The beautiful game: malfeasance and goalposts

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When the World Cup comes to Brazil in 2014, it marks football’s return to its spiritual home, the country of the greatest player (Pelé), the most unforgettable teams (Brazil 1970 and 1982), and the most mythical stadium (the Maracanã).

But no business is more fraught with pitfalls than the beautiful game. Since football became big business in the 1990s, several companies have invested heavily in Brazil. Almost all have fled, their tails between their legs and a trail of red ink behind them.

The biggest problems have come in the chaotic and corrupt domestic game. Companies such as Bank of America, ISL and Hicks, Muse, Tate and Furst invested – and lost – hundreds of millions of dollars in storied clubs such as Vasco da Gama, Flamengo and Corinthians.

On a national level, disorganisation and malfeasance are as much part of the game as goalposts and shin pads. Ricardo Teixeira, the president of the Brazilian Football Confederation and the head of the 2014 Organising Committee, is accountable to no one. A 2001 Congressional inquiry accused him of crimes ranging from tax evasion to money laundering to corruption. Charges were never filed.

“Since then nothing has changed,” says Juca Kfouri, a well-known columnist who has campaigned against corruption in sport.

Now, vast injections of money are needed to make the World Cup happen. Between R$60bn (US$34bn) and R$100bn must be spent before 2014, says José Roberto Bernasconi, president of the National Association of Architectural and Consulting Engineering Companies and author of a report on the work that needs to be done. Between 10 and 15 per cent will go on stadiums and the rest on infrastructure, Mr Bernasconi says.

The federal government has said it will not pay for arenas, although many believe it will eventually step in and contribute as the tournament gets nearer. The Lula administration through the BNDES, the government’s development bank, has offered credit lines of R$400m for each publicly owned arena, or 75 per cent of the total cost, whichever is lower, according to BNDES officials.

It is offering another R$5bn to states and municipalities to update transportation networks, and private hotel chains will have access to R$1bn for reforms and modernisation.

The remaining spending has still to be decided and that worries Mr Bernasconi. Although Brazil was awarded the right to host the tournament two years ago, it delayed 19 months before deciding which 12 cities will host matches. Five months later, work has yet to start on the venues and much of the infrastructure.

“Everyone from Lula down knows there is a lot to do,” Mr Bernasconi says. “But we are moving too slowly. 2008 was totally lost, we are already at the end of 2009 and next year is an election year.”

The most obvious delays are in the stadiums, some of which will have to be ready by 2013, when Brazil hosts the Confederations Cup.

Equally pressing is inadequate transport and tourism infrastructure. The World Economic Forum’s Travel and Tourism Competitiveness Report classed Brazil’s infrastructure “underdeveloped” and rated it 108th of 133 nations in affinity for travel and tourism. Brazil came 110th for roads, 123rd for ports, 86th for railways and 101st for air. Most alarming, it was 130th for safety and security.

There is also a need to invest in energy, telecommunications, sewerage and hotels, Mr Bernasconi says.

The upside is that more than 1m jobs will be created in the construction industry alone, says Edenir Artur Veiga of the Brazilian Industrial Engineering Association.

Most opportunities will be for domestic companies but many will look for foreign partners, especially if work falls behind schedule.

“There are things that we don’t have the technology to do, so engineering companies will form partnerships with European companies and they will start do to that in the first half of next year,” Mr Veiga says. “It’s inevitable.”

Because investors are dealing with federal authorities and multinational companies rather than unscrupulous club directors, and because Brazil’s international image is at stake, outsiders face fewer risks than in the past, Mr Kfouri says.

But he adds: “I am not saying there won’t be money changing hands and palms greased but there are more guarantees this time.”

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