Nov. 8 (Bloomberg) -- A year after rewriting records on its way to winning a fourth Brazilian soccer championship, Fluminense is in danger of making the wrong kind of history.
The Rio de Janeiro-based club, whose players have included current and former Brazil national team captains Thiago Silva and Carlos Alberto, has six games to avoid becoming the first champion to drop out of the elite division the following season.
“It’s not normal in Brazil,” said Pedro Daniel, an economist who analyzes the country’s soccer industry for auditor BDO Brazil. “It’s never happened that one club is champion and next year was relegated.”
A 1-0 loss to local rival Flamengo on Nov. 3 left Flu, as the 111-year-old club is known, 16th of 20 teams, with only goal difference keeping it out of the four-team drop zone. It next faces Corinthians in two days.
For club president Peter Siemsen, who was elected in 2010, a yearlong tax wrangle with the Brazilian government and injuries to players including captain and record-breaking striker Fred have contributed to turning his champions into relegation scrappers.
Title-winning coach Abel Braga, whose team took a record 76 points from its first 35 games last season, was fired in July after five straight losses. His successor, ex-Real Madrid manager Vanderlei Luxemburgo, has managed six wins from 23 matches and is without a victory in eight straight games. The sequence has led to chants calling for his exit.
“The majority of fans are still with us,” Siemsen said by telephone. “We’re fighting now in a very hard way. We still believe we can stay in this division.”
Some supporters are less convinced. After the derby match against Flamengo ended in a last-minute defeat on an own goal, a group of fans vandalized the team’s headquarters. Some players had their cars damaged and sponsors billboards were torn down, according to sports daily Lance!. Siemsen said those involved were “crazy fans connected with hooligans.”
Fluminense, founded by a group of Rio aristocrats in 1902, has historically been associated with the city’s wealthy elite. It was among the last clubs in Brazil to include black players and its fans are known for throwing white powder onto the field, a tradition dating back to an incident a century ago when a player attempted to disguise his skin color by covering it with rice powder.
Today, the club attracts fans from all sections of society, though they were heavily outnumbered against Flamengo, Brazil’s best-supported team. Last year, Fluminense generated 151.2 million reais ($66 million) in sales, less than half of what top earner Corinthians made, according to a report by BDO.
“Fluminense is a weird team,” said Amir Somoggi, who advises several of Brazil’s top clubs on business strategy. “They won a lot of cups, but don’t make any money. They have a beautiful team, but not many fans.”
Demotion won’t hurt Fluminense’s finances as much as teams in some other major soccer leagues because television contracts are fixed long term, according to Somoggi. The loss of its major backer Unimed, whose name has adorned the team’s jersey’s since 1999, would be a cause for concern, he added.
“Without Unimed, Fluminense would probably be second or third division,” said Somoggi, who estimates that the health-care services provider and insurer pumps about 90 million reais annually into the team. “If they quit investing, I don’t know how Fluminense will survive.”
Brazilian teams are run as member-owned organizations, meaning they can’t be bought by wealthy individuals or companies. Fluminense’s relationship with Unimed is unique, and some fans oppose it because of the company’s influence on team matters, according to Daniel, the economist.
“Unimed pays the majority of the salaries at Fluminense,” Daniel said. “The president of Unimed, Celso Barros, is a famous fan who puts his money in Fluminense.”
In a statement, Unimed said the sponsorship “gives great visibility” to its brand in Brazil while helping Fluminense “build winning teams.” Two national championships and one Brazilian Cup title in the past six years “demonstrate the success of our strategy,” Unimed added.
The company said that it’s interested in renewing the sponsorship, though will evaluate the results achieved through partnership before any decision.
Siemsen said he’s confident Unimed will renew and the issue of unpaid taxes dating back more than two decades may soon be resolved. Fluminense owes the government about 400 million reais, and has been involved in putting together a 20-year repayment plan for Brazilian soccer clubs to repay debts totaling 4.5 billion reais. The agreement still needs to be ratified by lawmakers.
“Since last November we faced a very, very tough situation so we fought,” Siemsen said. “Last week, we had a new law and we renegotiated our tax debt to return to a good situation.”
The president is now seeking a positive outcome on the field, where the club’s performance has swayed from year to year. In 2009, it won six of its last seven games to avoid demotion and rebounded to win the title the next season.
To prepare for the Nov. 10 match against Corinthians, the squad arrived in Sao Paulo six days early as it seeks to repeat that relegation escape.
“In truth I believe we can stay up,” Siemsen said. “I don’t think we will go to the second division.”
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