Maracanã Stadium bidding process ‘foul play’

Image: MJR Group Ltd./Coliseum

The official bidding process to manage Brazil’s famous Maracanã Stadium was unexpectedly suspended on October 27^th.

‘Máquina do Esporte’ stated that in a monocratic decision by Councilor Márcio Pacheco of the Court of Auditors of the State of Rio de Janeiro (TCE-RJ) (a State-run committee that oversees the bidding process), the bidding process for running the show of the Maracanã Stadium has been suspended.

Pacheco, who works for the TCE-J, made the last-minute request to postpone the bidding process to Cláudio Castro, the Governor of Rio de Janeiro.

The 78,838-capacity Maracanã Stadium, officially named Estádio Jornalista Mário Filho, is an association football stadium in Rio de Janeiro, Brazil. The stadium is part of a complex that includes an arena known by the name of Maracanãzinho, which means ‘The Little Maracanã’ in Portuguese. It is one of the most famous stadiums in the world. The venue boasts two top-flights as its tenants – Flamengo Rio de Janeiro and Fluminense Rio de Janeiro. Cultural events are also held in the facility.

The Flamengo Rio de Janeiro is a Brazilian sports club based in Rio de Janeiro, in the neighborhood of Gávea, best known for their professional football team that plays in the Campeonato Brasileiro Série A, as well as Campeonato Carioca.

The Fluminense Rio de Janeiro is a Brazilian sports club best known for its professional football team that competes in the Campeonato Brasileiro Série A, the first tier of Brazilian football and the Campeonato Carioca, the State league of Rio de Janeiro.

‘Máquina do Esporte’ further stated that Pacheco has alleged a series of improprieties in the bidding documents, including no financial feasibility study being carried out. The Councilor also questioned the lack of an in-depth study on the potential revenue generating modes of Maracãna Stadium, the contract value has not been properly mentioned by the players involved in the bidding process along with several other loopholes which has come to the fore.
 

Bidding Changes

For the bidding process to resume, the Government of the State of Rio de Janeiro will have to make the changes as requested by the TCE-RJ as well as carry out the relevant studies. At least two consortia must participate in the competition. One has been formed by Flamengo and Fluminense , who currently manage the stadium jointly.

On October 27^th, a group formed by 777 Partners, a Miami-based investment firm, was informed it could not submit its bid by the Tribunal de Contas do Estado (TCE-RJ) – a State-run committee that oversees the bidding process. The 777 group also includes Legends, the US-based hospitality company specializing in sports arenas, and WTorre, a Brazilian commercial real estate company.

Earlier this year, the Legends signed a partnership with the Spanish professional football club Real Madrid to manage the spruced-up 81,044-capacity Santiago Bernabéu Stadium in Madrid, Spain.
 

Value and Term

The public notice published by the Government of Rio de Janeiro establishes that the minimum value of the proposal for running the Maracanã Stadium would be R$ 100,643,500 for a period of 20 years. Pacheco’s contention is that the value and duration of the contract for managing the facility has not been properly mentioned in the bidding documents.

According to the Councilor, the definition of the value “Should be based on an economic-financial feasibility study, with a methodology capable of assuring the compatibility between charges and advantages of the concessionaire, based on a business plan.”

In the business plan, the State should be in a position to know the revenue generating modes of the stadium, and the expenses that the winning consortium would accrue when taking over the reins of the stadium, including payment for the concession.

The lack of an in-depth study coupled with the above factors has led Pacheco to question the veracity of the entire bidding exercise. The TCE-RJ stated that there is “no technical basis for choosing the period of validity of the contract”.
 

Cabin and Parking Spaces

Another question raised by Pacheco refers to Annexes I and II of the public notice, which establishes that a cabin and parking spaces be reserved for the public authorities at the Maracanã Stadium. The Councilor feels that such a clause can be done away with.

Pacheco also sought an explanation as to why the State authorities should be entitled to the above privileges in the arena since the space has been allotted to the private sector. In addition, he said that proper rules will have to be formulated as to in how many annual events the State Government authorities will be entitled to occupy parking spaces and cabins.

Pacheco also demanded that proper rules be framed in the context of the number of guests who could make use of these spaces.

The Councilor has also suggested that the State Government “Should create a mechanism for disclosing the criteria and a list of beneficiaries who would avail the above benefits”.

The Maracanã Stadium, which is owned by the Rio de Janeiro Government, has been managed by Rio’s top flight soccer teams Flamengo and Fluminense since 2017. The State opens bids periodically for short-term management, but there has yet to be an official bidding process to manage the facility on a full-time basis.

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