Rio de Janeiro Terminates ATP Advertising Agreement Before Expiration

Written by: on 14th November 2013
Swiss Indoors tennis tournament in Basel
Rio de Janeiro Terminates ATP Advertising Agreement Before Expiration

epa03924714 Switzerland's Roger Federer serves a ball to Bulgaria's Grigor Dimitrov, during their quarter final match at the Swiss Indoors tennis tournament at the St. Jakobshalle in Basel, Switzerland, 25 October 2013. EPA/GEORGIOS KEFALAS  |

The State Government of Rio de Janeiro has torn up its three-year advertising contract with the ATP, which indicated that the chances of the ATP World Tour Finals moving there after the tour’s deal with London’s 02 area ends appear to be almost nil.

 

The agreement began in 2011, but Rio broke it midway through the season. The city’s logo had been placed on the side of the net during the ATP World Finals, as well as in videos and on the ATP website. The contract’s value was for around $9 million US, not a small amount for the tour.

 

“They pulled the advertising and we have had problems, but we believe it will be resolved,” ATP World Tour Finals tournament director Andre Silva told Tennis News Brazil. “The contact exists, we’ve been professional, the situation is still friendly, and we believe it will be all right, but there are still some details to be finalized. We believe that the Rio government will do what it promised, but without a doubt the breaking of the contract creates certain distrust, leaves a taste that’s not so good in the mouth. We have to wait. If they do what they promised when we decided to negotiate the contract and then they shut down [when it’s completed], at least that shows that they did what they promised.”

 

Brazil is undergoing economic problems and apparently the state government no longer has access to the same pot of money that it did when it first negotiated the contact. Many people have been out of the streets protesting the amount of money that government is spending on next summer’s World Cup as well as the Olympics. Estimates put those expenditures at around $30 billion and protestors note that is far too much to spend when schools and hospitals are shabby and inflation is climbing.

 

A Rio official recently said that $700 million in government aid would be needed to make up for a shortfall in balancing the Olympic budget. Organizers are not looking to sell additional sponsorships but that will be a challenge given that the financial markets aren’t high on the Brazilian economy: major banks recently reduced its 2014 growth outlook to 2.11 percent, and there is speculation that the nation’s credit rating will be downgraded.

 

Compared to what the government is spending on World Cup and the Olympics, the ATP deal is just small piece of the pie, but it seems to have been effected by Rio over reaching.

 

“You have the double-whammy of two events,” Simon Chadwick, a professor at Coventry University in England who researches sports marketing trends told the AP. “I think it’s a massive task of corporate Brazil to commit to such huge financial resources to two sets of sponsorship deals. My sense of Brazil right now is that they have overextended themselves. The cost implications of staging two mega events is just too much.”

 

Rio does have an ATP 500 tournament the week of February 17 but organizers IMX are not the same ones who signed the deal with the ATP Finals.

 

“It’s an annoying situation for me as a Brazilian,” said Silva. “

 

The country’s new secretary of sports, André Lazaroni doesn’t appear to have much interest in hosting the ATP Finals.

 

“At the moment the possibility is not great,” Silva said.

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