FIFA spat helps cover up out-of-control Cup budget

The Brazilian media is following every twist and turn of a colourful spat between FIFA and the Brazilian government. That is masking some frightening (and not updated) numbers on costs for the Cup with construction firms using the negative publicity and government hyper-sensitivity to gouge out more money.

Senators, who are used to fulsome praise, at least in public, are being uppity because of a very public attack on Brazil’s readiness for the cup. FIFA representative Jerome Valcke may indeed have overstepped the mark when he said that Brazil needed a kick up the backside, but the thrust of what he was saying, that hotels and airports are way behind, remains unassailable. In fact, the government has acknowledged this in the past.

Yet instead of addressing these valid complaints, the Senate has leaped on an opportunity to vaunt its wounded pride. Today, Senators announced they had cancelled a meeting with Valcke and upped the ante in the country’s troubled relations with FIFA. “We do not accept the FIFA’s caretaker. What was approved was a meeting with [President] Blatter, not his aide. If it was up to me, he would get a kick in the backside,” the eminently-quotable Roberto Requiao chairman of the Education, Culture and Sports commission said.

This is all fun stuff but is masking the sad truth. Costs are spiralling out of control and the games will be a patch job. The Senate itself admitted last year that costs would be close to 30% higher than expectations. Private estimates run much higher. Some stadia are only one quarter complete. There are not enough hotels and urban transport will be insufficient. No doubt many will enjoy discovering Brazil’s panache and ability to throw a party from nothing in 2014. But as a symbol of Brazil’s growing maturity, the games will prove an abject failure.

About admin

I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
This entry was posted in Articles. Bookmark the permalink.

Comments are closed.