Petrobras and other Brazilian firms are using sports sponsorships to up their international profile. Brazil’s booming economy gives them extra leverage in places like Argentina and Chile, but it may also be pricing them out at home.
FLORIANÓPOLIS -- The dejected players left the field, some in tears. In the stands, the team's fans stood stunned. Sadness quickly turned to anger as reality began to sink in: for the first time its glorious 110-year history, River Plate – Argentina's second most popular football team – had just been relegated to the second division.
But while the emotional blow was mostly felt in Argentina, the economic shock of River Plate's dismal downgrade hit hardest across the border - in Brazil, home to Petrobras and Tramontina, the team's principal sponsors. Tramontina, a knife manufacturer based in Rio Grande do Sul, has done business in Argentina for 40 years. Besides being featured on River Plate's jerseys, the company's logo also appears on the team's outdoor training facilities, in River Plate advertisements and on its official website. The same goes for Petrobras, the Brazilian oil giant.
Tramontina's contract with River Plate expires in December. The team's deal with Petrobras goes until next June. But even if both companies decide to cut their ties with River Plate, neither is likely to pull out of the Argentine market altogether. Nor are they the only Brazilian firms happy to sign sponsorship deals there. According to Amir Somoggi, director of a sports consulting firm called BDO Brasil, Brazilian companies have a lot of cross-border negotiating power these days thanks to the booming economy and the relative strength of the real. "With Argentina there's the added fact that it has historically had good commercial relations with us," he says.
Besides sponsoring River Plate, Petrobras also has a hand in Argentine auto racing. It has sponsorship deals in other South American countries as well. For a while Chile's main soccer tournament went by the name "Petrobras National Championships."
Brazil's economy, too hot to handle?
But as much as these kinds of sponsorships are about seizing opportunities abroad, they're also a symptom of the difficulties Brazilian companies face in sponsoring sports teams and events at home. Brazil's economic upswing has, in some cases, made such sponsorship deals prohibitively expensive for local companies. Sponsoring River Plate costs Petrobras about $2.5 million per year. Its deal with Chile cost $1 million per year. That's a laughable sum compared to what it would have to pay to sponsor a championship tournament for the Brasileirão, Brazil's top soccer division.
"Over the last couple of decades, big international names like Adidas, Nike and Puma entered Brazil with force, sponsoring various teams," says Robert Alvarez, a professor at São Paulo's ESPM, a professional marketing school. "This increased the value of the market, prompting local sportswear brands to look abroad to do business."
An emblematic example is Penalty, a well-known Brazilian sportswear brand that, starting in 2008, made a strong push to expand its presence outside the country. Penalty's foreign sponsorship deals include the Uruguayan soccer team Defensor, which won a championship in 2010; the Chilean first division team Everton in Viña del Mar; Vélez Sarsfield in Buenos Aires, Argentina; and Amiral Quebec, a female soccer club in Canada. Penalty also managed to get its logo onto the jerseys of the referees in the most recent Copa América tournament.
Brazil's biggest sports-related sponsorship deals, however, occurred during last year's World Cup in South Africa, when brands like Seara, a food company, and beer giant Brahma appeared side-by-side on billboards with the likes of Coca-Cola and Hyundai. "They're billionaire companies that don't have problems with money and are strong competitors," says Amir Somoggi. "That's why they can invest in the kind of sponsorships that will allow them to be seen by 2 billion people."
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