Brazil Olympic Funding Taps Sports Marketing Gold

Ramping up for the 2016 Rio Games, Brazil is promoting tax incentives that will generate more than $150 million for sports and special Olympics programs designed to take kids off the streets and help them go for the gold.

The vehicle to make this happen is Brazil's unique sports incentive law that allows companies and individuals to invest a portion of what they would normally pay in income taxes in programs connected to Olympic and paralympics sports. Companies can invest one percent of their tax bill and individuals can invest up to six percent of what they would normally pay in taxes each year.

The sports ministry indicates that 103 organized sports activities are getting funding through the law, which could be modified to attract even more money.

While the Dilma government is wont to admit it, the law could provide an attractive vehicle for Brazil's super rich like former tennis star Jorge Paulo Lemann (net worth $5.3 billion) and mining magnate Eike Batista (the world's 8th richest person with a net worth of $30 billion). Batista, who was featured in a 60 Minutes segment on Brazil last November, once pulled out his checkbook and gave Madonna a million dollars for a charity project.

Sports marketing, an adjunct of the entertainment industry, is becoming a major driver in Brazil's consumer economy. But the main focus is on professional athletics and personalities -- not the Olympics -- since big globalist companies who are active in the zone are more disposed to bank on the value propositions and merchandising opportunities they offer.

The value of futebol superstar Ronaldinho being contracted by Rio side Flamengo, for example, has been estimated at $120 million by Brazilian sports bloggers. As a yardstick, that figure represents 18 percent of the $745 million it took for Flamengo fan Barack Obama -- who received a Flamengo jersey as a gift during his recent Rio visit -- to win the 2008 presidential race. Add the market value of superstars Ronaldo, Robinho, Neymar and Ganso and the figure approximates the cost of the last Obama campaign.

While Obama is a big fan of futebol and the Olympics there are signs that that gambling interests -- legal and illegal -- are threatening the integrity and values promoted by the Olympic movement since its inception in 1894.

International Olympic Committee president Dr. Jacques Rogge of Belgium, considered the most powerful figure in world sports, is concerned that sports betting on Olympic events will influence the character of the games and the sponsorship money that support the movement. The 2012 Olympics will be held in London, considered to be a world center for legal sports gambling.

Rogge estimates that illegal gambling currently generates $140 billion in annual revenue worldwide and he has proposed an international task force to address issues like event manipulation and irregular betting. Ken Noble, the former senior US treasury official who runs Interpol has voiced support for Rogge's concerns saying that the threat can come from anywhere and that the time to act is now.

Brazil's Olympic funding scheme is a great way to give kids a chance to succeed through sports. But it needs to be complemented by programs that keep Olympic dreams from turning into Olympic class nightmares.

With the legal gambling industry reluctant to support IOC president Rogge's call for them to help fund Olympic programs it remains to be seen just how long sports marketers who use athletes as role models can have it both ways.