The controversy enshrouding the management model for the refurbishment of the Beira-Rio, which threatens the hosting of 2014 FIFA World Cup™ matches in the stadium, can be sorted out at a meeting of the Board of Directors of the club, penciled in for 14 March.
At this Wednesday’s meeting, the Board met at a meeting which is already hailed as historic by some Board members. The current management of the club, headed by Giovanni Luigi and also by the club CEO, Aod Cunha, presented the arguments in favor of the partnership with building firm Andrade Gutierrez for the refurbishment of the stadium. In exchange, the club would grant a concession of new commercial land areas which would be created (the club would continue to have the current sources of income, such as match tickets and publicity areas inside the stadium).
This is the first time that the Board of SC Internacional has publicly informed details of the proposal made by the building firm.
The Local Organizing Committee (COL) of the World Cup has been asking for financial guarantees for the work since last year. If these are not presented, there is the possibility that the games may be transferred to the new Grêmio stadium, the Arena do Grêmio, which would be a political burden on SC Internacional.
Even though the COL has not yet set a deadline for the presentation of these guarantees, Mr. Luigi admits that the pressure for a decision has heated up.
“At no moment, whether verbally or in writing, has the committee set dates”, he Said. However, Mr. Luigi has said that he had two telephone calls from the Committee in recent weeks, seeking information about the progress of this controversy. Last week, Sports Minister Orlando Silva came to Porto Alegre and expressed his concern at Inter’s delay in reaching a final decision.
According to the model as presented at the Board Meeting, Andrade Gutierrez would have the right to exploit the shopping center which is planned in the new project for the Beira-Rio Stadium, as well as a garage building with a capacity for three thousand cars, naming and sector rights, VIP seats and special suites.
Aside from taking on a commitment to complete the construction work in line with FIFA requirements, the construction firm would also be required to construct the new training center for the club.
Ever since the Beira-Rio Stadium was approved by FIFA as a venue for matches of the 2014 FIFA World Cup™, SC Internacional had been working with the model of self-financing of the work. SC Internacional planned to pay for the refurbishment with funds coming from the sale of their old home, the Eucaliptos Stadium (which made some R$ 28 million), and also with the advance lease of the new suites of the stadium. Out of the 100 suites that are planned as part of this project, 26 have been leased up to the present moment.
This Thursday morning, at a press interview, Mr. Luigi and Mr. Cunha were adamant in their defense of the partnership model. In their opinion, the unpredictability of the pace of lease operations and of FIFA requirements could cause a financial hole in the club’s cash flow, which would mean that the Board would have to seek funds in other areas, such as soccer, to ensure that the schedule as agreed with FIFA is indeed followed.
“Through self-financing alone, the club is not able to collect the funds which are necessary to complete the work in time for the World Cup”, Mr. Luigi declared. “The only proposal still standing and that solves the circumstances of the work at hand is this idea of a partnership”, added the club CEO, Aod Cunha.
Without a profit
At the Board Meeting, the self-financing model was defended by participants in the previous administration of the club. Former Club President Vitório Piffero, who stepped down in January, used economic arguments to justify the execution of this work with the club’s own resources.
In his opinion, Inter may rake in as much as R$ 900 million with the new areas created, over 20 years, with the deduction of the sum already spent on the work. For those criticizing the partnership, the profit of the new Beira-Rio Stadium will be handed over to Andrade Gutierrez for the next 20 years.
A third possibility has also been considered, which is that of taking out an indirect loan from the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social - BNDES) through the credit facility known as ProCopa Arenas. The funds are not available for private clubs, but SC Internacional would try to look for an institution who could take on the repayment of the financing facility.
According to Mr. Cunha, this possibility lost strength, as the club has already approached 11 financial institutions, none of which was willing to make the transfer.
The intensity of the debate has forced the calling of a new meeting on the 14th. According to Mr. Luigi, the intention of the current Board is to propose that the new model be voted at the next meeting. Should the discussions be prolonged, then a new meeting could be arranged for 15 March, just for the voting process.
The President of SC Internacional said that work will go ahead, and that the Board will make every effort to complete the refurbishment for the World Cup, even if the partnership is rejected by the Board Members. “The Council is independent, and whatever it decides will be taken on by the Management, and every effort will be made to press on with it”, he said.