brazil olympic report

8/4/2019 Brazil Olympic Report

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Important notice to readers

The information contained in this booklet has been collected form various sources and is believed in good faith tobe correct at the time of writing. However, readers are advised that the laws, regulations, tax rates and all other itemscontained or mentioned in this booklet are subject to change without notice. Descriptions of laws, regulations, taxrates and other levies are brief introductory summaries that do not include or mention all cases or circumstances. Also,many of the sporting, infrastructure and similar projects described or mentioned in this booklet are still at the planningstage and may not go ahead, or may do so in a different manner to that described here. The inclusion or mentionof a proposed sporting or infrastructure project or any other kind of business activity cannot be taken to in any wayimply that it does or may constitute a good investment or business opportunity, or even that such an opportunity doesor may exist. Readers should undertake their own complete research and evaluation of the sporting or infrastructure

projects and business activities mentioned herein before taking any decisions with respect to any form of involvement.The International Bar Association, its employees and all others involved in the preparation of this booklet, includingbut not limited to researchers, writers, contributors and editors, will not accept responsibility for nancial or otherconsequences of any decision made by any individual or company that may have been partially or totally based on thecontents of this booklet.

Major SportingEvents in BrazilBusiness Opportunities and the Legal Framework

Brazil, particularly Rio de Janeiro, has been chosen to host severalmajor global sporting events: the 2011 Military World Games;the 2013 FIFA Confederations Cup; the 2014 FIFA World Cup;and the 2016 Olympic and Paralympic Games. This special IBAreport looks at the tens of billions of dollars in investment and

business opportunities for stadiums, transportation, urban renewaland associated infrastructure, together with the relevant legalframework and likely special regimes.


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How do you say businessconflict resolution in Brazil?

ICDR.

The Brazilian economy has been growing at an unprecedented rate. And considering

the increased possibilities from the World Cup and Olympics, its easy to see why more and

more businesses are thinking about or currently working in Brazil.

Doing business in fast-growing economieswhether its in energy, construction,

licensing and distributorships or tourisminevitably requires known and trusted dispute

resolution options. For years, the International Centre for Dispute Resolution (ICDR)

has resolved business disputes in Brazil on matters as varied as technology, energy,

employment, real estate and more. The ICDR panel of arbitratorsinternational and

Brazilian experts in their fieldsalong with the ICDR International Arbitration and

Mediation Rules are not only well known, but frequently relied upon in Brazil.

For effective andfamiliar international dispute resolution, as well as assistance with

contract clause drafting or designing conflict management strategies in Brazil, contact

Luis Martinez at [email protected], or visit www.icdr.org.


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Contents

1 Brazil wins World Cup and Olympics after years of hard training 4

2 International presence in Brazil 7

3 What Brazil needs from the world 9

4 The World Cup and the Olympic Games: events, stadiums and

directly associated investments 11

5 World Cup and Olympics: the gold rush 28

6 Key points of Brazilian law 32

7 International experience: shortening the learning curve 51

8 Acronyms and useful contacts 56

9 Doing business in Brazil rst steps 59

For more information on how to advertise in future updates of this publication, contact: Andrew Webster-Dunn, [email protected].


4/604 Mj Sig EvES i Bzi BI OPPORTITI A T LGAL FRAMWOR

Its almost as if Brazil was awarded the World Cupand the Olympics for good behaviour. The twomajor competitions are widely seen and trumpetedby local politicians as international recognitionthat the country has somehow come of age.

While neither competition constitutes an ofcialendorsement of economic policy, its unlikely that

Brazil would have been able to mount credible bids,in particular for the Olympics, without the substantialprogress of the last couple of decades. Together, thetwo competitions involve around US$5 billion ofdirectly related expenditure and several times thatin associated infrastructure, plus complex planningand execution of stadiums and other projects to arigid timetable, meaning that the host country mustbe able to demonstrate convincingly that it can makethe necessary preparations and foot the bills.

Proof of Brazils economic reliability couldbe seen during the recent global nancial andeconomic crises. These impacted the country lessseverely than most of the world, and also much lessthan numerous international crises of the past. Insome ways the country today gives every impressionof being stronger and better placed than before as if the turbulence actually did it good.

Business is booming and even the most staidof international media appears excited: For theCountry of the Future, Its Finally Tomorrow theWall Street Journal said, while The Economist went

with Getting it together at last. Brazil used to be allpromise. Now it is beginning to deliver.

Success rarely happens overnight. For Brazil,

it has been the result of at least two decades ofinstitution building and policy improvement, withmuch remaining to be done. A good place to startis the end of military government in 1985. Generals

who ruled since a 1964 coup dtat left a mixed legacy:

some rapid industrialisation and iconic infrastructurelike the 13km Rio-Niteroi bridge and the Itaipuhydropower dam the worlds largest until China builtThree Gorges. But they also left behind an economyshut off from foreign competition, suffocating understate control and saddled with huge foreign debts.

The rst years of civilian rule were vibrant for

the reawakening democracy, but problematic forthe economy. Ination gathered speed and peakedat almost 3,000 per cent a year in 1993. Then themid-1994 introduction of a new currency dubbedthe Real nally ended the chaos.

However, todays good times are anchored inmuch more than just currency stabilisation. Keyreforms included privatisation of steel, mining,power distribution and telecommunications. Abusiness phoneline in So Paulo used to costUS$1,000 or more from the state phone company

with a waiting list of up to two years or US$5,000off the shelf via the parallel market. After a decadeof private investment, xed lines go begging.

Perhaps the most important privatisation wasof the numerous state banks that used to be a backdoor for politicians to overspend, particularly inelection years. Today these are virtually all gone, soldoff or closed. This went hand in hand with a toughscal responsibility law that requires the President,state governors and city mayors to present properannual budgets showing the origin and destinationof funds, and then to stick within these limits. It alsosets borrowing limits for states and municipalities.

The scal responsibility law is perhaps the

most important piece of legislation passed in thiscountry to make the Brazilian Federation efcientand moral, with real prospects of serving the nationfor coming generations, wrote leading Braziliantax lawyer and professor Ives Gandra da Silva

1. Brazil wins World Cup and Olympicsafter years of hard training


5/60Mj Sig EvES i Bzi BI OPPORTITI A T LGAL FRAMWOR 5

Martins when the law was enacted in 2000.In May 2010 Brazils Finance Minister Guido

Mantega heralded the law as, a benchmark in thehistory of the Brazilian state, and, the rst steptowards sustainability of Brazils public accounts.

A decade earlier, however, Mantega was a senioreconomic advisor to the Workers Party (PT)that voted against the scal responsibility law in

Congress. His change of heart illustrated anotherkey reason that Brazil is so well placed today thePTs conversion to economic orthodoxy.

A blessed inheritance

Many of Brazils basic economic and institutionalreforms were put in place during the 1995-2003administration, headed by President FernandoHenrique Cardoso of the Social DemocracyParty (PSDB), and were opposed tooth and nail

by the PT, then in opposition. Through 2002, asPT founder Luiz Incio Lula da Silva appeareddestined for success in his fourth bid to win thepresidency, many sectors of the Brazilian economy

went into panic. In the seven months prior topolling, the Bovespa stock index fell by over 40per cent, and the Real currency dropped 36 percent against the US dollar. Country risk hit 2,433basis points and the IMF stepped in with a US$30billion stand-by loan.

Investor jitters were understandable. Until recentlythe PT had pushed an openly anti-business agenda, forexample backing a plebiscite to renege on the countrysforeign debt. But shortly before the election campaignthe PT rebranded itself with a broadly social democratplatform. Once elected, Lula as he is generally called gave the market the strongest possible message thateconomic policy would remain conservative when henamed Henrique Meirelles, former global presidentof BankBoston (now part of Bank of America) to runthe Central Bank with virtually full autonomy. Inationtargeting, vilied by the PT when in opposition, hasremained a cornerstone of monetary policy, along

with the free-oating exchange rate. More radical PTsupporters were shocked and some quit the party, but

it was a watershed signal that Brazil would stick to theeconomic straight and narrow.

Stability led to growth, and Lula acceleratedexisting programmes to promote incomeredistribution. Many foreigners might still seeBrazil as a place of shocking inequality asociety where the rich y over shanty towns asthey helicopter to business meetings or weekendbeach retreats but there has been progress. Theminimum monthly wage is now the equivalent ofalmost US$300, compared with just over US$100 inthe mid-nineties. Grass-roots income supplement

programmes have been expanded, often tied tosocial policies like a requirement to have childrenvaccinated and keep them in school.

Consistent primary budget surpluses (beforeinterest) have helped reduce the public debt, while

exports have boomed. Brazil is now the worldslargest supplier of coffee, sugar, chicken meat,beef and orange juice, and a top-ve producer ofsoy, iron, tin and cotton, although in some recent

years the countrys single largest exporter has beenEmbraer, the regional jet maker. Strong exportsand the inward ood of foreign investment helpedpush foreign reserves over US$200 billion, and all

three major international ratings agencies nowclass the countrys bonds as investment grade.

