Nov. 27 (Bloomberg) -- It’s not record ticket prices preventing Adriana Oliveira from seeing her beloved Flamengo in Brazil’s soccer cup final. She simply can’t find one for sale.
“I’ve seen a lot of people complaining about ticket prices, but it makes no difference to me,” said Oliveira, 23, a waitress from Latin America’s largest slum, Rocinha. “For Flamengo I’ll do anything. Paying 300 reais ($130) for a ticket would be perfect.”
Following a year of cost cutting, the team that boasts of being “the most loved club in the world” is in line for the biggest payday in the history of the national cup after overturning an injunction that sought to curb ticket prices.
Carlos Langoni, Flamengo’s vice president for debt negotiation, said the team will earn $5 million when it runs out tonight in the decisive second game against Atletico Paranaense. The match will be played at Rio de Janeiro’s iconic Maracana stadium, the venue for next year’s World Cup final. The series is tied 1-1 after the opener on Nov. 20.
At the start of the season Flamengo owed 750 million reais ($326 million), more than any other team in Brazil, and had a reputation for financial mismanagement. Fans voted in a board including former central bank president Langoni and club president Eduardo Bandeira de Mello, once an executive at state development bank BNDES, to fix its finances.
Two days ago the team said it managed to stem costs and cut losses, which hasn’t happened “for a very long time,” said Pedro Daniel, an economist specializing in soccer at auditor BDO Brasil.
Next month, Flamengo and other teams are expected to sign an accord with the government to repay 4.5 billion reais in tax debt accumulated over 20 years, Daniel said.
Seeking a compromise from the government over the tax debt hasn’t been easy, said Langoni, who served as president of Brazil’s central bank between 1980 and 1983.
“It was much more difficult than renegotiating the Brazilian debt, but at that time, I had the support of the IMF, I had the help of Paul Volcker,” Langoni said in an interview at his office in Rio, referring to the former chairman of the U.S. Federal Reserve. “Here we’re alone.”
The government came down hard on the team, he said. Revenue from a new sponsorship agreement with Adidas AG and ticket income was frozen by authorities. Eventually an agreement was reached that allowed Flamengo to retain some revenue and pay down the debt over time.
“So Flamengo is gradually coming out of the dark side,” Langoni said.
Founded in 1895 as a rowing club called Clube de Regatas do Flamengo, the team with red and black horizontally striped shirts returned this season to play home games at the Maracana, which was shuttered for three years for a 1.1-billion-reais renovation.
Fans who backed the new board are concerned measures to pay down debt are harming on-field prospects. The team has fired two coaches this season and is in 11th place, closer to the relegation candidates than champion Cruzeiro with two games to go. The cup run has brought some relief.
“The problem with a club like Flamengo is this blend of emotional and reason,” said Langoni. “You have to balance both. Fortunately, Flamengo is winning.”
The club’s latest battle came after authorities claimed ticket prices between $110 and $350 for tonight’s sold-out game were abusive. That compares to an average real monthly income of 1,917 reais ($835), according to the national statistics institute. Flamengo successfully argued that its asking prices were fair, given interest in the game.
“We went to the judge and said, ‘This is a private business,’” Langoni said. “We’re not a public company, we’re not talking about bus transportation. We’re talking about a game, and we want to make money.”
Unable to attend the game herself, Oliveira instead bought a T-shirt and a notebook for her son at an official merchandise store in beachside Copacabana that, the day before the game, had a line out the door. She’s not put off by the fact she wasn’t able to shell out for the costlier tickets.
“It’s alright,” she said. “We’ll get them next time.”
To contact the editor responsible for this story: Christopher Elser at email@example.com