suggesting that sponsorship is becoming an increasingly important marketing tool in the country.

Chart 2. Brazilian sponsorship growth rates 2005-2016
 Brazilian sponsorship growth rates 2005-2016

This underlying market growth is being driven by three other key factors:

Brazilian economic expansion

Despite the 2008 global financial crisis, Brazil’s economy has grown at an average of 3.5% per annum since 2001 and forecasts suggest that such levels are likely to continue.

Chart 3. Brazilian GDP growth 2001-2012
 Brazilian GDP growth 2001-2012
                                                                                                              Source: IMF

As one of the so-called BRIC (Brazil, Russia, India, China) nations, the country is rapidly becoming a global economic powerhouse and now ranks as sixth in the world by GDP.

The country has large reserves of natural resources and strong industries such as agriculture, automotive manufacturing, steel, petrochemicals, IT, aircraft, and consumer durables. The stronger a country’s economy, the more likely it is that its sponsorship industry will grow and this certainly appears to be the case in Brazil.

Growing marketing sophistication in Brazil

Brazil is also arguably more westernised than its BRIC competitors and is developing a marketing culture akin to that of the USA and Western Europe. With increasing numbers of advertising, marketing and sponsorship agencies setting up joint ventures in the country, the level of expertise is increasing. Such agencies work with major brands to negotiate and activate sponsorship rights and this has led to an uptake in the use of sponsorship by the major corporates.

That said, it is widely acknowledged that brands, and rights holders in particular, have yet to fully understand the potential offered by sponsorship and the commercial culture within the sports industry is still immature.

This is evidenced by the large numbers of short-term deals signed, even for some of the biggest sports properties such as primary sponsorships for leading football clubs. It is
generally accepted in mature markets that sponsorship deals require a minimum of three years to really work for the brand. Yet in Brazil it is not uncommon for deals worth more than $10m to last for a single year. 

Despite this, there is clearly an appetite for sponsorship that is likely to grow in the next five years and the staging of the FIFA World Cup and Olympic Summer Games will ensure that the level of marketing expertise in the country improves. In the long-term, this should ensure that the sponsorship industry becomes more mature with brands, rights holders and agencies embarking on a steep learning curve.

Revenue growth in Brazilian football

The revenue growth in Brazilian football has been noticeable in recent years. As will be seen, football is by far the most dominant sport in the country, accounting for 62% of the value of sponsorship expenditure. This development had been curtailed in the past three decades by the financial power of European football. Quite simply Brazil’s best players joined clubs in Italy, Spain, England and Germany where wages and transfer fees have been much higher.

Although the big European clubs still offer much higher wages, the differential is narrowing as Brazilian club football develops. A new TV deal worth $630m per year has been signed
between the Campeonato Serie A clubs and the nation’s dominant broadcaster Globo.

However, matchday revenues and other commercial income remain relatively low. Corinthians record ticket receipts in 2012 averaged $492,250 per match whereas in Europe, big clubs such

as Real Madrid, Barcelona, Arsenal and Manchester United can achieve $5m. This is
expected to change as new and refurbished stadia come on stream for the 2014 World Cup, although perhaps at a slower than might be expected. There is resistance to ticket price increases and stadium naming rights among fans and a lack of commercial expertise to develop hospitality and merchandising among clubs.

The saving grace, to an extent, is the will

bottom_left_corner
bottom_right_corner
0 item(s)

SEARCH

Register or Login to read free content from more than 19 publications
Email

Password
CONSULTANCY
IMR specialises in bespoke research reports and commercial advice to rights holders
world_pay
Official Supplier


European Sponsorship Association
Media Partner
INTERNATIONAL MARKETING REPORTS