When the city of Rio de Janeiro

was chosen to host the 2016

Olympic Games, and to be one

of the host cities of the 2014

FIFA World Cup, all Brazilians

were ecstatic. Hosting both

these major events within lessthan two years is a terric opportunity, one that will

require a lot of focus, determination and hard work.

I have no doubt that Rio will do a great job

in preparing for the 2016 Olympics and the

2014 World Cup, and that each of them will be

remembered for decades to come as well-organized,

peaceful and fun events. Rio is committed to make

the very best of this phenomenal situation, which

presents the former capital of Brazil with theopportunity to not only remodel its infrastructure,

but also showcase this vibrant and beautiful

city to a global audience. Additionally, it is a

unique occasion to show the world the profound

and positive transformations that Brazil has

undergone in recent years, resulting in a modern,

diverse and democratic society.

Ricardo C VeiranoVeirano Advogados

How Brazil shrugged off the crisis

Thanks to the good economic managementsince the mid-nineties, Brazil faced the loominginternational crisis with a bulging piggy bank andits house more or less in order. There was no realestate bubble of the likes seen in Europe and theUnited States, no massive overhang of consumer

debt, and Brazilian banks had relatively lowleverage. Exposure to toxic assets was virtually zero.As the international turmoil grew into a tsunami,

Lula initially declared Brazil would feel at most a littleripple. When the crisis nally did hit Brazil at the end



of 2008 it was to be sharper than in most of the richercountries, but also much shorter. Private credit vanishedovernight, car sales collapsed and export sectors,particularly mining, cancelled investment projects andstarted layoffs. But the government quickly pumpedin money for vehicle purchase, exports, company

working capital and the like. Darkest gloom and utterdespondency lasted from maybe Christmas 2008 to

the pre-Lenten of Carnival 2009, which is normallya slack period anyway. Within months the economy

was bouncing back. It ended 2009 with a contractionof just 0.2 per cent, compared with world, euro zoneand US average contractions of -0.6 per cent, -4.1 percent and -2.4 per cent respectively, according to theInternational Monetary Fund (IMF).

One of the great ironies is that Brazil was ableto respond rapidly to the crisis because it still hadmajor state-run banks that implement government-run programmes exactly the institutions thatmany foreign experts had been urging the country

to get rid of. Export credit and long-term businessnance comes from the Brazilian DevelopmentBank (BNDES), while housing, agricultural andsmall business credit ows from the Banco doBrasil and Caixa Economica. This meant that thegovernment had levers it could pull quickly andprecisely. With most businesses now boomingagain, there is a palpable condence in Brasliathat signicant government involvement in theeconomy has proven its worth.

This crisis was provoked and made worse bythe irrational behaviour of some white, blue-eyedpeople, who before the crisis looked like they kneweverything about economics, but they have shownthat they know nothing about economics, Lulasaid in March 2009.

Heading into 2010, the economy simply took off.First quarter GDP growth was a crazy 9.0 per cent,compared to the terrible Q1 of 2009. Both the localmarket (as measured by the Central Banks mid-AugustFocus survey) and the IMF in its July update to the

World Economic Outlook predicted Brazilian GDPgrowth of 7.1 per cent for the year as a whole. TV salesin 2010 were projected to rise by around 20 per centover 2009 albeit they are usually good in a World Cup

year with a strong trend to more expensive large at-screen models bought on credit. New car sales were upby almost as much, on top of record sales of 3.1 millionunits in 2009. Indeed, over the last few years car saleshave risen in Brazil more or less as fast as they havefallen in the United States and Europe. Residentialconstruction is also surging ahead (see Section 5).

Going for growth but how fast?

The lessons of the crisis will be important, whoever

is President after the October 2010 election. Bothleading candidates Dilma Rousseff of the ruling PTand Jos Serra of the opposition PSDB expressedcommitment to broadly the same policies inationtargeting, a free exchange rate and income transfer

programmes for the poor meaning that differenceswere likely to be more in terms of nuance, particularlythe degree of state involvement. Further signicantprivatisation was seen as highly improbable undereither candidate, while both spoke approvingly ofstructures such as public-private partnerships.

It also looked increasingly likely that thegovernment would dampen down the economy at

least slightly, and indeed the Central Bank startedraising interest rates in mid 2010.

Both candidates were committed to growth, butthe big question going forward was how fast Brazilcan grow without running into myriad capacity,supply, logistics and human resource bottlenecks.

Signicantly, in an Economist IntelligenceUnit study for the HSBC bank published in mid-2010, a survey of 536 senior executives worldwideidentied low standard or costly infrastructureincluding telephones, transport networks (and)utilities to be the single greatest challenge to their

business operations in Brazil.Brazil faces a triple challenge to improving

its infrastructure. It must invest to maintain whatit has; invest to recoup the shortfall of years ofunderinvestment; and invest to expand for thefuture. Will there be enough money?

According to a May 2010 report on Brazilianinfrastructure by Morgan Stanley bank, Brazilsinfrastructure investment in recent years has runat about 2 per cent of GDP. This needs to climb to4 per cent to permit average GDP growth of 5 percent. Getting GDP growth up to 6 per cent wouldrequire infrastructure investment of 6 per cent,

which is higher than the rate forecast under thegovernments Faster Growth Plan (PAC-2).

PAC-2, described in Section 5, forecasts theequivalent of some US$800 billion in capitalinvestment, 60 per cent of it through 2014, but thatis predicated on the countrys total investment rate(including infrastructure) rising from 16.7 per centof GDP in 2009 and a projected 18.5 per cent in2010 to 21.5 per cent in 2014. This in turn is tied toaverage GDP growth of 5.5 per cent.

The government has predicted average GDPgrowth of 5.5 per cent a year, something that

appeared easily achievable in 2010 but perhapsmore complicated thereafter. Both the local marketand the IMF saw Brazilian GDP growth falling in2011, to 4.1 per cent and 4.5 per cent respectively.

Whether or not Brazil manages to crank itsinfrastructure investment up to the ideal level, thereis no doubt that the projects directly related to the

World Cup and the Olympics will move ahead, if notperfectly on schedule then at least to be ready for theevents. Both events are a matter of national pride andthe federal government will make them happen, nomatter what. One great plus is that the bulk of the

expenditure, as detailed in this report, will be directednot to vanity projects but to non-sport infrastructurethat is useful in its own right. Some stadiums might beexpanded or upgraded beyond their economic level,but they constitute a small part of the total cost.



Brazil has had a long, love-hate relationship withforeign investment. The 1988 Constitution, writtenshortly after the end of the 1964-85 militarydictatorship, barred foreign capital from variousstrategic sectors of the economy and establisheda constitutional distinction between companies

with local and foreign capital. But within a few years this was amended, and today all companiesestablished in Brazil are treated equally in virtuallyall circumstances (see Section 6).

Ford and GM set up subsidiaries in So Paulo atthe end of the First World War, starting what was tobe a constant stream of investment. Another wavecame in the 1960s and 1970s during the high-growtheconomic miracle, and today the great majority ofglobal companies have a foothold in the country.Car makers include Fiat, Toyota, Honda, Mercedes,

Volkswagen, Hyundai, Mitsubishi, Nissan, Peugeot,

2. International presence in BrazilCitroen and Renault; retail banks include Citibank,HSBC and Santander.

Most globally-known mass-market consumerproducts are made in Brazil by giants such asUnilever, Procter & Gamble and Nestl. Carrefourand Wal-Mart are expanding fast while the giantsupermarket chain Po de Aucar is jointlycontrolled by its Brazilian founders and Frenchretailer Casino. Telecommunications and ITleaders including Microsoft, Google, HP, Dell, andIBM are all present.

All in all, 23 of the 40 largest non-nancialcompanies (by 2008 sales) are wholly or partiallyforeign-owned, and 17 Brazilian-owned, althoughsome companies in the latter category such asPetrobras and Vale have shares quoted abroad,mainly in New York, via Depository Receipts, and ofcourse many foreign investors own stock in Braziliancompanies via the Brazilian Stock Exchange.

International presence in Brazil

Company Sector ype Control 2008 Sales US$b

1. Petrobras nergy tate Brazilian 92.4

2. Petrobras ist Wholesale tate Brazilian 28.9

3. Vale Mining Private Brazilian 15.3

4. Volkswagen Automotive Private German 14.4

5. Fiat Automotive Private Italian 11.5

6. Ambev (AB InBev) Consumer Private Belgian 11.2

7. GM Automotive Private 10.7

8. hell Wholesale Private Anglo-utch 10.2

9. Bunge Consumer Private utch 10.2

10. Carrefour Retail Private French 10.0



11. Ipiranga Wholesale Private Brazilian 9.9

12. Telesp Telecom Private panish 9.7

13. Telemar Telecom Private Brazilian 9.1

14. Vivo Telecom Private Portuguese-panish 8.8

15. Wal-Mart Retail Private 7.5

16. Braskem Chemical Private Brazilian 7.2

17. Po de Aucar Retail Private French-Brazilian 6.1

18. Oi (Brasil Telecom) Telecom Private Brazilian-Portuguese 6.4

19. Cargill Consumer Private 6.2

20. TIM Telecom Private Italian 6.2

22 Ford Automotive Private 6.1

23 Mercedes-Benz Automotive Private German 6.1

25 Arcelor Mittal Iron & teel Private Anglo-Indian 6.0

27 Texaco Wholesale Private 5.9

28 Claro Telecom Private Mexican 5.7

29 mbratel Telecom Private Mexican 5.6

31 letropaulo/A nergy Private -Brazilian 5.2

34 ouza Cruz (BAT) Consumer Private 4.9

40 nilever Consumer Private Anglo-utch 4.6



Brazil started opening its economy at the beginningof the 1990s, and today trade is distributed fairlyevenly among the United States, Europe, Asia andLatin American neighbours. There has been ashift in recent years, with China surging past theUnited States to become Brazils largest tradingpartner in 2009.

