UK Trade & Investment Seminar. JOSÉ ROBERTO BERNASCONI President

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1 COPA UK Trade & Investment Seminar JOSÉ ROBERTO BERNASCONI President LONDON / OCTOBER / 2009

2 Brazil s map South America Area: 8,5 m km 2 Population: 190 m 2

3 FIFA 2014 Hosting Cities 3

4 SINAENCO Brazilian Trade Association of Architecture and Consulting Engineering Firms Brazilian Trade Association for Architecture and Engineering 18,000 members 2,000 partner firms 4

5 SINAENCO SINAENCO is a national institution with its headquarters in São Paulo. It has a national directorate and 13 regional directorates: Distrito Federal / Brasília, Bahia, Ceará, SINAENCO SINDICATO Espírito DA ARQUITETURA Santo, E DA ENGENHARIA Goiás, Minas Gerais, Pará, Paraná, Pernambuco, Rio de Janeiro, Rio Grande do Sul, Santa Catarina e São Paulo. 5

6 Sinaenco s regional directorates 6

7 Sinaenco s regional directorates and 2014 hosting cities 7

8 2014 big figures 64 games in 8-12 cities (32 national teams) FIFA 2006 Germany: 3,353,335 of fans inside the stadia (average of 52,401 fans/game); 18 million of fans at fun parks outside the stadium in hosting cities of 2006; billion of fans watching the games on TV in 240 countries; Investments (in ) 4 bn in construction and upgrade of roads; 3.5 bn in local transportation; 2 bn in stadia; Revenue of 8,5 bn to FIFA 8

9 FIFA 2014 The World Cup is the biggest televised event in the world. FIFA has 208 member countries. The UN has 192 members. It is estimates that 40 bn people will watch the WC2014 on screen. Meaning that for each fan at the stadium, there will be 10,000 watching it on TV or the fun parks. 9

10 What FIFA 2014 means to Brazil The FIFA 2014 World Cup will be a specific event in the Brazilian path of economic growth and milestone for investments in the country. Brazil is a very large country with potential for much more land occupation (without environmental damage) and a growing sustainable consumer base. Brazil has stable democracy and economy, as well as as long-term food, water and energy supply. 10

11 Changing the level of Brazilian Football Brazil produces the highest number of football high quality players supplying most countries with quality players. When playing together for the national team, they are one of the most competitive teams. But football in Brazil is a small not very profitable business, with low revenue reverting to its clubs and stadia. FIFA 2014 World Cup is already changing patterns and the profile of football fans and stakeholders in Brazil. 11

12 Average of football games revenue - I For the 2009 season (that starts earlier than the European one) the Brazilian Premier League, with the 20 best clubs, has 250 games. The average of fans at the stadium is 15,921 people. The total revenue so far is 21million, with an average of revenue of 6 per fan. 12

13 Average of football games revenue - II Corinthians, the most popular football club in São Paulo and second in Brazil, has the biggest revenue without having the biggest fan base. On 20 Sep 2009 game in the Pacaembu stadium (São Paulo) was the comeback of Ronaldo. The total revenue was 345,590 (an average of 12 for each of the 33,700 fans in the stadium). 13

14 Average of football games revenue - III Palmeiras is the current leader of the Brazilian Premier League. In a game against Atlético Paranaense on 26 Sep 2009, they got 23,395 fans in the stadium paying a total of 2,859,437. The average price of the ticket was 15. We can note a new pattern forming. 14

15 Old paradigms - I Brazilian current paradigm is still the Maracanã Stadium in Rio de Janeiro constructed in 1950 to host 100,000 people (mainly standing). The FIFA 1950 s final game in Maracana had almost 200,000 (of which 174,000 were paying fans). Today Maracanã has a capacity for 87,000 seats. It gets full capacity when Flamengo plays there (the largest club fan base in Brazil). The average ticket cost is It hosted 24 games of the Brazilian Premier League. 15

16 Old paradigms - II During the military regime, many State Governments built a series of big white elephants, with capacity for over 60,000. Most of them have serious maintenance problems. For the World Cup city hosting bids, some cities designed new modern state-of-art stadia, expecting to get private investment. Now that the cities have been chosen, they are facing a new challenge. Private investors are scarce. Their original projects are proving to be economically non-viable. They are hoping now for public funding to develp their projects. 16

