Maracanã Dispute: TPUs, Renovations, and Vasco’s Interest in Managing the Stadium

In April 2019, the Government of the State of Rio de Janeiro made an agreement with Flamengo and Fluminense for the temporary cession of Maracanã for 180 days. At the time, the promise was to hold a new public notice to bid for the stadium, which cost more than R$ 1.3 billion in the renovation for the 2014 World Cup – when it was closed between mid-2010 and until 2013.

But, after all, what is TPU? Why does Vasco want to manage the stadium? What is the reason for the fight with Flamengo and Fluminense, who have renovations in a row without competition for a public stadium?

O ge answers some of the main questions involving the former Greatest in the World.

Term of Permission for Use or Term of Permission for Onerous Use of Public Property is considered a “precarious instrument” for the use of public property. Which means: assignment for a short and limited time of the Maracanã stadium – and Maracanãzinho – and the operation of bars, parking and cabins. In the case of Maracanã, the TPUs last for 180 days each.

Because it’s temporary, the TPU does not require much more than minimal investment in stadium upkeep and maintenance. Unlike the bidding scheduled for 20 years in Maracanã, in which permit holders can foresee high investments and receive dividends in return in the various forms of revenue.

The first TPU was signed in April 2019. At the time, the State Government terminated the contract with Odebrecht for a debt estimated at R$ 40 million. There were several points of conflict – such as changes in the scope of exploitation of the public good – throughout the contract between the Executive Power of Rio de Janeiro and the company that was later at the center of Operation Lava Jato.

There are a total of nine TPUs signed since April 2019 – each lasting 180 days. The last eight with automatic renewals. In none of them there was public competition – or public call, as recommended by the State Audit Court.

The instructional body of the TCE considered a “manufactured emergency situation” the justifications of the State Government to subsequently renew with the same clubs. There was a recommendation to suspend the TPU and not renew it, but in a plenary vote, the TCE directors did not oppose the most recent renewals.

The State Government of Rio de Janeiro did not provide detailed clarification on the constant renewal of temporary contracts with Fla and Flu. It simply responds that “it would be counterproductive” to carry out “a bid within another bid”. In Vasco’s action in court, against the TPU renewal celebrated this week, the government defended the agreement with Flamengo and Fluminense.

The cost established in the TPU is a fixed R$ 199,000 per month, plus a minimum of approximately R$ 65,000 for visiting and operating the stadium museum.

In the future bidding, the minimum cost will be R$ 416,000 per month. If these amounts were already valid over these 48 months of TPU, the Government would have raised R$ 10 million more for the weakened State coffers.

The winning proposal in the 2013 bidding – also contested at the time by inspection bodies – was from the Odebrecht Consortium, which offered BRL 705 million. The minimum offer was R$ 600 million. In the end, the renovation of the stadium for the World Cup cost the public coffers more than R$ 1.3 billion.

In addition to the State Government, the BNDES (federal public bank) invested R$ 400 million in the renovation of Maracanã. At least 11 contractual amendments were carried out, making the works even more expensive.

Vasco held the first meeting with the State Government to express interest in participating in the management of Maracanã on April 6, 2021, in a meeting with Vasco president Jorge Salgado, vice president Carlos Osório and governor Cláudio Castro.

At the time, the TPU in force with the Fla-Flu duo would expire at the end of April of that year. Since Vasco’s public demonstration to enter management, there have been five automatic renewals without public competition with Fla and Flu. That is, without Vasco having the chance to make his offer.

Unlike what the president of Fluminense, Mario Bittencourt, said, the interest predates Vasco becoming SAF. The first news about Vasco’s understandings with the American investors of 777 Partners is from February 2022 – the sale was consolidated in September 2022.

The club in São Januário has support from 777 Partners, which has expressed its desire to increase revenue from ticket sales and game days. What today is limited in its private stadium, which receives a maximum of 22,000 people and barely approaches income of around R$ 1 million at the box office – which happened recently in the elimination of the Copa do Brasil for ABC-RN, when the club raised the price of tickets, over protests from the fans.

In comparison, Flamengo raised around R$ 150 million in game revenues in 2022, against just R$ 30 million for Vasco.

Flamengo and Fluminense agree that Vasco will use Maracanã to hold concerts. Recently, in an interview with the podcast “La Prévia”, the Colombian Juan Arciniegas, one of the directors of 777 Partners, said that the idea is without expanding the use of the stadium, in addition to football matches. Arciniegas said there are multiple ways to increase revenue “using stadiums to their fullest, using 365 days of the year, instead of using stadiums once every two weeks, as is the case around the world”.

To date, Vasco – which since the beginning of the SAF process no longer publishes financial statements or the balance sheet for 2022 – has not clearly expressed itself on the subject, although he has already expressed that the priority would be football and that “Maracanã belongs to everyone”, the name of the partnership with WTorre and Legends. As it would still use São Januário in several matches, the club would allow rival games in Maracanã.

A longer answer might require going back decades to explain the centuries-old rivalry, but basically it’s part territory dispute and part technical issues – the eternal case of damage to stadium turf that can host two, three games a week. .

Flamengo and Fluminense haven’t played in their private stadiums since the 1990s – neither in Gávea nor in Laranjeiras. In recent years, they have already played at Nilton Santos, in Ilha do Governador, in the Portuguesa field, in Edson Passos, in the América field, and in Raulino de Oliveira, in Volta Redonda – not counting games outside the state of Rio for financial option.

Vasco made a proposal to send 15 games per year to Maracanã, with 20 to Fluminense and 35 to Flamengo – this within the framework of 70 games per year, the minimum required by the bidding notice for Maracanã. But there was never a deal. Vasco da Gama even had some understanding with Flamengo’s leaders, but they had to come to terms with the tricolors. Which was never close to happening.

This answer is simple. In the TPU contract, the following is included among the obligations of the licensee – in this case, Flamengo:

“it is forbidden… favoring one or more club associations… through an offer of exclusive or preferential use of the Complex, in particular, the Estádio Jornalista Mário Filho”. That is, when there is no conflict of dates and through rent charged, as happens today, any other club that is not Flamengo or Fluminense must always have the right to play in Maracanã.

The most recent state government reports are from 2020. They show public equipment with profit potential and that generates revenue of at least R$ 40 million per year.

The “Maracanã cost”, for operating the stadium, according to the same report, is almost R$ 26 million per year – and varied little with the recent assignment of use to Flamengo and Fluminense. According to a technical feasibility study presented by the State Government, the cost fell by 10% on average per game, mainly due to the renegotiation of contracts with some suppliers.

The Government study also points out that “all games with less than 22,000 payers were in deficit, regardless of the average ticket value (which ranged from R$ 20.00 to R$ 37.80)”.

Among the main sources of income for Maracanã currently are the following lines:

*In these cases, Flamengo and Fluminense are considered.

The Civil House of Claudio Castro has until next Saturday (the 29th) to respond to questions and provide further clarification on the notice.

There are questions about:

Among the recommendations, some the Government has already signaled changes, such as the slight reduction in the much greater weight of the technical proposal to the financial one – the score for the number of games (70), which favors the candidacy of two clubs over one, continues to be preponderant above the financial proposal. The TCE, at the same time, has already defined as “administrative merit” the benefits of cabins, parking and tickets at the cost of the future concessionaire.

The government’s current forecast is to launch the public notice in 40 days. If there is a bid winner during the current 180-day TPU, valid until the end of October, the bond is interrupted.