What does Brazil import? Principally moresophisticated machinery and tools, electronicequipment, components, and various chemicalsand raw materials. Most consumer products anddurables carry a Made in Brazil label, but they

will normally contain a signicant proportion ofimported parts.

The countrys exchange rate has been inthe vision of many economists overvalued forsome time, in part because of the high domesticinterest rates, and this has led to a gradual but

worrying process of deindustrialisation. The LCAconsultancy estimated that the domestic marketshare of imported electronic and communicationsequipment rose from 23 per cent to 50 per cent

between 2002 and 2010, for example, while textilesrose from 4.5 per cent to 15 per cent. Localcompanies are investing and modernising andmany sectors have been protected with stiff tariffs,but the jury is still out on how much Brazil, amiddle-income country with few specic industrialadvantages, will be able defend its manufacturingsectors against cheaper Asian rivals. Cheap toys,clothes and footwear are classic examples.

What about infrastructure?

With all the infrastructure investments plannedfor the World Cup, the Olympics and the FasterGrowth Program (PAC-2), some sectors maycome under particular pressure. The country has

3. What Brazil needs from the worldfor many years been an exporter of heavy earth-moving equipment, and international marketshave slumped since the crisis, so theres plenty ofspare local capacity for basic items like bulldozers.Recently, however, there has been an inux ofcheaper basic equipment from China. Higher-

value, more sophisticated items like large cranesand tunnelling shields are imported and should bein strong demand.

Also, as Brazil pours money into highwayexpansion, the imports of asphalt have soared.The only local supply is from Petrobras reneries.These have a capacity of three million tonnes per

year but there is not always enough in the right partof the country, or at the right time of the year construction in many parts of Brazil has a strongseasonal trend because of heavy rainfall. Asphaltimports were US$47 million just in the rst half of2010, compared with US$15 million for the wholeof 2009 and under US$5 million in previous years.Petrobras has new reneries planned, but theseare long-term projects and the asphalt shortage

highlights the various bottlenecks Brazil will facegoing forward. Cement companies have alsoannounced investments to expand capacity.

However, what construction companiescomplain about most is the lack of specialistmanpower. Skilled machine operators andmaintenance staff are at a premium. Salaries forexperienced civil engineers have risen sharply andsome companies have called back retirees.

The Ministry of Labour and Employmentreported a 27 per cent jump in the number oftemporary work permits issued for foreign engineers

in the rst seven months of 2010, compared withthe same period in 2009, but the great majority were for crew coming in from the United States,the United Kingdom and the Philippines to workon offshore oil rigs.



Foreign engineers are allowed to worknormally in Brazil but they must have their foreigndegree validated by the Ministry of Educationand Culture, which normally seeks the advice ofleading Brazilian universities that have courses inthe specic area. The result is then assessed by theFederal Council of Engineering, Architecture and

Agronomy (Confea), a professional association.

The process is essentially the same as for a Brazilian who studies abroad and then wishes to have hisforeign diploma recognised. Confea says it is fairlystraightforward, and some 900 foreign degreeshave been recognised.

However, this academic recognition is not thesame as a work permit. The engineer or architectseeking to work in Brazil must also obtain a visa see Section 9.

And what about lawyers?

The situation for foreign lawyers is broadly thesame. There are no nationality requirements assuch to practice law, but a foreign law degreemust be validated and the candidate must pass theexams of the Brazilian Bar Association (OAB) inthe normal way.

The law does allow foreign law rms to setup ofces in Brazil but only to act as consultants

with respect to non-Brazilian law, for example incross-border mergers. Such ofces must registerannually with the OAB there are a dozen soregistered in So Paulo and are not allowed topractice Brazilian law. Neither may they enter intoa permanent relationship with a Brazilian law rm.

The Law Firms Study Centre (Cesa) hasbeen investigating foreign law ofces followingsuggestions that some might have used local lawyersas a front to effectively practice Brazilian law. Cesadid not accuse the foreign law ofces of acting inbad faith, but said it merely wished to clarify exactly

who could do what.On the bright side, both the World Cup and

the Olympics should generate a great volumeof legal work (see Section 7) for both local

and international companies, and most majorBrazilian rms have long-established links withoverseas counterparts.



The following pages offer summary descriptionsof the ve major sporting events scheduled to takeplace in Brazil during 2016.

Notes

Data validity: Project descriptions, costs andfunding sources are as published in July 2010,unless otherwise indicated. Information of projectfunding describes planned sources as per ofcialdescriptions, and does not necessarily imply suchnancing has been granted.

4. The World Cup and the OlympicGames: events, stadiums and directlyassociated investments

Monetary values: The World Cup is budgetedby the Brazilian Government in Brazilian currency(R$, real, reais), while the Olympic Games wereoriginally budgeted by the Brazilian OlympicCommittee in R$ and US$ at 2008 actual and 2016

projected exchange rates. Brazilian infrastructureprojects are budgeted by the Brazilian governmentin reais. The exchange rate at 30 June 2010 wasUS$1.00 = R$1.80, and this has been used at variouspoints throughout this section to give guidelineindications of US$ values. However, nal equivalent

values will depend on exchange rate uctuationsover the years and the breakdown of each itembetween local and imported content.

What 5th CiSM Mltary World games

Where Rio de Janeiro

When 16-24 July 2011

internatonal oransaton International Military ports Council (Conseil International du port Militaire CIM)

ocal oransaton Military ports Commission of Brazil (Comisso esportiva Militar do Brasil CMB)

Who can take part Members of the armed forces of 132 member countries

Compettors (estmated) 4,900

otal partcpants (estmated) 6,700

oursm mpact ot signicant

Cost, nestment and fundn Mainly covered by the military budget



What FiF Confederatons Cup

Where Brazil four cities yet to be selected

When 2013 (probably June)

internatonal oransaton The Organising Committee for the FIFA Confederations Cup, appointed by the FIFA

xecutive Committee

ocal oransaton Local Organising Committee of the 2014 FIFA World Cup (LOC), appointed by the Brazilian

Football Confederation

Who can take part ight national football teams

Compettors 264

otal partcpants 400 500 (estimated)

oursm mpact epends on qualifying teams, but probably not substantial

Cost, nestment and fundn Basically included in the main World Cup programme

What FiF World Cup

Where Brazil 12 cities nationwide plus training centres

When June-July 2014

internatonal oransaton FIFA Organising Committee, appointed by the FIFA xecutive Committee

ocal oransatons Brazilian Football Confederation (CBF)

2014 FIFA World Cup Organising Committee Brazil (LOC), appointed by the CBF

Who can take part 32 national football teams

Compettors 1,056

otal partcpants 3,000 (estimated) plus local staff and volunteers

oursm mpact 600,000 (Brazilian Tourism Ministry)

250,000 (outh African media estimate for 2010 Cup, after the event)

Eent cost R$5.7 billion (stadiums)

otal nestment R$17.3 billion (including urban transportation improvements)

Fundn sources Public and private investment, plus loans

Military World Games 2011

The CISM Military World Games are a fairly newaddition to the global sporting calendar. They wererst held in Rome in 1995, and then at four-yearlyintervals in Zagreb (Croatia), Catania (Italy) andHyderabad (India), with Rio de Janeiro selected tohost the fth games in 2011 under the slogan ThePeace Games. In March of 2010, the rst WinterMilitary World Games were held in Acosta (Italy).

Competitors are military sportsmen and womenfrom around the world 132 countries are membersof the Brussels-based International Military SportsCouncil (commonly referred to under the Frenchacronym CISM). Each country is represented by

its armed forces or an agency linked to them. Inthe United States, for example, representation is

via the Armed Forces Sports Ofce, while in Brazilit is the Military Sports Commission of the DefenceMinistry (Comisso Desportiva Militar CDM).

