New Zealand Embassy Brasilia, Brazil

FIFA 2014 and Olympics 2016: A Report for Business

Brazil is preparing to host the two largest sporting events in the world in the next three years: the FIFA World Cup 2014 and the Olympic Games in 2016.

This report sets out the impact the hosting of the events is having on the Brazilian economy, the current state of preparations, and the key bodies involved. It is intended to support discussions within both business and government on how NZ could best engage in these events.

Overview

In the next three years, Brazil will host two major sporting events: the FIFA World Cup and the Olympic Games (in Rio de Janeiro). The World Cup will be held across 12 Brazilian cities (see attached information sheet) in June/July 2014, and the Olympic Games in August 2016. During the Prime Minister’s mission to Brazil in March this year, interest was expressed in the opportunities for New Zealand businesses for both events, and how New Zealand could enhance its profile in Brazil.  

In order to host both events, Brazil is investing around  US$52 billion in infrastructure, including the construction or rebuilding of stadia, roads and highways, airports and expansion of electricity and telecommunications networks. Additional investments of US$ 11 billion are planned for the 2016 Olympic Games.

Increasing costs of hosting the World Cup fuelled the street protests across Brazil in mid-2013. Brazil is looking to pick up the pace of infrastructure delivery to ensure successful events while managing public expectations around expenditure.

Estimated Impacts of Both Events on the Brazilian Economy

As we know from New Zealand’s hosting of the Rugby World Cup, the economic impacts of large sports events are difficult to quantify. However, studies done by the University of Sao Paulo and Ernst & Young suggest the gross economic impact of both events could reach over USD $100bn. Some estimates suggest this could result in the creation of some 120,000 new jobs.  The main economic sectors benefited by these investments will be:

  • real estate & rental services

  • civil construction

  • business services

  • oil & gas

  • telecommunication services

  • logistics

The FIFA World Cup 2014

Coordination of projects for the World Cup is being led at state and municipal government level. The Federal government is overseeing the development of existing major infrastructure projects as part of the national infrastructure development plan, called the PAC, underway since 2007. The construction and reform of stadia across Brazil will cost an estimated total of US3.5bn.

It is estimated that national commercial air traffic will increase significantly in 2014 on top of already strong domestic growth. As a result, US$ 3.3 billion is being invested in airport infrastructure in the 12 host cities to cater to the increased demand. As there is less than one year left until the event, most of the building and renovation of sports stadia and other infrastructure is well underway (although some have raised concerns about some of the work being behind schedule). There are likely to be some last minute requirements that Brazilian companies may not be able to fulfill, but foreign firms interested in picking up this work would need to be able to respond quickly which would mean having an existing presence in Brazil. The FIFA World Cup business is mainly at the individual city level, with no single overarching organising body, so companies need to engage directly with the 12 host municipalities.  We consider that the Olympic Games (still three years away) have better potential for NZ companies interested in involvement in large-scale construction or infrastructure projects.

With an estimated number of tourists at around 500,000, the Brazilian tourism sector will also be the focus of increased investment, including in hotel accommodation, infrastructure, tourism facilities, training and security. There seems to be scope still for New Zealand businesses looking at fan support packages for the event, although companies would need to move quickly. Interested companies should contact their Customer Manager at New Zealand Trade and Enterprise, or if you do not have a customer manager you can email customeradvisorteam@nzte.govt.nz

To help you find what you need faster, we've also put together information on some common enquiries:

The 2016 Rio Olympics

As with the FIFA World Cup, the 2016 Rio Olympics promise to be a landmark event that puts Brazil in the spotlight.

Brazil has not set up a single organising body for the 2016 Olympics as other countries have done in the past.  The Rio 2016 Organising Committee was created to coordinate the event and is comprised of representatives from different tiers of government in Brazil (Federal, State and City) and the Brazilian Olympic Committee. Within government, there are three relevant bodies – a local organising committee (EGP); a secretariat within the Rio Mayor’s office (EOM); and at the federal level the Olympics Public Authority (APO). The latter is responsible for coordinating preparations at a high level, while procurement and investment decisions are being taken at city government level.  The Mayor of Rio (Eduardo Paes of the centrist PMDB party) has made it clear his priority is to ensure the Olympics serve to make Rio a better city in the long-term. 

