June 9 (Bloomberg) -- The World Cup was meant to be a celebration of a new Brazil -- powerful, prosperous and jubilant. When the ball starts rolling in three days the world may instead view images of violence and inefficiency.
Seven years after gaining rights to host sport’s most-watched event, Brazil nears the tournament amid street protests, economic slowdown and a wave of strikes including subway and museum workers. Visitors will also encounter a nation with a stalled economy, consumer confidence at a five-year low and rising domestic opposition to the event amid a heated presidential election.
From sponsors to soccer legends, Brazilians are lamenting preparations for an event in which authorities delivered less than half of planned projects despite the record price tag of $11 billion. Brazil’s image abroad is likely to be hurt as the World Cup reveals a less prosperous country than expected, said Simon Anholt, a policy adviser who has worked with more than 50 nations on identity image.
“Everybody imagined that Brazil is 20 years further advanced than it really is,” he said by telephone from Kingston, Jamaica. “There is quite a strong possibility that the image of Brazil will suffer a downward correction.”
Streets in Sao Paulo and Rio de Janeiro, where the final will be played on July 13, show little of the decoration and painting that preceded past tourneys. That’s a change from the nationwide celebrations in 2007 when the country won the rights to host the cup from governing body FIFA, and the “extraordinary” outpouring of support then-president Luiz Inacio Lula da Silva predicted for the event.
Almost all the 12 stadiums that were built or remodeled cost more than anticipated, and many of the promised urban mobility projects such as airport renovation and transport networks have either been scrapped or delayed.
The poor planning and runaway spending that has fueled protests in Latin America’s biggest economy may tarnish the country’s international image, said Mauricio Morgado, marketing professor at Fundacao Getulio Vargas.
“There is a big chance this becomes a shot in the foot,” he said by telephone from Sao Paulo. “It was an excellent idea from a branding point of view but we may not have the expected positive effects.”
Jerome Valcke, the general secretary of FIFA, said last month his organization had “been through hell” trying to arrange the event in Brazil. The outcry has been so extended that even some authorities are saying that the country’s image has been dented by the shortcomings.
The reputation of Brazil has “obviously” been damaged with the World Cup preparations, Rio mayor Eduardo Paes told reporters in Rio on June 7. “We are not communicating well, there is a problem of mistrust in Brazil at the moment on our capability of delivering things.”
Brazil also faces challenges in the one area where its image abroad is already tarnished: public safety. With street crime rising in Rio, for example, travelers may face a greater chance of getting mugged.
“We have gone through a very big change in dealing with crime, it’s much, much better than what it was five years ago,” Rio’s Paes said at the same press event.
Brazil as a nation hasn’t established a strategy for its image besides the stereotypes of beach, Carnival and happiness, and now is caught short, said Raquel Goulart, branding director at Saravah, a Rio-based agency specialized in market strategy.
“When you have a blank page and you don’t formalize what you are standing for, anyone can write what they want,” she said by telephone. “The negative news is unfortunately reflecting a reality.”
Opposition from Brazilians to hosting the World Cup rose to 42 percent in May from 38 percent in February, with support dropping to 51 percent from 58 percent in the period, according to a May 15-19 Ibope poll that had a 2 percentage-point margin of error. The survey also shows that while 36 percent say the event is likely to be a success, 31 percent of people consider that possibility small or very small.
The high rejection levels for an event Brazil has won a record five times stems from suspicions of corruption and spending money on stadiums and sports facilities at a time of growing dissatisfaction with the economy and government services.
After growing at almost double the rate of the U.S. between 2000 and 2010, allowing millions of consumers to buy items such as cars and televisions for the first time, the Brazilian economy has stalled amid above-target inflation, triggering a surge in popular discontent. GDP expanded 0.2 percent in the first quarter, the national statistics agency said May 30, and economists surveyed by the Central Bank cut their forecasts for the year to just 1.44 percent.
Annual inflation in May reached 6.37 percent and has run above the target midpoint for President Dilma Rousseff’s 3 1/2 years in office. Brazil aims for inflation of 4.5 percent, plus or minus two percentage points.
Two out of three Brazilians say the $2.2 trillion economy is in bad shape, according to a poll released June 3 by the Pew Research Center, which had a 3.8 percent margin of error. The survey also found that 61 percent of people say hosting the World Cup is bad for the country because it takes money away from schools, health care and other services.
“The criticism against the government over the World Cup has a political intention,” President Dilma Rousseff told foreign correspondents during a June 3 dinner in Brasilia’s Alvorada Palace. “Complex engineering works in a country like Brazil, without a tradition of public investment, don’t function as precisely as a watch.”
Brazil’s government referred questions on the impact of the World Cup on the country’s reputation to Rousseff’s comments during the dinner.
The World Cup brings “great visibility” and the government expects both the country’s positives and negatives being portrayed, Sports Minister Aldo Rebelo told reporters in Rio today.
“We have our deficiencies, too,” he said. “We don’t want to be seen as better than we are, but we also don’t want to be seen as worse than we are. That’s something we don’t accept.”
While Brazil erred by trying to portray the image of a country resembling Switzerland, the criticism received ahead of the World Cup may fade once the event starts, said Wolfgang Maennig, a professor of economics at Hamburg University that specializes in sport economics.
“It’s too early and my experience from mega events is that you have a lot of criticism and it’s even increasing in the last two months,” he said in an interview in Rio on May 30. “The very first moment that the referee whistles off the first match, all is forgotten and there is party and excitement.”
The Brazilian benchmark Ibovespa index entered a bull market on May 7, surging 20 percent from this year’s low, as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies. The real has advanced 6 percent versus the U.S. dollar during 2014, the biggest gain among major currencies tracked by Bloomberg.
Brazil is not the only country where initial expectations of the benefits of a mega-event may end up backfiring. Qatar, which is organizing the 2022 World Cup, has been forced to deny allegations of corruption in the awarding of the tournament in 2010 as soccer governing body FIFA prepares an investigation on the bid, potentially jeopardizing some of the Gulf state’s investment plans of as much as $200 billion lined to the cup.
This year’s Winter Olympics at the Russian resort of Sochi also turned into a public relations nightmare for Vladimir Putin’s government as international news outlets focused on the lack of preparation despite a record-shattering $51 billion budget.
Viewers during the World Cup will be exposed to a version of Brazil they didn’t know, which may challenge their preconceptions, Anholt said.
“We knew that the world loves Brazil. The question is -- is the love for Brazil strong enough to survive what might be a slightly surprising new vision?,” he said. “People are going to see things that are positive and they are going to see things that may be quite negative and which may shock them.”
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