Money in Play

For Latin America, the multi-million-dollar world of sports offers boundless opportunities as well as the very real risk of losing first-class athletes.

text walter duer
photos cristiÁn gÁlvez

The time when the main goals of playing a sport were having fun, making friends and, in the best possible scenario, winning fair and square, seems more and more like part of the distant past. Unimaginable sums of money – in advertising, ticket sales, broadcasting rights and contracts – are tied up in athletes who work miracles with a ball, run like the wind or perform awe-inspiring gymnastic feats. The recent Olympic Games offer a perfect example. Private studies estimate that the total amount invested by companies in the event was nearly three billion dollars, 900 million of which remained in the coffers of China, the host country. And this tremendous sum doesn’t even factor in other sources of income, like tickets sales or television rights. “Since the very first Olympic Games, funds were sought to offset the organizational expenses,” explains Eduardo Cantaro, a researcher specializing in the subject and the author of the book 100 años de fútbol olímpico (100 Years of Olympic Soccer). “Nevertheless, even today the Games retain a certain amateur spirit: in the Olympic Village, for example, you can see an unknown athlete having lunch next to Lionel Messi.”

The flow of cash seems infinite. In 2007, the international consulting firm Deloitte found the Formula 1 to be the highest-grossing regular sporting event, with an average of US$229 million generated by each of its 17 annual Gran Prix races, well above the US$24 million generated by each NFL game, the US$8 million from each English Premier League soccer game and the US$2 million from each Major League Baseball game. Special events, like the most recent World Cup in Germany, can produce as much as US$12 billion. And the sports industry continues to grow. The consulting firm PriceWaterhouseCoopers reports that the cost associated with large-scale sporting events will increase 37 percent by 2012, by which time no less than US$141 billion will be in play at an international level.

This wallet-bursting phenomenon can be compared in a very simple way with how things happened in the not-too-distant past. No soccer fan would ever argue that Argentinean forward Hernan Crespo is better than his countryman Diego Maradona. Nevertheless, the club Lazio al Parma acquired Crespo in 2000 for US$51 million (the highest amount paid for a Latin American player in the history of the sport), more than six times the US$8 million that Napoli paid Barcelona for Maradona just 15 years earlier. Likewise, consensus has it that Brazil’s Romario has been a much more effective forward that his countryman Robinho. Nevertheless, Robinho was acquired by Real Madrid from Santos in 2005 for US$24.5 million, while Barcelona paid the Dutch team PSV Eindhoven “only” US$10 million for Romario 12 years earlier. And the cost of acquiring elite players – like the Brazilian Kaka or Portugal’s Cristiano Ronaldo – continues to rise.

Taking the discussion to the world of tennis, Guillermo Vilas won some 70 titles in his career, mainly during the 1970s. His exploits earned him less than US$5 million in prize money. Meanwhile, his fellow Argentinean David Nalbandian, who has won less than ten trophies, has already earned over US$9 million.

In our region, the money spent on sporting events is a little more modest. The sports industry in Latin American countries will grow by 6.5 percent a year, according to the PriceWaterhouseCoopers report. By 2012, the region will be generating approximately US$3.9 billion in sports-related revenues.

This “industrialization” of sports presents a real challenge to our part of the world: how to reap the benefits without losing athletes to other countries. The financial clout of the United States and Europe is hugely attractive; it makes sense and is even expected that the best Latin American basketball players will play in the NBA, for example, or that the most gifted soccer player will play in the Spanish, English or Italian leagues, while the most skilled baseball players will join the MLB.

Given the relative budgets, competing is not an option. Just for purposes of comparison with the rest of the world (except the U.S., where athletes are hyper-professionalized, and China, where sports are a matter of state), Singapore promised a whopping US$800 million prize to any national athlete who took home an Olympic gold.

Soccer continues to be the most popular sport in our region, as well as the most “exportable.” Brazil alone sold over 1,600 players to other countries in the past two years. According to the Deloitte study, Latin American Football Money League, “Brazil, Argentina and Uruguay are the countries where the club budgets are primarily replenished by player transfers, while in Mexico, Chile and Ecuador, the main sources of income are television, advertising and ticket sales.”

However, soccer isn’t the only game in town. A quick glance at the top 100 men’s tennis players shows that 14 are from Latin America – with watershed moments that include the 2004 Athens Games when Chile’s Gonzalez and Massu took the gold, with another silver for Gonzalez this year in Beijing. Meanwhile, Argentina’s Manu Ginobilli has attained NBA superstardom, Colombia’s Camilo Villegas is winning fans on the PGA tour, three Brazilians race on Formula 1 tracks, Peruvian Sofia Mulanovich dazzled at the most recent World Surfing Championship (earning second place after finishing first in 2004) and Dominican-born Alex Rodriguez is slugging his way to becoming the highest-paid baseball player in the United States.

The field is set. South America has the potential to achieve sporting excellence, and at the same time, there is a massive commercial impulse behind it. It would be a shame if shortsightedness – selling off athletes cheap to relieve pressure on a struggling club or failing to increase support for athletes in different sports – loses the game.