Why Brazilian Investors Have Their Sights Set on Soccer in Florida

It was an inconspicuous but significant moment when Michael Bradley easily dispossessed Ricardo Kaka after 25 minutes in Orlando City’s away match against Toronto FC last Saturday. The Brazilian was lackadaisical in midfield and failed to stop his franchise’s skid as referee Jose Rivero ejected Orlando defender Rafael Ramos in the 36th minute for a poor challenge.

Bradley, Toronto’s and the U.S. national team’s captain, orchestrated a second-half demolition of Orlando City with the visitors conceding five goals. A powerless Kaka was substituted just before full-time.

The result left Orlando languishing in eighth place in the Major League Soccer’s Eastern Conference, in a dogfight with Montreal Impact, New York City FC, and Philadelphia Union for a coveted playoff spot.

It’s not how Orlando City’s Brazilian chairman and majority owner Flavio Augusto da Silva had imagined the team’s first season in the American top flight would pan out. Da Silva became owner of the Florida franchise in 2013, when the Lions plied their trade in the USL Pro, America’s professional third-tier league.

It was the Brazilian’s first venture into soccer. As a 23-year-old, he founded Wise Up with a $10,000 loan and a single idea: to teach fluent English to adults in 18 months. Da Silva’s brainchild proved successful. Today, Wise Up has over 400 schools in six countries, and enough money to be a junior sponsor at the last FIFA World Cup.

Da Silva isn’t the only Brazilian to make a wager on soccer in America. Last December, former Brazil and Real Madrid striker Ronaldo joined the ownership group of the Fort Lauderdale Strikers, a franchise in the revamped North American Soccer League. Since retiring from competitive soccer in 2011, Ronaldo has led a successful career as a partial owner of 9ine Sports and Entertainment. His clients include FC Barcelona superstar Neymar, mixed martial arts fighter Anderson Silva, and brands such as battery maker Duracell and beer brewer Brahma.

Florida’s flagship franchises are both enduring disappointing campaigns in U.S. soccer.

Da Silva and Ronaldo are both Brazilian entrepreneurs who relish soccer. While Orlando City and the Fort Lauderdale Strikers are both enduring disappointing campaigns in the MLS and NASL respectively, they have become Florida’s flagship franchises.

“There is cultural change,” explained Leonardo Scheinkman, a Brazilian player agent and marketer, who attended Orlando City v. Philadelphia Union earlier in August. “There were 35,000 fans in the stadium. There were a lot of families and kids.”

“Orlando is a city that has embraced soccer,” added Scheinkman, “All the cars have an Orlando City mark, logo, or magnet on the back. All season tickets [18,000] for next year have been sold. In six months, this club has a bigger fan base than the Orlando Magic, who has been there for 30 years.”

In many ways, Da Silva and Ronaldo are trailblazers for other Brazilian investors who are gravitating towards soccer in the U.S. and moving away from the game in Brazil, highlighting the many shortcomings of the country’s domestic league. The business reasons for such a move are sound: the business potential and market traction of the MLS – and (to a lesser extent) the NASL – are big.

The business potential and market traction of the MLS – and (to a lesser extent) the NASL – are big.

Florida, at least in the case of Orlando City and the Fort Lauderdale Strikers, is a popular destination for the Brazilian middle and upper classes. In the 90s, Disney World fascinated Brazilian tourists who lavished thousands of dollars to visit the Magic Kingdom. Gradually, as the country’s middle class burgeoned, Florida’s temperate climate and affordable brand names tempted Brazilian tourists, wealthy expatriates, and property investors. Today, a trip to Florida has become almost a rite passage for many Brazilians.

The MLS (now in its 20th season) and the NASL are on a mission to propel American soccer to the top of the game. The league is building its brand, cultivating the live experience at soccer-specific stadiums, and gradually penetrating the TV market. Most American sports franchises have maximized their local and national TV revenue, but the MLS still has enough room to grow, with a much smaller cost of entry into the market – just $110 million per franchise.

The recent successes of both U.S. men’s national team and the U.S. women’s national team at the 2014 FIFA World Cup and the 2015 FIFA Women’s World Cup exposed more Americans to soccer than ever before. This season, MLS crowds are growing with an average attendance of 21,200. At most games, Orlando City typically draws 33,346 fans.

Then, there is also the fact that Brazilian soccer itself is in a grim state. Brazil’s unforgiving 7-1 defeat to Germany at the 2014 FIFA World Cup didn’t serve as a wake-up call for the self-serving, whiskey-drunk autocrats at the Confederação Brasileira de Futebol CBF, where the idea of modernization is loathed. Brazilian clubs are mired in public and private debt, hemorrhaging players to foreign clubs and averaging a gate of just 17,256 at the midway point of the domestic season. The Brazilian government is trying to remedy the situation with Medida Provisoria 671, which will allow for the refinancing of Brazilians clubs’ debts, but demands better management and more transparency from the clubs.

Brazilian soccer itself is in a grim state.

“It’s a historical problem of management,” said Amir Somoggi, a finance and marketing consultant who works with some of Brazil’s biggest soccer clubs. “The soccer part, notwithstanding its many deficiencies, is doing reasonably well, but the budgeting, spending, and lack of revenue are the big problems.”

“In theory, Medida Provisoria 671 can help, but it has to implement a more business-oriented vision,” continued Somoggi. “That a maximum of 80 percent of the annual gate receipts (up from 70 percent) can be spent on professional soccer allows the clubs to spend even more than today.”

With the beautiful game in the doldrums in their home nation, Brazil’s investors have every incentive to choose Florida and the rest of the U.S. to tap into a growing soccer market, hoping that one day Kaka and other marquee players will deliver victory.