Operations

Allegra Pacaembu signs deals with football clubs, concert promoter

Featured image credit: Allegra Pacaembu

Allegra Pacaembu, operator of the Mercado Livre Arena Pacaembu, has furthered its ambition of making the revamped stadium a true multi-purpose venue by agreeing deals with football clubs and a concert promoter.

Allegra Pacaembu in January 2020 took over the management of the Estádio do Pacaembu complex after being awarded a 35-year contract. With work having started in June 2021, the company is reaching the end of three-year project comprising full restoration of the Pacaembu while respecting the history of the São Paulo venue and amplifying its potential.

An array of attractions will be on offer at the stadium complex, which prior to the redevelopment still occasionally hosted home games for the State of São Paulo’s big four football clubs – São Paulo, Corinthians, Palmeiras and Santos.

Allegra Pacaembu is seeking to ensure the football tradition continues and has disclosed deals have been struck with São Paulo and Santos, along with Cruzeiro, which will bring in matches from its base of Belo Horizonte.

Initially, for 2024, Cruzeiro will play up to two games at the Pacaembu, with São Paulo and Santos staging up to 10 apiece. The deals have been struck under a model different from the traditional stadium rental agreements in Brazilian football.

Instead of paying a rental fee, the clubs have instead agreed on a revenue sharing deal with Allegra Pacaembu through which they will share income generated from the games themselves. This will lead to an emphasis on promoting the matchday experience, encouraging fans to arrive early and stay late to sample what is on offer at the new-look complex.

Explaining the concept, Eduardo Barella, CEO of Allegra Pacaembu, told Globo Esporte: “I told them (the clubs): look, every time you go to play in a place that doesn’t belong to you, the discussion is – ‘I’ll take the fans and just keep the ticket (revenue)’. While the operator benefits from (income from) hospitality, parking, food and drinks and such.

“There is always an argument and a clash. So what do we put in? Are we going to align interests here? We created a project based on numbers demonstrating to the clubs that if we were partners, this would bring more benefits.

“The rent is zero and the entire cost of operation, security, cleaning, emergency services and so on, it is an open cost that has to be approved by both parties. All the money that comes in from ticketing, hospitality, food and beverage, parking, etc., the first money that comes in pays the cost (of a game), then it is divided.

“You can have different percentages depending on the revenue item. I think the advent of SAF (allowing private investment) in Brazilian football is very positive, because today you have executives who are looking at clubs as brands, not just as football clubs.”

Meanwhile, a deal has been struck with Four Even, a Brazilian investment fund which specialises in the promotion of concerts and entertainment events. According to Bloomberg Línea, Four Even will pay R$26m (£4.26m/€4.98m/$5.37m) per year for the right to stage up to 80 events.

The contract is due to run for up to 10 years and has been negotiated on a ‘take or pay’ basis, whereby Four Even will pay the full amount even if it fails to stage 80 events.

Barella added to Globo Esporte: “We have a contract that, together with the hotel contract and the sports rehabilitation centre contract, are long-term contracts.

“Unlike with the (football) clubs, it is a contract with a firm guarantee of the performance of the shows, which in business jargon we call a ‘take or pay’ contract, that is, it is the confirmation of the dates. If the dates are not used, they are lost, including advance payment.

“It’s a contract with an entertainment fund made up of investors and producers who buy dates from artists, buy lots of dates. And then, obviously, we are a facility that needs the content. The content needs a venue, so this is a natural marriage and they signed a contract with us.”

Ecommerce company Mercado Livre last month acquired naming rights to the Estádio do Pacaembu in a deal that could reportedly be worth up to R$1bn, a record for a stadium sponsorship in Brazil.

The façade of the stadium is set to retain its Estádio Municipal Paulo Machado de Carvalho branding, with the new ‘Mercado Livre Arena Pacaembu’ moniker to be displayed inside the venue. The agreement also extends to the wider stadium complex, with Mercado Livre taking naming rights to the on-site 8,000-capacity events centre, aquatics venue, tennis court and gym.