There are various parallels with the OlympicGames, and indeed the CISM is ofcially recognisedby the International Olympic Committee with

which it has collaborated in several events. Membercountries bid to host the games and the winner ischosen by secret ballot: Brazil beat Turkey for 2011.Once awarded, the games are organised by the local

member with the CISM keeping a watching brief.Despite the parallels, the Military World Gamesare a much more low-key affair than the Olympics, at



What lympc games


When 5-21 August 2016

internatonal oransaton International Olympic Committee (IOC)

ocal oransatons Brazilian Olympic Committee (Comit Olmpico Brasileiro COB)

Local Organising Committee (Comit Organizador dos Jogos Olmpicos Rio 2016)

Olympic Public Authority (Autoridade Pblica Olmpica APO)

Brazilian ports Legacy Company (mpresa Brasileira de Legado sportivo A Brasil 2016)

Who can take part Teams from the 205 ational Olympic Committees within the IOC

Compettors 10,500 in Beijing in 2008 from 204 ational Olympic Committees

otal partcpants alf a million volunteers in Beijing

oursm mpact Possibly over 75,000 (see text)

Eent cost $2.8 billion (2008 prices, including Paralympics)

otal nestment $14.4 billion (2008 prices, see text)

Fundn sources Public and private investment, plus loans

What aralympc games


When 7-18 eptember 2016

internatonal oransaton International Paralympic Committee (IPC)

ocal oransaton Brazilian Paralympic Committee (Comit Paraolmpico Brasileiro CPB)

Who can take part Teams from 165 ational Paralympic Committees (PC)

Compettors 4,200 in Beijing in 2008 from 148 countries

otal partcpants /A

oursm mpact ot signicant

Eent cost $170 million, within overall Olympics budget

otal nestment and fundn Within overall Olympics budget

least in terms of investment. The Rio games will mainlyuse existing military sporting infrastructure and somefacilities that were built or signicantly upgradedfor the XV Pan American Games in 2007, and theevents are of similar proportions: 5,633 athletes from42 countries took part in the Pan American Games,

while some 4,900 athletes and 1,800 delegates fromover 100 countries are expected in 2011. This existinghigh-quality infrastructure was cited by the city as oneof the key reasons leading to its selection.

The largest single investment is three athletesvillages housing a total of 7,190 participants in low-rise

apartment blocks, complete with restaurants, saunas,gyms, information and medical centres, media

facilities, launderettes and internet cafes. These willbe converted into ofcers housing after the games,one centre for each of the three armed forces.

Military Games are signicantly smaller thanOlympic Games. There will be 20 different eventsincluding ve specically military sports, and beach

volleyball as a demonstration. The Beijing Olympicshad 11,000 athletes competing in 28 sports with 302events. Some 700 journalists might cover the event,compared with almost 25,000 at Beijing. In terms oflogistics and security the Military Games offer Riocity authorities an excellent warm-up for the World

Cup and Olympics, building on the experiencethey gained at the Pan American Games.



Organisation

The fth CISM Military World Games are beingorganised by the Brazilian armed forces. An inter-ministerial Committee for the Management ofGovernment Actions supervises an ExecutiveCommittee. Below this an Organising Committeecoordinates the six main areas of preparation:

human resources, corporate relations, gamesoperations, logistics, security and intelligence, andcommand and control.

Venues and events

Pan american Games venues

Joo Havelange Olympic Stadium: athletics,mens football

Maria Lenk Aquatics Centre: swimming Micimo da Silva Sports Centre: basketball,

womens football

BOARD OF MINISTERS

EXECUTIVE COMMITTEE(MoD)

ORGANISING COMMITTEE

EXECUTIVE SECRETARIATDirector: President of BrazilianDelegation to CISM

CISM PROJECT OFFICER

HUMAN

RESOURCES

CORPORATE

RELATIONS

OPERATIONS

OF THE GAMES

SECURITY AND

INTELLIGENCE

COMMAND

AND CONTROL

Training

Recruitment

and Selection

Volunteers

Uniforms

Institutional

Relations

Media and

Marketing

International

Relations

Sports

Awards

Sports Policy

and Services

Facilities

Operation

Doping Control

Intelligence

OperationsTransport

Catering

Lodging

Health

General Services

Operations

Security

Accreditation

LOGISTICS

Information

Technology

Tele-

communications

Operations

Communications

Other existinG venues

The Deodoro Sports Complex: equestrianevents, military pentathalon

Modern Pentathalon Centre: modernpentathalon

Guanabara Bay: sailing Copacabana Beach: triathlon, beach volleyball

Maracanzinho Gymnasium: volleyball National Target Shooting Centre: aeronautical

pentathalon, shooting CEFAN Naval Physical Education Centre: naval

pentathalon, taekwondo CIAMPA Marine Corps Academy: boxing Parachute/Armoured Cavalry Barracks: fencing Army Physical Education Centre: judo Out of town: skydiving, orienteering



FIFA World Cup 2014 and Confederations

Cup 2013

The FIFA World Cup will take place in Brazil in2014, the fth time the tournament has beenstaged in South America. Brazil also hosted theCup in 1950.

World Cup football matches will take place in

12 cities nationwide, each with a football stadiumthat is being built from scratch or signicantlyrenovated. Each city will have games in one stadiumonly. The federal government and host cities areplanning substantial investment focusing mainlyon urban transportation, and most cities will seea greater or lesser volume of private investment inassociated areas such as hotels.

Each city has nominated one or more urbantransportation projects to improve mobility, andthese have been included in a federal governmentpriority programme. These are the projects listed

on the following pages. Some of them offer specicadvantages for the World Cup, for example a Metroor Bus Rapid Transit (BRT) line to a stadium, butmany will simply improve general trafc ow. Manyof these transportation projects were part of citiesexisting long-term planning, meaning that the maineffect of the World Cup is to bring them forward.

Financing

Direct public spending will be split between the threelevels of government federal, state and municipal with additional funds in the form of loans comingfrom two major federal banks, the Federal SavingsBank (CEF) and the Brazilian Development Bank(BNDES). Generally speaking, the CEF nancesurban development while the BNDES will lend forstadium construction and upgrading.

In all, these sources are forecast to providesome R$17.3 billion of funding, the equivalent ofUS$9.6 billion at current exchange rates. Amountsshown in this section are tax-inclusive, althoughsome state governments have enacted or areconsidering scal relief and other conditions for

the World Cup. Also, the Brazilian Congress isconsidering legislation that would reduce taxes onconstruction. See Section 7 for further details.

An economic impact study carried out for theBrazilian Sports Ministry by Value Partners BrasilLtda, a consultancy, suggested that total WorldCup-related investments could reach R$33 billion(US$18.3 billion).

In addition to the amounts shown in the tableon page 16, the Sports Ministry study projected

World Cup-related investment in airports at R$4.8billion; ports, R$0.7 billion; IT and telecom, R$3.8

billion; security, R$3.6 billion; hotels, R$1.9 billion;and health, R$1.0 billion. Investment opportunitiesin several of these areas are discussed in Section 5of this booklet.

The Sports Ministry study forecast that 78 percent of all World Cup-related investment wouldcome directly from government coffers, plus10 per cent in the form of repayable state-banknancing for private projects and 12 per centfrom private sources. Direct economic impact wasestimated at R$47.5 billion from 2010 through2014, generating on average 0.26 per cent of GDP

through the period. So Paulo and Rio de Janeirowere projected to account for 45 per cent of thisimpact, with Braslia adding a further 9 per cent.Indirect economic impact was projected at R$129.4billion through 2014 or R$135.7 billion through2019, with improved infrastructure and increasedtourism being the main multipliers.

Organisation

The 2014 World Cup is being organised by the Local

Organising Committee (LOC). This is presidedover by Ricardo Teixeira, who is also presidentof the Brazilian Football Confederation (CBF), apost he has held since 1989. So far the LOC has asmall policy staff with much of the basic planningoutsourced and/or handled by the CBF. Stadiumdevelopment is handled by the host cities, with theLOC and FIFA monitoring progress.

The 12 cities chosen to host matches wereselected from 18 applicants. They are notnecessarily the 12 cities with the largest populationsor economies, nor are they the 12 most importantin terms of football. All selected host cities are statecapitals except Braslia, which is the federal capital.

Among the criteria for selection was a desire toinclude at least one venue in each Brazilian region.However, not all of the host cities have majorfootball clubs that regularly draw large crowds.

While there is little doubt that all stadiums willdraw a decent crowd for World Cup games, thereare questions about the post-World Cup economic

viability of some of them. Some city authorities saythis will be mitigated by opening up the stadiumsfor non-sporting events, and are designing them toallow for this.

It is likely that the 12 host cities will be groupedregionally into four blocks of three to reduce travelduring the initial groups stage of the tournament.The probable division is reected in the investmenttable. It should be noted that several details ofstadium construction and renovation and urbantransportation projects are still being nalised.

Two major items linked to the World Cup arethe International Broadcast Centre and the FIFAConference. The Broadcast Centre is a sought-after investment because it tends to concentratethe majority of international media spending

throughout most of the competition, while theFIFA Conference is a brief but prestigious eventthat attracts global press coverage.



The Confederations Cup

This 2013 tournament is essential a dry run forthe World Cup. It takes place one year ahead ofthe main competition and gives the host nation anopportunity to test its organisation, transportation,security and other arrangements, plus some of thestadiums. There is no specic capital investment

for the event.

The eight participating countries will be Braziland Spain as the host nation and reigning worldchampion respectively, plus the winners of FIFAssix regional competitions: the 2011 Asian Cup; the2011 Concacaf Gold Cup; the 2011 Copa America;the 2012 African Cup of Nations; UEFA Euro 2012;and the 2012 OFC Nations Cup.