Investments in Rio

Unlike previous Games, Brazil has not developed a theme for the Olympics that might point to certain business opportunities (eg sustainability in London). Major decisions on the projects and companies to participate in the development of the Games have been made since early 2010, with a Rio Business Office established to ensure a coherent approach to business opportunities for both the Olympics and the World Cup.

With a projected increase of 15 per cent for Rio’s year-on year tourism numbers in 2016, hotel accommodation capacity will have to be increased by up to 50,000 rooms. In order to achieve this goal, Rio is regenerating its historic Port area, which will offer not only new accommodation, but will reconnect this underused space to the rest of the city. The redevelopment of this port area is the largest Public Private Partnership in Brazil – twice the size of London’s Docklands project – and there is particular interest in the project being based on sustainable construction principles.

The Games in Rio will be clustered around four main areas: Barra, Deodoro, Maracanã and Copacabana. The Olympic Park is being developed on 250 acres of land located in the Barra da Tijuca part of Rio (30 km from Rio´s downtown). The Park will include permanent and temporary venues for the Games as well as a Media Centre and Training Centre.  Nineteen of the 28 sporting events will be held at the Olympic Park.  The construction of the Olympic Village is being undertaken by the UK subsidiary of the US company AECOM.

In addition, 11 permanent and four temporary sport installations will be constructed, and existing facilities modernised. The Rio government is planning to implement a BRT (Bus Rapid Transport) system to connect the planned clusters, besides investing US$ 2.6 billion in the modernisation and extension of metro lines. It is estimated US$ 565 million will be spent on the remediation of Rio’s lagoon and harbour for the water-based Olympic sports. In October there will be a public tender for the management of Rio’s international airport, Galeão.  With the majority of these large infrastructure contracts now assigned, opportunities for sub-contracting are likely to present themselves.

 

Involvement of NZ companies

New Zealand companies interested in providing goods and services for these events will encounter a competitive environment with heavy engagement already by major Brazilian and foreign multinationals as well as Brazilian SMEs. That said, with some work likely to be  required at the last minute and some of it not able to be provided locally, there may well be good opportunities remaining for latecomers. It is important to note too that a lot of business deals in Brazil are achieved through personal relationships, and as such that companies have greater chances of success if they are associated with a Brazilian company and engage directly or through their partner with relevant private sector, federal, state, and municipal government entities.

Although more than half of Rio’s Olympics venues are already built – a legacy from the Rio 2007 Pan American Games – investments from 2010 through 2016 will reach approximately U$50 billion, including airport renovation, stadium construction, and wider infrastructure projects. Unlike in London, the percentage of investments dedicated to transportation such as buses, beltways and metro lines will be higher than investments dedicated to Olympic sports projects such as arenas and stadiums. This is due to investment in core infrastructure in Rio not keeping pace with the city’s high growth in recent years. Many projects are funded through PPPs including under the PAC national infrastructure development plan. 

Interested companies should contact their Customer Manager at New Zealand Trade and Enterprise, or if you do not have a customer manager you can email

Games procurement

Procurement for the Olympic and Paralympic Games has been mapped since the beginning of 2012. Almost 75% of these goods and services will be purchased and/or contracted in 2014 and 2015.  Key ‘pillars’ are outlined in the ‘Sustainable Games Supply Chain Guide’ (http://portaldesuprimentos.rio2016.com/en/sustability-as-a-principle/) on which Organising Committee developed the ‘Suppliers Guide’ (http://portaldesuprimentos.rio2016.com/en/registration/) which provides information related to the registration of companies and contracting of services. Other topics such as the code of conduct for business, information security, sustainability, and diversity  are also covered in the Guide which is a useful starting place for businesses looking at opportunities in Rio.  Interested companies should contact their Customer Manager at New Zealand Trade and Enterprise, or if you do not have a customer manager you can email

NZ brand

Both the FIFA World Cup and the Olympics are opportunities to increase recognition of the New Zealand brand in Brazil as well as to build people-to-people linkages. While the brand is important across our range of economic interests in Brazil, we see this as particularly relevant for the international education and tourism industries.  Establishing a greater presence may be difficult in the case of the Olympics given the large number of countries involved, but there are niche angles such as the debut of rugby sevens at Rio.  There are likely to be work opportunities for young people around both events, such as English-speaking hosts, either on a voluntary or paid basis.  If there were a group of young New Zealanders working in Brazil during the events this would provide a valuable boost to the base of experience and knowledge of Brazil in New Zealand.  More information can be found here.

 

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