17 New paradigm The requirement for an economic feasibility study for each stadium is changing the circunstances. Projects are getting more realistic now. Brazilian clubs and managers are new creating a new paradigm of compact multi-purpose arena, with less capacity and more security and comfort. On the other hand, the price of tickets tends to increase. This is possible given the new economic situation of the growing middle class. This new public is passionate about football and they are willing to pay more for the tickets. 17

18 Legacy Construction and refurbishment of arenas will go beyond 2014 in Brazil. More cities and clubs will construct new arenas, under post paradigm: Palmeiras and Corinthians football clubs in São Paulo; Grêmio Portoalegrense football club in Porto Alegre; Figueirense and Avaí, football clubs in Florianópolis. There will be permanent opportunities for sports design and engineering. 18

19 A new level of development Brazil wasn t affected much by the financial international crisis due to its banking system regulation and because its internal consumer power. Brazil will grow in 2009 (apprx. 0.8%) and in 2010 the growth rate forecast is 5%. Brazil will become a world provider of oil when the pre-salt oil is explored. Pre-salt revenue should increase resources for education, health care and infrastructue. 19

20 Attracting Foreign Investments Brazil is already a big destination for foreign investment. FDI forecast for 2009: US$ 25 bn. SINAENCO Although SINDICATO lower than DA the ARQUITETURA US$ 45 bn FDI E in DA 2008, ENGENHARIA it shows that Brazil wasn t hit by the crisis as bad as others. Brazil should be the world s 6th or 7th recipient of FDI. UNCTAD research done with 240 multinational companies shows that Brazil s will be the 4th FDI destination by (Valor 24/0909) If this forecast is confirmed Brazil could anticipate its infrastructure plans. 20

21 The biggest opportunities Among different infrastructure opportunities in Brazil, the biggest ones are: Airport infrastructure Rail infrastructure LRV (light rail); Monorail; High speed trains Oil & Gas Petrobrás Water treatment water, sewage, waste collection and treatment Housing Programme ( My home, my life ) 21

22 Airport infrastructure It s the biggest bottleneck for WC2014 infrastructure. The main Brazilian airports are managed by INFRAERO (stateowned company). The Brazilian government are assessing two possible models for the airports administration: Privatisation or airport concessions. Maintaining state control - full concessions - with capitalisation of INFRAERO. Flight control is managed by the Brazilian Air Force Ministry. 22

23 Rail System Road transportation is dominant in Brazil. Road Freight - 90% of São Paulo State. In Brazil as a total this proportion is lower due to the mining rail transport in other regions. Long-distance passengers rail transportation is almost inexistent. We are experiencing an increase of urban passenger transportation due to the metro and urban trains metropolitan systems. 23

24 New projects on track Brazil has some expertise in rail and metro technology but new rail technology will be implemented for the World Cup 2014: VLTs Light Rail Vehicles Monorails TAV high-speed train We need to accelerate the technological understanding of those new technologies. There will be investments around US$ 74 bn, according to local paper Valor Economico (30/09/2009). 24

25 Oil & Gas Petrobrás Pre-salt exploration Heliport infrastructure Shipbuilding construction maintenance 25

26 Santos Bay Concessions and production hubs 26

27 Helicopter Infrastructure With the increase of high-sea oil exploration, the demand for new helicopters and new heliports will increase on Brazil s coast. 27

28 Investiment Plans Distribution according to business sectors

29 Technological challenge With the expectation of higher economic growth rate, financial resources will not be an issue. Investment availability will be linked to technology (deliver higher quality with lower costs). International companies participation will be conditional on technology transfer to Brazilian partners. Example: Petrobrás shipbuilding, exploration and production Air Force jets France x USA x Sweden High-speed train (Campinas-SP-Rio) 29

30 And now with everything gains much more relevance 30

31 In summary It s worth while paying attention to Brazil s socio-economic evolution in the following years. Variety of opportunities. 31

32 32

33 Thank you 33