World Cup investments currently forecast by the Brazilian government*

(Costs for stadiums and other infrastructure)

Host cty (state) inestments ($ mllons)

Federal

oernment

(CEF

nancn)

Federal

oernment

(BDES

nancn)

State

oernments

Muncpal

oernments

thers otal

Manaus (AM) 800.00 375.00 846.90 30.00 0.00 2,051.90

Braslia (F) 361.00 400.00 348.30 0.00 0.00 1,109.30

Cuiab (MT) 454.70 330.00 150.70 0.00 0.00 935.40

Recife (P) 589.00 456.10 173.20 23.30 0.00 1,241.60

atal (R) 361.00 250.50 119.20 30.40 0.00 761.10

Fortaleza (C) 414.40 400.00 320.30 50.30 0.00 1,185.00

Rio de Janeiro

(RJ)

0.00 1,590.00 200.00 420.00 0.00 2,210.00

Belo orizonte

(MG)

1,023.30 300.00 126.10 498.70 0.00 1,948.10

alvador (BA) 541.80 400.00 217.60 0.00 0.00 1,159.40

o Paulo (P) 1,082.00 400.00 1,508.50 334.50 90.00 3,415.00

Curitiba (PR) 440.60 25.00 0.00 52.00 113.00 630.60

Porto Alegre (R) 456.20 0.00 0.00 36.50 130.00 622.70

Total 6,524.00 4,926.60 4,010.80 1,475.70 333.00 17,270.10

% 38% 29% 23% 9% 2%

* For data validity see notes at the start of this section; for acronyms see list at the end of this booklet.



Host City Proles

Manaus, Amazonas State

Metropolitan region population2.04 million

Economic activityManaus city is a tax-free zone for manufacturing,

with several leading international IT, electronics,household appliance and motorcycle makers.

Municipality Population: 1.74 million Area: 11,401 km2

GDP/capita: R$20,894

Stadium Vivaldo (Estdio Vivaldo Lima) belongs to

the state government. New stadium, old onedemolished; current capacity 31,000, plannedcapacity 48,000.

Costs (ofcial) total R$515 million. Sources of funding R$140 million state

government, R$375 million BNDES. Costs (latest reported) R$514 million. Status demolition under way; completion due

December 2012.

Urban transport improvementTotal cost (ofcial): R$1.54 billion.

Key elementsConstruction of R$1.3 billion monorail rapid transitsystem running 20 km northwards from old citycentre, basic project by PricewaterhouseCoopers,funded R$706.9 million by the state governmentand R$600 million by the federal government via

the CEF, completion December 2013; implantationof 77 km BRT system in east of city, integrating withmonorail, R$230 million funded R$200 by federalgovernment via the CEF, R$30 million by municipalgovernment, completion March 2014.

Note

Monorail tender on hold as of July 2010 awaiting improved projectand nancial detailing by state government.

Braslia, Federal District

Federal District population2.61 million

Economic activityMainly the federal government, associated agenciesand state companies, embassies, and publicaffairs ofces of private companies. Some light

manufacturing: agribusiness, pharmaceuticals, IT.Municipality Area: 5,802 km2 GDP/capita: R$40,696

Stadium Man Garrincha belongs to the Federal

District government, current capacity 42,000,planned capacity 71,000. Major renovation,

virtually a new multipurpose stadium with newgrandstands, new roof, commercial centre,underground parking. Will be renamed BrasliaNational Stadium.

Costs (ofcial) R$745.3 million. Sources of funding R$345.3 million federal

district government, R$375 million BNDES. Costs (latest reported) R$696 million. Status partial demolition started; contract

signed July 2010 with consortium headed by ViaEngenharia and Andrade Gutierrez; completionbefore July 2013 in time for Confederations Cup.

Urban transport improvementTotal cost (ofcial): R$364 million.

Key elements

Construction of rst part of a 22.5 km light railsystem, running from the airport through thecity centre. Funding R$3 million from federaldistrict government, R$361 million from federalgovernment via CEF. Work underway; delivery ofairport link due March 2012.



Cuiab, Mato Grosso State

Metropolitan region population824,000

Economic activityA major centre in Brazils new western agriculturalfarming region, with fast-expanding agribusiness.

Municipality Population: 551,000 Area: 3,538 km2


Stadium Verdo (Estdio Jos Fragelli) belongs to

the Mato Grosso state government, currentcapacity 40,000, planned capacity 42,500.New multipurpose stadium with removablegrandstands to allow exible use. Developmentaround the stadium will include restaurants,hotels and parking.

Costs (ofcial) R$454.2 million. Sources of funding R$124.2 million Mato

Grosso state government, R$330 million BNDES. Costs (latest reported) R$342 million. Status contract signed April 2010 with

consortium headed by Santa Brbara and Mendes Jnior, old stadium demolished, constructionunder way, completion December 2012.

Urban transport improvementTotal cost (ofcial): R$481.2 million.

Key elementsConstruction of R$317.6 million BRT systemfrom the airport to city centre and hotel district;plus other associated BRT and urban road systemimprovements.

Recife, Pernambuco State


Economic activityPort city serving a wide hinterland, mainlyagricultural; big tourist centre.

Municipality Population: 1.56 million Area: 217 km2


Stadium Capiberibe (Arena Cidade da Copa or Arena

Pernambuco) an all-new multipurpose stadium with capacity for 46,154 spectators and 6,000parking spaces. It is part of a planned complexcalled Cidade da Copa (literally, WorldCup City) that includes restaurants, hotels, ashopping centre, cinemas, a convention centre,a public hospital, and a 9,000-home residentialproject for low and middle-income families. This

will be connected to the Recife metro network bya BRT system or equivalent.

Costs (ofcial) stadium R$529.5 million; otherdevelopments around R$1.6 billion.

Sources of funding stadium R$132.4 millionPernambuco state government, R$397.1 millionBNDES; other developments are private.

Status in May 2010 a consortium comprisingOdebrecht, ISG (International Stadia Group)and AEG Facilities successfully bid R$532.6million for a 33-year BOT concession contract(including construction time). This was to bestructured within a public-private partnershipin which the Pernambuco state governmentcontributes the 220-hectare site (plus 50 ha

for the stadium) and private investors providedevelopment funding. Completion dueDecember 2012.


Key elementsConstruction of a R$268 million BRT system with alink to the Cidade da Copa development; R$428.3million for improvement to urban freeways andavenues; one new metro station.



Natal, Rio Grande do Norte State


Economic activityTourism

Municipality Population: 806,200 Area: 170 km2


Stadium

Arena das Dunas new stadium to be built bythe Rio Grande do Norte state government viaa public-private partnership on a 45-hectare siteformerly occupied by the Machado stadiumand the Machadinho multisport arena. Plannedcapacity 45,000, with parking. The project mayalso include hotels and commercial buildings.

Costs (ofcial) R$350 million. Sources of funding stadium R$99.5 million

from the Rio Grande do Norte state government,R$250.5 million BNDES.

Costs (latest reported) R$400 million. Status awaiting formal launch of tender.

Completion due December 2012.


Key elementsUpgrading, extension and construction of variousurban avenues and freeways, including the link tothe airport. Funding is mainly from the federalgovernment via the CEF.

Fortaleza, Cear State


Economic activityTourism, textile industry, footwear, foodstuffs,industrial development at Pecm Port.



Stadium Castelo (Estdio Governador Plcido Castelo)

major renovation of existing stadium belongingto the Cear state government, current capacity60,000, planned capacity 66,700. Renovationincludes expansion of grandstands, with fullroong, plus 4,200 parking spaces, a runningtrack, swimming pools, tennis courts, a multi-usegymnasium, cinemas, restaurants and shops.

Costs (ofcial) R$623 million. Sources of funding R$223 million Cear state

government, R$400 million BNDES. Costs (latest reported) stadium R$452.2

million, built via a public-private partnershipwith eight-year operating rights.

Status tender process delayed due to legalquestioning; completion due April 2013.

Urban transport improvementTotal cost (ofcial): R$562 million.

Key elementsConstruction of R$265 million, 13 km light rail linebetween the main hotel region and the city centre,integrated with the existing metro system, fundingsplit between the Cear state government and

the CEF. Construction of an urban BRT system, with R$163.5 million funding split between theFortaleza municipal government and the federalgovernment via the CEF. Also new metro stationsand upgrading urban avenues.


20/60



Salvador, Bahia State


Economic activityTourism, petrochemicals, automobile manufacture,port.


GDP/capita: R$9,240

Stadium Fonte Nova (Estdio Octvio Mangabeira)

belongs to the Bahia state government. The existing 60-year-old, 80,000 capacity stadium

is being completely demolished to allow forconstruction in the same place of a 50,433capacity stadium modeled on the AWD Arenain Hanover, Germany that was used for the 2006

World Cup. Plans include 30 VIP boxes, 1,978parking slots, a football museum, shopping areasand business convention facilities.

