Fifa Fever, Brazil 2014 and the financial implications

FinanceTrading / Investing

  • Author Paul Dexter
  • Published April 8, 2012
  • Word count 581

There can’t be many people in Brazil who don’t know what’s happening in their country in 2014. It’s not just of enormous interest to ordinary citizens in the country (and around the world) but also to politicians and business people too. The financial implications are huge and for those looking to invest in Brazil, the opportunities are numerous.

After all, the lead-up to the event is already well under way. Many millions of dollars worth of investment in the infrastructure for the FIFA soccer World Cup have been spent or pledged and the many thousands of expected visitors, both domestic and foreign, to the match venues will all need to be catered for. This will take many forms, not least the stadiums themselves plus seating at the matches, accommodation, travel facilities, food, entertainment and so on. Brazil’s preparations are forging ahead. Although its still only 2012, the scale of the task means there’s no time to lose.

Throughout Brazil there will be a total of twelve cities (all state capitals) hosting World Cup matches. Unlike in1950, when Brazil last hosted the competition, these venues will be spread across the country widely. The locations will include Brasilia, Rio de Janiero, Sao Paolo, Belo Horizonte, Manaus, Natal, Recife, Fortaleza, Salvador, Curitiba, Porto Alegre and Cuiaba. This geographical spread will mean a great deal of long-distance travel for the teams, support staff and fans. After all, Brazil is one of the five biggest countries in the world.

Brazil includes regions in both the northern and southern hemispheres, but mostly the latter, where all the matches will take place. Contrary to what some people may think, the country is not bathed in tropical heat all year round. Actually, in June and July when the competition will take place (the southern hemisphere winter), parts of the south and centre can be quite cool, a factor that is borne in mind by those involved in the World Cup, especially regarding construction of the stadium buildings.

The opening ceremony will be held in the ‘New Corinthians’ stadium in Sao Paolo the country’s largest city. This prestigious location will cost over US$ 520 million and the national development bank BNDES has pledged eighty percent of it, the remainder from the city government.

The final match in July will be in the Maracanã stadium in Rio de Janiero. This was first built for the 1950 championships but has been/is being extensively renovated for this time, including a completely-new cover. Other innovations include a massive new parking complex with spaces for over 2,500 vehicles. Altogether a total of R$ 460 in being invested in the event, with the obvious hope that the facilities will more than pay for themselves at the time and of course in the months and years afterwards.

All this provides important chances to Invest in Brazil for a host of institutions, large or small, local or foreign. In order to make the whole package even more attractive, the Brazilian Government has legislated to exempt investors from certain taxes.

For example, the so-called Industrialised Products Tax and also the Importation Tax will not be levied on firms constructing or refurbishing the stadiums (or should that more accurately be ‘stadia’?). As another ‘sweetener’ the twelve cities hosting the matches are allowed to waive, in certain circumstances, the normal State Value Added Tax on all companies providing, directly or indirectly, goods or equipment for constructing or refurbishing the locations.

All in all, a very attractive package for investors.

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