The prestige of FIFA World Cup led to many new stadiums in Brazil, which now hardly have a stable future. Corinthians are burried in debt after hosting the opening game. Meanwhile FC São Paulo can be relieved that their stadium was dropped from the list.
It was supposed to be the leap into big money, re-establishing Brazilian football again on the global stage. But, as usual, the World Cup proved to fail the hopes many had. To this day the 2014 tournament in Brazil is a pain for public and private entities alike.
Corinthians drowning in interest
In May Corinthians have revealed the club is failing to keep up with debt repayment for Arena Corinthians. The venue was delivered as a private project of Odebrecht. The construction giant took a R$400 million ($70m) loan from the national bank Caixa, while also receiving massive tax credits in Sao Paulo, exceeding the amount of debt. In order to claim ownership of the stadium, Corinthians have to repay the incurred debt now.
“By agreement with Odebrecht, we will dedicate 100% to Caixa. We borrowed R$400 million from Caixa, we have already paid R$172 million. We are in debt of R$500 and a few million,” said club director Andrés Sanchez in an interview with Corinthians TV. The amounts suggest the club isn't able to keep up with interest, let alone recovering from the debt entirely.
As Sanchez explains, every month his team has to pay instalments of R$ 5.7 million ($1m). On a regular basis this was covered at least in part through a special fund where all matchday revenue is transferred. But with COVID-19 devastating global football, there is no matchday at all and other sources of revenue have also dried up.
That's why Sanchez – who was the stadium's project manager during construction – is now negotiating with Caixa to reduce monthly instalments. The perspective of Corinthians going under isn't immediate just yet, but with annual deficit of R$177 million ($31m) for 2019 the situation is dire indeed.
For FC São Paulo this could have been the end
Derby rivals playing at the iconic Estàdio Cícero Pompeu de Toledo (Morumbi) aren't in much better shape at all. FCSP ended 2019 with R$156m ($27m) into the red, owing the results to poor on-field performance and equally disappointing revenue.
That's why sports journalist Mauro Cezar has recently said that it may have been a blessing for 'Tricolor' to have lost the World Cup hosting rights. Remember, initially Brazil suggested Morumbi as Sao Paulo's host venue, but Corinthians stepped in and offered their new stadium in replacement. As it turns out, Corinthians may have tripped over themselves instead of shaming local rivals.
“São Paulo would have to redo its entire stadium, it would be a World Cup opening stadium, certainly costing R$1 billion or more. And São Paulo would be even more financially involved today because their football management is a disaster, with yet another new Morumbi to pay... look at the size of the hole.” Cezar said during a recent podcast.
Meanwhile, Palmeiras are safe
Though the pandemic has hit everyone in the football world, local rivals Pailmeiras seem to be the least affected. For starters, they entered 2020 not with a deficit, but with a surplus from 2019. Sure, it was as modest as can be (R$1.7m or $300,000), but was achieved even after spending exceeded planned amount by 21%.
Their stadium, Allianz Parque, hasn't been built for the World Cup, which means it was always built with regular revenue in mind rather than satisfying the expectations of FIFA. As with many Brazilian stadia, it was built privately by a developer who now operates it.
But the agreement between Palmeiras and WTorre means that already from the start the football team is getting a portion of revenue, while not facing excessive costs. The shared percentage is growing until Palmeiras reach 100% after 30 years from opening. This means COVID-19 has struck at a time when it hurts WTorre more than Palmeiras themselves.