São Paulo – The World Cup due in Brazil in 2014 will place the country in the centre of the world, bringing tourists to more than just the 12 host-cities, creating currently non-existent demands and requiring a much larger infrastructure than the country’s current one. These demands and needs will create opportunities for wealth and income generation that may transform the country. A study conducted by Ernst & Young Terco and the Getúlio Vargas foundation (FGV) in June 2010 estimated that up until 2014 World Cup-related investment will amount to 142.79 billion reals (US$ 105.6 billion).
According to the executive director for consulting at Ernst & Young Terco, Marcos Nicolas, the survey “Sustainable Brazil –Socioeconomic Impacts of the 2014 World Cup” does not specify how much of the 142.79 billion reals has already been generated, as it is not aimed at keeping track of investment. Still, it claims that should the projects be implemented as planned and in keeping with the deadlines, Brazil will be the leading champion of the World Cup no matter which team raises the trophy.
According to the study, the civil construction sector will benefit the most from investment for the event. The survey forecasts that the industry will generate an additional 8.14 billion reals (US$ 6 billion) thanks to the World Cup. Other industries that should benefit will be food and beverages; services supplied to enterprises; public utilities (such as water and gas supply); and information services. Coupled with civil construction, these industries should generate 50.18 billion reals (US$ 37.1 billion).
“[The projects] must be made feasible. They must be implemented within the timeframes and the plans that have been set for them. That way, Brazil will see gains as planned. The World Cup is right now, not only in 2014. There must not be delays, not an hour must be allowed to go by. The study’s targets have to be met,” says Nicolas. The 142.79 billion reals that the country may earn will be generated through projects and investment before and during the event.
Not all sectors will benefit from the World Cup at once. “The wealth [forecasted in the survey] will be generated from 2011 to 2014, hence our concern. If we do not generate [wealth] as of 2011, you lose it. That is why the first cycle was meant to be structured out already,” says Nicolas.
There are projects going as planned. A case in point is the Mineirão stadium, in Belo Horizonte, which is being overhauled, and Mané Garrincha stadium, which is being rebuilt, in Brasília. Other stadiums, such as Beira Rio, in Porto Alegre, and Arena da Baixada, in Curitiba, will be overhauled for the event, but works are behind schedule.
And this is not the case only with the timetable for works in Southern stadiums. A report issued in September by the Federal Accounts Court (Tribunal de Contas da União – TCU) points out delays in federal, state and municipal government infrastructure works, ports and airports.
As of September 30, according to the TCU survey, works had not begun at the airports of Fortaleza, Salvador, Curitiba, Cuiabá, Porto Alegre, Brasília, Confins (Belo Horizonte) and Recife. A TCU inspection of works at the Manaus airport led to a cost reduction of 37 million reals (US$ 27.3 million). A concession for the airport of São Gonçalo do Amarante, in the city of Natal, was awarded to the private initiative, and works are underway at the Rio de Janeiro and São Paulo airports.
Where some projects are behind schedule, others are on time. “Some [cities] have moved forward because they have approved investment, but there is no single highlight. São Paulo is independent from the 2014 World Cup because it already possesses a very strong average [infrastructure] level. As a result of the Olympics, Rio has looked to the future and is also getting ready for 2016. This is a praiseworthy strategy,” says Nicolas. He also claims that many positive examples do not get publicity.
Everyone wants a piece of the action
From major companies to natural persons, everyone is preparing for the Cup. It is no different when it comes to small businesses. The survey “FIFA World Cup 2014: Map of Opportunities for micro and Small Companies at Host Cities,” conducted by the São Paulo chapter of Brazilian Micro and Small Business Support Service (Sebrae-SP) and FGV, shows that small entrepreneurs in nine sectors of the economy may benefit before, during and after the World Cup: civil construction, information technology, tourism, tourism-related production, retail, services, clothing, wood and furnityre, and agribusiness.
The Sebrae-SP services consultant, José Bento Desie, claims that sectors such as civil construction and textiles will profit the most prior to the Cup. Others will generate the most wealth during the tournament. Such is the case with services, trade, lodging and transport. Tourism may grow after the event, as a result of its legacy. Said legacy, says Desie, might even cause the country’s economy and current practices to change. In civil construction, the new methodology adopted for the Cup may be used in future works. He claims that even agriculture may benefit from the tourist inflow while the tournament takes place.
“There is a trend of seeking organic products. We will raise farmers’ awareness and determine at which instances their power can be increased. During the event, this trend may reflect on consumption habits. Perhaps after the Cup a demand [for organics] will be created. Right now, farmers look for a demand and don’t find it, but during the Cup the topic will be in the spotlight and we hope it will interfere with consumption habits,” says Desie. Figures disclosed this year by the Brazilian Organics Association (Brasilbio) show that revenues from organic food sales reached 500 million reals (US$ 370 million) in Brazil in 2010. The sector is growing at a higher rate than national agriculture as a whole, but it only represented 0.2% of the gross agricultural value in 2010, according to the Brazilian Confederation of Agriculture and Livestock (CNA).
