June 24, 2024

How does the Libertadores Millionaire Prize affect the future of Palmeiras and Flamengo; See how much each one earns

5 min read
Pablo Mari, Rafinha, Reinier and Rodolfo have already left the club Photo: compilation on promotional photos

Three titles in the Libertadores Championship is the dream of the fans. This Saturday, rubro-negros or palmeiras will be able to do it. For the club, in addition to the historical achievement, defeating the main competition in America in a short period of time is a warning to the market: you can trust us with your brand, which will have a positive spread throughout the territory of South America. It secures the market and injects more money in the following years. It has been the same with Flamengo and Palmeiras in recent seasons following national and international achievements. Something that River Plate actually witnessed a few years ago.

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Right, a mountain of money falls into the club’s teller. Whoever lifts the trophy today in Montevideo, which is added to all stages, will be richer by about 126 million Rls – and the runner-up will take, in total, nearly 76 million Rls. But it’s the spillover effect that creates the so-called virtuous cycle for dominant teams, with the two clubs’ recent numbers showing an increase in total sponsorship values ​​after accomplishments.

Flamengo, for example, generated R$78 million in revenue in 2019. The following year, after the second continental title, the value topped R$100 million. Palmeiras has also overcome these barriers, with little growth between seasons.

– On the one hand, the award is already on the rise, and not just that given by Conmebol. Top sponsors often associate rewards with achievements knowing that they will have a greater exposure to the brand at this point. In addition, the Libertadores does not end itself, the title leads to the World Cup. It is yet another event that adds this relationship with the brand. There are significant direct and indirect gains – analyzes specialist, finance and management of Brazilian football Cesar Grafitti, CEO of Itaú BBA.

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For example, Palmeiras renewed the contract with the main sponsor for another three years. Crefisa/FAM sponsorship is worth R$81m, but could be as high as R$120m, in the case of titles. Flamengo has already sat down with sports equipment supplier Adidas to renegotiate the contract, which expires in 2022.

Currently, the club receives 40 million Brazilian riyals annually, between merchandise and money. Red – black wants more money and less uniform. The Libertadores trio will help more with bargaining power. Champion of the 2015 and 2018 editions of the Libertadores – with four titles in total – River Plate, also sponsored by adidas, will see a $3 million (approximately R$17 million) increase in the contract for the next three years.

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Although analyzing the true impact of sporting achievements on the finances of South American clubs is complex, especially due to the divergent exchange rate and economic situation of the two major markets in the region, the most successful teams in the previous season tend to be naturally more valuable in the eyes of the market and its fans in the following year . This is the virtuous cycle that teams like River Plate, Flamengo and Palmeiras have been in since 2018, when they became champions of the last editions of the Libertadores – says Philippe Soaleiro, Director of SportBiz Consulting.

The continued presence in the Copa Libertadores finals also indicates to the market that they are financially healthy and professionally run clubs. Thus, new doors can be opened for brands that were not accustomed to investing in football. Sporadic states, such as Santos and Corinthians, hardly remain in the game without a deep restructuring.

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Only a radical change in the management of Flamengo and Palmeiras can change this scenario. Grafietti says the trend is to dominate the leagues and markets for a while.

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