Cost (ofcial) total R$591.7 million. Sources of funding R$400 million from the

federal government via the BNDES; balanceprivate. The Bahia state government opted fora public-private partnership that effectivelyinvolves a 35-year BOT concession, with the stategovernment pledged to pay R$107 million per

year for 15 years starting in 2013. This will coveroperation, maintenance, interest, taxes andrepayment of the R$400 million BNDES loan.

Status tendering for the PPP concessionwas won by a consortium comprising the OASand Odebrecht construction companies.Demolition started June 2010; completion due

December 2012.


Key elementA BRT corridor will be constructed from the airportinto the citys North Zone. Financing is principallyfrom the federal government via the CEF.

So Paulo, So Paulo State


Economic activityFinance, media, services, light and some remainingheavy industry, IT, business tourism, logistics.Municipality Population: 11.04 million Area: 1,523 km2


Stadium Stadium undecided as of early September 2010.

Morumbi, the citys largest stadium (capacity67,400), was initially endorsed by municipal andstate authorities as So Paulos candidate to hostthe World Cup opening match, and the clubprepared a major renovation plan. However,the surrounding region has become denselyoccupied since the stadium was inauguratedin 1960, so construction of additional facilitiesdeemed essential by FIFA was problematic. Also,the fact that the stadium is privately owned (bySo Paulo FC) complicated public nancing for

the upgrade. The Local Organizing Committeesaid that Morumbi had been ofcially excludedfrom their plans.

Corinthians FC then announced plans toconstruct a new stadium (see pictures on page22) at Itaquera, some 20 km east of So Paulocity centre and approximately one kilometrefrom an existing metro station. The stadiumis budgeted at R$335 million for a 48,000-seat capacity. According to the club, a majorconstruction company will build the stadiumfor free in exchange for 10 years naming rights.

However, the Itaquera stadium as announcedwould be 17,000 seats below the 65,000 minimumrequired by FIFA to stage the opening match.Corinthians ofcials said they could increasecapacity with temporary bleachers, but that thecost of this could not be born by the club. TheCBF said that the Itaquera project had yet to beformally presented and evaluated.

Urban transport improvementTotal cost (ofcial): R$3.18 billion.

Continued overlea



Key elementsR$2.86 billion for a 21.5 km elevated monorail systemintegrated with the existing city metro. This willconnect the Congonhas metropolitan airport (Brazilsbusiest) with the Morumbi stadium. Financing comesmainly from the state government and the BNDES,

with the municipality contributing just over 10 per

cent. The status of the project was placed in doubtafter FIFA rejected Morumbi stadium, but the stategovernment said it would go ahead anyway. There isalso a R$315 million plan for urban development inthe vicinity of the Morumbi stadium, but the status ofthis project is also in doubt.



Curitiba, Paran State


Economic activityLight and heavy industry, vehicle and auto parts,foodstuffs, electronics.



Stadium

Arena da Baixada (Estdio Joaquim AmricoGuimares) belongs to Atltico ParanaenseFootball Club, current capacity 28,327, plannedcapacity 41,375. Major renovation includesnew grandstands, new roof, multi-event facility

with business centre, stores, parking for 1,908vehicles.

Costs (ofcial) total R$184.5 million, of whichstadium budget R$138 million; additionalcommercial facilities R$46.6.

Sources of funding stadium R$113 millionprivate, R$25 million BNDES; commercial

development R$46.6 municipal government. Costs (latest reported) stadium R$138 million. Status nancing under negotiation; completion

due December 2012.


Key elementsConstruction of BRT corridors (including R$107.2million for airport/city centre route); upgrading ofurban freeways; upgrading of integrated bus/railstation; R$69.1 million for integrated trafc controlsystem.

Porto Alegre, Rio Grande do Sul State


Economic activityPort, general industry, engineering, automobilemanufacture, foodstuffs.



Stadium Beira-Rio (Estdio Jos Pinheiro Borda)

belongs to Internacional Football Club.Planned major renovation includes new roof,8,000 parking slots, press facilities, VIP boxes,panoramic restaurant and leisure areas. Currentcapacity of 56,000 will be increased to 62,000.

Costs (ofcial) R$130 million. Sources of funding private, from the sale of an

old, smaller stadium and pre-leasing for 10 yearsof VIP boxes.

Costs (latest reported) stadium R$130 to R$150million.

Status work started late July 2010; completiondue August 2012.


Key elementsR$104 million for a BRT system integrated with theexisting urban bus network; R$407.2 million for

various urban freeway and avenue extensions andupgrading; R$13.7 million for a trafc monitoringsystem to improve dispatching and movement ofbuses along designated corridors.

Note

Sources and data or the host city profles: Population IBGE 2008 or 09; GDP/capita IBGE 2007. Costs ofcial cost is that declared

by federal government; reported cost is from tender information, local governments or specialist media. All costs are ofcial unlessotherwise stated. Stadiums are called by their commonly-used name, with any different ofcial name shown in parenthesis; completiondates are as per original ofcial planning unless otherwise noted.



XXXI Olympic Games and XV Paralympic

Games 2016

The Olympic Games will be held in South Americafor the rst time in 2016. Rio won selection inCopenhagen in October 2009, beating Madrid,Tokyo and Chicago. However, IOC President

Jacques Rogge said that Rio did not win the Games

because of its location: We did not choose Brazilbecause South America had never got the Gamesbefore... we chose Brazil because of the quality (ofthe bid).

In addition to an impressively detailedcandidacy package and a vigorous lobbying effort,Rios plan for the Games built in some eye-catchingfeatures: Opening and closing ceremonies in the

legendary Maracan Stadium, now undergoingextensive renovation to stage the nals of the2014 World Cup.

Triathlon and beach volleyball will take place onCopacabana Beach. The marathon and archery events will use the

Sambadrome where Rios Carnival parades areheld.

Rowing and canoeing will take place in theRodrigo de Freitas lagoon behind IpanemaBeach.

Sailing will be based in the downtown GloriaMarina with races in Guanabara Bay.

Cycle road races will take place in the FlamengoPark, beside the bay.

Most athletes will stay in a purpose-built OlympicVillage in the Barra da Tijuca beach zone nearthe main competition sites. This and three other

villages for media and event staff will provide25,000 bedrooms.

One trump card for the Rio candidacy was its abilityto t virtually all events into the city. Only football

will be spread around, with games in So Paulo,Braslia, Salvador and Belo Horizonte.

The total cost for the Rio Olympic Games is theequivalent of US$14.4 billion. Broadly speaking thiscomprises US$2.8 billion for the Games themselves

with their immediate associated infrastructure,

plus US$11.6 billion for general infrastructureupgrading promised by the federal, state andmunicipal governments. These gures include theParalympics, which use the same infrastructure andhave a relatively small operating budget. The wholepackage carries a federal government guarantee.

Much of the general infrastructure budgetapplies to projects that were planned anyway, so theimpact of the Games is essentially to bring theseprojects forward and give them a hard deadline.Main infrastructure projects are describedfollowing the Games Map on the page 25.

Organisation and legacy

Rio has drawn on Londons experience and issplitting Games preparations between the LocalOrganising Committee (LOC) and an OlympicPublic Authority (Autoridade Pblica Olmpica

APO). Essentially the LOC stages the Games whilethe APO, a consortium that brings together thefederal, state and municipal governments, takescare of the infrastructure that makes them possible.However, to give the structure more managerialmuscle and agility, Brazil has created a third body,

a company that is 100 per cent owned by thefederal government called the Brazilian SportsLegacy Company (Empresa Brasileira de LegadoEsportivo SA Brasil 2016). This is designed to bethe executive arm of the APO.

As with all Olympic bidders, Rio was anxiousto demonstrate that it will invest in projects thatare useful to the city and country afterwards. Thefact that the largest stadium already exists, and isfrequently full for local football matches, concertsand other events, gives it a head start.

One promised legacy item is environmentalinvestment. During 2016 organisers promise toplant 24 million trees to restore degraded areas ofthe Tijuca mountain rainforest that rises behind thebeaches. There are also substantial programmes topromote sports education in schools.

The tourism potential is uncertain. Beijingactually saw a drop in foreign visitors during the2008 Olympics period, but analysts list severalpossible reasons. Some economists say that mega-events tend to generate their main tourism impactover several subsequent years.

According to Rio Olympic planners, the city willhave 28,700 rooms in hotels and short-let ats of

two stars and above, counting scheduled expansionthrough 2016. Cruise liners berthing at a plannednew passenger quay will potentially add another8,500. If all these 37,200 rooms are lled with anaverage of two people, they would accommodate74,400 visitors. Other tourists may seek bed-and-breakfast type accommodation.



Map of Rio Olympics plan

1 Barra de uca ockey, tennis, velodrome, aquatic center, Olympic arena, main Olympic Vil lage,

Media Village, broadcast center, main press center

2 odro de Fretas aoon Canoeing, rowing

3 Copacabana Beach Triathlon, beach volley,

4 Flameno ark ailing, cycling

5 Maracan Football, opening and closing ceremonies archery and Marathon start/nish in the

amba Parade tadium

6 joo Haelane Stadum Athletics

7 Deodoro Mountain bike, equestrian events, shooting, modern pentathlon



Rio key urban challenges

Investments in Rio de Janeiro

The World Cup and the Olympics have thepotential to transform Rio de Janeiro. The self-styled marvellous city endured decades of gradualdecline after the federal government moved out

to Braslia in 1960 and the drug trafckers movedinto the favela slums. But towards the end of thecentury Rio started to pull itself up by its ip-ops.The successful 2016 Olympics bid followed a failed

attempt for the 2012 Games, when Rio didnt evenmake the nal cut. But the city gained credibilityby hosting a spectacular Pan American Games in2007, with almost 6,000 athletes from 42 countries.Substantial federal investment in security meantthere were no signicant problems.