In addition to issuing the study and the fields that might benefit from the Cup, Sebrae-SP, which has been preparing projects for the Cup since 2009, will help micro and small entrepreneurs get ready to profit from the event. Sebrae-SP missions will travel to Germany and South Africa, which hosted the last two cups, to learn from their experiences. Small farmers willing to grow organic foods may take courses and undergo training. Other sectors of the economy with high growth potential due to the Cup will also get training.
One micro businessman who is observing the Sebrae-SP’s tips to make money from the Cup is Daniel Leopoldino, who owns phytotherapy product and food supplement shop Sempre Natural, in Mogi das Cruzes, in the metropolitan region of São Paulo. To him, the World Cup 2014 has already begun. He and his wife, who is his partner in business, are taking English lessons to receive foreign tourists. The businessman will also take advantage of the event to boost his online sales.
Once the Cup has started, Daniel will stay in the vicinities of the World Cup opening stadium Itaquerão, in the East Side of São Paulo, to distribute free samples of his products along with a leaflet of his business. “We sell to 18,000 clients across Brazil. We want to expand our portfolio,” he says. For such, he intends to establish a partnership with the manufacturer of his products.
“It will be very good business for the laboratory, because a fan who travels in from [the state of] Maranhão to watch a match might not buy a product from my store, but he might buy it from another establishment back at his city. The manufacturer will be the same,” he says. The participation of Daniel’s company in the World Cup will be an “expanded version” of what he already does in regional competitions. “Currently, I try and distribute samples at bike rides, local karate championships. Why would I not do it during an event like the Cup?,” he says.
A bed for tourists
Be they large or small, tourism industry companies will be among those benefitting the most from the tournament. Tourism Ministry figures show that Brazil received 5.1 million tourists in 2010. The Ministry estimates that in 2014, 8 million people will visit Brazil. Of those, 600,000 will come specifically for the World Cup. The figure should be maintained after the event. The Ministry is expecting 7.9 million foreigners in 2016, the year in which Rio de Janeiro will host the Olympic Games.
Rio will have 3,000 new hotel rooms by the beginning of the event. Some of them will be lodged at places designed for “hotter” purposes. According to the Rio de Janeiro Hotel, Bar and Restaurant Union, 20% of the 180 existing motels are preparing for the Cup by transforming some of their suites into hotel rooms.
Serramar Motel, in the Barra da Tijuca neighbourhood of Rio, is one such establishment. About a year ago, one of the motel’s buildings was refurbished to host the hotel. The owners intend to profit from the World Cup 2014. Some of that goal has already been achieved, according to the reservation manager, Rodrigo Lucas. “Right now, some of our guests are people who came for World Cup works or some other World Cup-related activity,” he says.
Bedrooms previously decorated with mirrors on the ceiling, round-shaped beds, colourful walls and pictures with “suggestive” drawings now have “regular” beds, worktables, and sober decoration. In some of them, the double bed has been replaced by two single ones. Motel Serramar still receives pleasure-seeking couples in 22 old-fashioned decorated rooms. The hotel, in turn, has 50 suites, with rates ranging from 135 to 262 reais (US$ 100 to US$ US$ 194). The business proved lucrative, and is likely to grow even further before the World Cup ball starts rolling. “We will have 100 rooms before the Cup begins,” says Lucas.
Another motel in Rio, Elegance, in the Catete neighbourhood, is preparing for a “facelift.” Not only because of the Cup, says the managing partner Marcos Piñol, but also because the clientele has changed. “Nowadays, couples make up in their parents’ homes, they don’t go to motels that often anymore,” he says. The establishment has not relinquished its motel-like features, but it already offers rates at 250 reais (US$ 185), breakfast included, for 19 of its 49 rooms. The partners are waiting for an estimate for a major overhaul, including changes in piping, room size and decoration. “We have not decided what we will do yet, but depending on the work, it may take two years,” he says.
Even those who do not own an enterprise are already preparing to make money from the soccer tournament. Chef student Anderson Salvador intends to rent out the property he lives in with his mother, at Lagoa da Pampulha, in the city of Belo Horizonte, to tourists. “I live approximately 5 kilometres away from the Mineirão [stadium]. My house has a great structure that can comfortably accommodate 12 to 15 people. It has two suites, a gourmet space,” he says. He does not know for sure how much he will charge, but figures he may get up to 100,000 reals (US$)74,000) during the month of the event.
Salvador has even placed an ad on the web. In addition to renting the house for 2014, the chef-to-be is hoping to receive tenants for the Confederations Cup, in 2013. He may expand the “package” if the tenants so wish. Anderson admits to cooking for the tourists and taking them to the stadium on match days, for additional charges.
*Translated by Gabriel Pomerancblum