The same kind of security apparatus willhappen again in 2016, but for the Olympics

the federal government is also working withthe state and municipality on numerous majorinfrastructure projects.

Olympic-related infrastructure investments listed by the federal government

rea otal ($ bllons)

Accommodation 2.59

ports infrastructure (mainly stadiums) 1.52

ecurity 0.48

Technology 0.41

Transportation 7.46

TOTAL 12.52

Virtually all of this is government responsibility. Just R$565 million (37 per cent) of the sportsinfrastructure budget and R$72 million (15 percent) of the technology budgets are scheduled tocome through the Rio 2016 organisers.

However, total investment in the city will befar greater. Rios bid for the Games indicates totalcapital spending of R$23.2 billion or US$11.6billion at 2008 prices.

The question of which investments are directlyor indirectly Games-related is sometimes debatable.This happens because several of the infrastructureprojects are components of ongoing investments inthe same area, and have been brought forward orsimply promoted to Olympics-related.

Rio International Airport illustrates the point.Expansion of Rios main airport (described below)is included in both the Olympic bid and the federalgovernments Olympics-related investments atR$810 million or US$405 million (2008 values).The federal government includes this project inits Faster Growth Plan (PAC) which details generalinvestments nationwide, meaning that it wouldbe done anyway, but it also lists the work as anOlympics-related expenditure contained withinthe R$7.46 billion transportation item shownin the table even though it is timed to be ready

for the 2014 World Cup. The Olympic bid goesto considerable lengths to describe how Brazilsand particularly Rios airport expansion will help

the Games, and lists the Rio project in its roll ofinfrastructure commitments, but excludes it fromincremental expenditure because it was due tohappen anyway.

Irrespective of the budget heading, the mass ofinfrastructure and other projects offer signicantbusiness opportunities. Funding is mainly fromthe federal, state and municipal governments, butsome private investment is planned, for example inthe metro expansion and Olympic Villages. Amongthe projects, with values as listed by the federalgovernment, are the following:

Rio airports

Antonio Carlos Jobim Airport (RioInternational): The annual capacity of 15million passengers per year (in 2008) will beincreased to 25 million by 2014 from 9,100/hour to 15,000/hour with the two runwaysextended to handle the Airbus A380. Cargocapacity will be expanded to 120,000 tonnes/

year. No new terminal is planned but the twoexisting ones will receive satellites that increasetotal international gates from 23 to 30 anddomestic gates from 24 to 34.

Santos Dumont Airport (Rio domestic):Passenger capacity will be boosted from 3,000 to5,000 per hour.



Metro and BRT

R$2.0 billion for three metro projects, including5 km of new line plus modernisation of variousolder stretches.

A R$2.5 billion BRT system with three lineslinking the main Olympic zone in the Barraneighborhood with the Ipanema/Copacabana

beach zone, and extending out to varioussuburbs.

Planners have discussed substituting part of theproposed BRT system more metro line.

Urban freeways

A R$1.3 billion half beltway looping around the West, North and East of the Rio metropolitanregion. This 129-km project is already beingbuilt. It has little direct link with the Games but

is designed to divert substantial through-trafcaway from the urban region.

Urban rail

A R$590 million, four-part upgrading of Riosexisting 225-km commuter rail service. Mainlymodernisation rather than expansion.

Environmental

Games organisers have pledged environmentally-friendly green Games, with re-use of water andindependent sewage treatment plants at someOlympic venues. Among planned investmentsare R$165 million (including private money) toclean up the Rodrigo de Freitas Lagoon wherecanoeing and rowing competitions will takeplace. Games organisers have also promised fullcarbon emission offset, to which end they willplant three million trees in a 1,360 hectare site.

Olympic villages

R$2.6 billion of investment is planned for variousOlympic Villages for athletes, staff and media.These will total 25,000 bedrooms. Plans call forthem to be totally nanced by private companiesand then sold off afterwards.

Cruise liner berths

Rio is growing as a cruise liner port of call. Thegovernment is scheduling a major upgradeto an existing passenger terminal in Riosold downtown docks area to be ready for theOlympics, when cruise ships will make up anyhotel-bed shortfall. The passenger terminalcould house leisure options like an aquarium,museum and cultural spaces, and maybe ofces.

Stadiums

Three major Olympic venues exist already the Joo Havelange Stadium and the Maria Lenk Aquatic Centre were built for the 2007 Pan American Games and will house athletics andsome swimming events. Upgrading or expansionof these and other existing venues is budgetedat US$124 million. Maracan Stadium isundergoing major renovation for the World Cupand is costed under that budget. Constructionof permanent new venues for basketball, martial

arts, synchronised swimming and the like hasbeen allocated US$556 million.



5. World Cup and Olympics:the gold rush

Faster Growth Plan PAC-2: Major areas US$ billions*

rea 2011-14 fter 2014 otal Share

nergy 232.75 313.55 546.30 68.70%

ousing (including MCMV) 139.10 0 139.10 17.49%

Transportation 52.25 2.25 54.50 6.85%

Better Cities 28.55 0 28.55 3.59%

Water and Power for All 15.30 0 15.30 1.92%

Citizen Community 11.50 0 11.50 1.45%

TOTAL 479.45 315.80 795.25 100.0%

Dstrbuton 60.3% 39.7% 100.0%

As announced by the federal government in March of 2010; programme names are unofcial translations

* R$ values converted unofcially at R$2 = US$1; current rate is roughly R$1.8 = US$1.0

Nobody doubts that major sporting events can bebig business. The challenge is deciding the best wayto get involved. Brazil will be spending far moreon general infrastructure investment than thestadiums themselves.

There are various estimates of how much theWorld Cup and Olympics might generate in terms ofbusiness and investment opportunities. Publishedestimates for Cup-related investment range fromUS$30 to US$55 billion, while planners for the

Olympics speak of US$14.4 billion of event-relatedbusiness and infrastructure spending, withoutcounting general private-sector investment. Firjan,the Rio State Industry Federation, has estimatedRio state could receive total investment of US$120

billion through 2016, although that includes muchgeneral private investment.

The Value Partners study mentioned in Section4 of this booklet suggested that World Cup-relatedinvestments could reach R$33 billion (US$18.3billion), with a direct economic impact of R$47.5billion from 2010 through 2014, generatingon average 0.26 per cent of GDP through theperiod with total direct and indirect economicimpact of R$183.2 billion roughly US$100

billion at current exchange rates through 2019.PricewaterhouseCoopers estimated a total ofUS$50 billion in Cup-related infrastructure, with a1 per cent increase in GDP during 2014.



High speed rail

This is the largest and most glamorous project thatmightbe built for the Olympics a high-speed raillink between Rio de Janeiro and So Paulo, servinga combined population in the two metropolitanregions of 32 million, plus several million in nearbycities. It would be the countrys biggest rail project

for many decades, if not ever. This is a world-scaleproject with total cost estimated at between R$35and R$50 billion US$19 to US$28 billion atcurrent exchange rates.

Brazil currently has some 30,000 km of old track,much of which deteriorated through inadequatemaintenance until privatisation via long-termconcessions in the 1990s. Virtually all inter-citypassenger services died away before privatisation.Key routes are now being modernised and there issome network expansion, mainly with governmentnance and with an emphasis on bulk freight. PAC-

2 allocates a total of R$43.9 billion to rail expansionand upgrading through 2014.Proponents of the high-speed link say it would

attract a substantial part of the passenger trafcnow using the Rio-So Paulo air shuttle.

The complete route starts at Campinas, 100 kmnorthwest of So Paulo, passes through So Paulo citycentre, then heads to Rio via the Paraba Valley. Some70 km of the 511 km would be in tunnels, mainly todescend the Serra do Mar mountain range. Journeytime is projected at 80 minutes non-stop, althoughsome trains would stop at So Paulo and Rio de

Janeiro international airports and one or two cities

along the way. Top speed is 280 km per hour. Various of the worlds leading high-speed

rail equipment makers have expressed interestin the project and some consortia with Brazilianconstruction rms have been tentatively formed.The project is likely to be undertaken via someform of public-private partnership. No rm datehas been set for tender but the government said it

will be built for the 2016 Olympics.Other high speed rail routes have been

discussed, for example from So Paulo to BeloHorizonte, but they lie a distant second to the Rio

So Paulo link.

Urban transportation

Sinaenco calculated that almost 77 per cent byvalue of the R$9.8 billion of urban mobility projectsdesignated by the federal government as WorldCup-related will feature some form of bus rapidtransit (BRT) or monorail technology. At leastR$239 million or 2.4 per cent of total cost referredto project design.

However, this represents just a fraction ofurban transportation projects under way in Brazil.The biggest ongoing project is the So Paulo citymetro (subway). This currently measures 69 km,

with another 20 km under construction, and

Adding up direct spending on stadiums andinfrastructure projects is fairly straightforward;determining the potential multiplier effect is lessprecise. Even more debatable is deciding whichpublic construction projects are not merely relatedto these major events but are happening onlybecause of them. Applying the most restrictive ofdenitions, excluding all projects that would not

happen without the World Cup and Olympics,the net infrastructure increment nationwideis probably quite small, because virtually allinfrastructure now being classed as Olympics-related or World Cup-related investment wasalready rmly or provisionally included in national,state or municipal development programmes. Thismeans a much greater chance of leaving a positivelegacy.

Stadiums

The greatest potential for white elephants is instadiums. While football is Brazils national sport,not all 12 host cities have major teams that drawbig crowds. Two examples: Braslia is planning tospend R$745 million on a 71,000 capacity stadium,

while the citys two top teams play in the secondand third divisions and drew average crowds in2009 of around 4,000 and 3,000 respectively. InCuiab, capital of Mato Grosso state, the cost of thenew 42,500-seat stadium was ofcially put at R$454million, although it may come in a little under thatgure. Meanwhile, the citys two teams averagedcrowds of under 2,000 each in the 2009 nationalthird division. In all such cases, planners said thatthe stadiums will be used after the World Cup forevents other than football.

For any company seeking investmentopportunities in stadium construction or renovationas a contracted supplier of materials, technologyor services, where the payment is directly fromthe state government or via its contracted stadiumconstructor, the economic viability after 2014 isprobably not a matter of concern. However, somestadiums may be offered under some form of

build-operate-transfer concession or public-privatepartnership, in which case potential investors shouldscrutinise future usage projections with care.

The National Association of Architectural andConsulting Engineering Companies (Sinaenco)calculated that design fees for World Cup stadiumsexceed R$100 million, or some US$55 million atcurrent exchange rates, approaching 2 per cent oftotal project costs. Most basic designs have beencompleted, several of them with the involvementof foreign architects ofces that have experiencein major stadium design. A number of stadium

projects are now being built, but no Olympicconstruction or upgrading has begun.



is integrated with an urban rail system giving anetwork total of 323 km. Several other major citiesincluding Rio de Janeiro, Belo Horizonte, Braslia,Porto Alegre, Salvador, Recife and Fortaleza haveembryonic metro systems, mostly with expansionplans. No metro expansion projects were endorsedfor the World Cup, possibly because they havea very high cost per mile and a long tradition of

construction delays.

Ports and airports

Expansion of Rios Antonio Carlos Jobim airportis a World Cup-related project and described inSection 4. However, many other airports also haveexpansion plans. So Paulos international airportat Guarulhos, some 27 km from the city centre,handled 21.7 million passengers in 2009, making itthe busiest in South America. According to Infraero,

the government company that runs most airportsin Brazil, this will be expanded to 29 million per

year. Plans call for building a third runway.PAC-2 also includes R$7.8 billion for port and

waterway expansion. Most of this is split betweenseveral projects aimed at expanding capacity andefciency, including dredging, port access, cargohandling facilities, and waterway multimodalterminals. Foreign companies have been movinginto the Brazilian logistics sector. Various citieschosen to host World Cup matches will receiveinvestment for passenger liner quays.

Civil construction

Brazil is going through a residential constructionboom, nothing like the real estate bubbles thatrecently aficted many developed countries, butrather an attempt to start reducing a huge housingdecit. The federal government has launcheda major drive to build low-cost housing to attracta shortfall estimated at eight million units, withUS$123 billion of grants and nancing included inPAC-2.

Called Minha Casa Minha Vida (literally, MyHome, My Life), the lead programme provideseasy nancing for up to two million cheaper homesthrough 2014. The project is split into three incomebands, for families with monthly income up toUS$700, US$1,400 and US$2,300, approximately.Bottom-rung repayments are limited to 10 percent of family income with a minimum of R$50 permonth, and preferentially the property is registeredin the wifes name.

This programme has attracted substantialinterest from major construction groups and is

accelerating a trend towards standardisation andmechanisation in Brazilian residential construction the sector has traditionally made little use ofprefabrication, dry-wall and so on.

Outside of My Home, My Life, residentialconstruction for middle and upper-class marketsegments is also booming, thanks mainly to greateravailable credit, and substantial foreign capitalis coming in. Among recent foreign investorsin Brazilian civil construction (residential andcommercial) are Equity International (Sam Zell,US), Brookeld Asset Management (Canada),Carmignac (Luxembourg) and BlackRock (US).

Another consequence of the constructionboom is a scarcity of specialist staff. There arerestrictions on foreign architects and engineerstaking formal responsibility for projects, but theymay nd opportunities as consultants.

Construction equipment

This essential but little-noticed sector is in a slumpin Europe and the United States, but boomingin Brazil. According to Off-Highway Research, aLondon consultancy, world construction equipmentsales crashed 40 per cent from 2007 to 2009, andhave recovered only slightly in 2010. Most developedmarkets are stagnant. In Brazil, according to localestimates, 2010 sales of construction equipment

Brazils long-term investment plans

At the start of 2010 the federal governmentpublished an update of its long-term investmentplan. This is named Programa de Acelerao doCrescimento literally Faster Growth Plan andgenerally known as PAC-2, where 2 indicatesthat it is an update of proposals published 2007.

As per the table, PAC-2 forecast R$1.59 trillionof spending, mainly state-led capital investment.

At todays exchange rate that would be equal toUS$880 billion. Allowing for some devaluationof the Brazilian currency in coming years, a nalequivalent might be closer to US$800 billion.

Some 60 per cent of PAC-2 is scheduledfor 2011-2014, with 40 per cent after that. Andalmost 69 per cent of PAC-2 is for energy, andthe bulk of that will be development of Brazilsrecently-discovered ultra-deep-water sub-saltpetroleum elds and construction of some

major hydroelectric dams in the Amazon.Various of the PAC-2 projects are among those

listed by the government and/or the OlympicOrganising Committee as World Cup-related orOlympics-related, and are described as such inthis booklet.

The government also launched a specicR$9 billion World Cup PAC in January of 2010covering the urban mobility projects planned forhost cities, described in Section 4 of this booklet.

At the same time it announced R$1 billion ofadditional nancing for private-sector hotel

development, via the BNDES.



are up by around 50 per cent or 60 per cent over2009, driven mainly by the infrastructure andcivil construction boom. The great majority ofearthmoving equipment is made locally by majormultinationals, and the country is a net exporter.More sophisticated items like tower cranes,hydraulic cranes, larger off-road dump trucks,tunneling shields and directional boring equipment

are imported. CNH, JCB, Terex and Caterpillarhave recently announced or opened additionalmanufacturing capacity, while Sany announced itsdebut factory.

Financial

Several asset managers have launched investmentfunds targeting Brazilian infrastructure and othersectors they think will benet from the WorldCup and the Olympics. Brazilian banks that havelaunched or are reported to be considering suchfunds are Ita, Banco do Brasil, Caixa and Bradesco.

Among foreign banks Santander and BNP Paribashave also launched similar funds. Insurance is alsoexpected to benet in various ways: the grouprenovating the Mineiro stadium in Belo Horizonte,one of the rst projects to get under way, signedinsurance policies worth a reported R$8.2 million

with the local branch of Germanys Allianz Group.



Introduction to the Brazilian legal system

Brazil has a civil law system with legislationcoming from the bicameral federal Congress,27 unicameral state Assemblies and some 5,565unicameral municipal Chambers, all of which aredirectly elected under universal suffrage.

The country is now on its seventh constitutionsince gaining independence in 1822. The mostrecent, promulgated in 1988, contains some 50,000

words and 250 articles, plus some 15,000 wordsand 97 articles in transitional provisions. As of July2010 the charter had been amended 66 times, anaverage of once every four months. Amendmentrequires 60 per cent approval in each of two votesin the federal Senate and House of Representatives(Senado and Cmera dos Deputados).

Three separate, equal and independentpowers are specied in the constitution: legislative,executive and judiciary. The latter is divided into

various levels and areas of interest. In addition to theregular courts there are specic systems for labour,

electoral, and military matters. Each of these systemsculminates in its own Superior Court the SuperiorTribunal of Justice (STJ), the Superior Tribunalof Labour (TST), the Superior Electoral Tribunal(TSE), and the Superior Military Tribunal (STM).

Above these sits the Federal Supreme Court (STF),which hears only matters of constitutional interest.

The enormous amount of detail written into theBrazilian constitution reects in the STF workload in 2009 it handed down 121,300 judgments, manyof them virtually identical tax, labour and welfare

disputes, or cases still dragging on from Brazils eraof hyperination. The constitution was amendedin 2004 to provide that STF decisions passed by anabsolute majority of the 11-member court shouldbe binding precedent for lower courts, and indeedthe 2009 volume was 24 per cent down on the 2007record of 159,500 judgments.

The federal justice system comprises regionaland itinerant c

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