Los Angeles is close: understand how the financing of sports in Brazil foments Olympic medals

Brasil de Fato

It’s almost a tradition: during the Olympic Games, questions about Brazilian performance emerge strongly on social media platforms. Commonly, complaints about the structure and salaries athletes receive become important. However, the right information about how this system works did not get the same attention.

That’s why Brasil de Fato interviewed experts in sports financing to explain how the transfer of public resources to high-performance sports works.

The current public funding system for Olympic and Paralympic sports was developed almost entirely during the first two governments of Luiz Inácio Lula da Silva (Workers’ Party), between 2003 and 2010. The mechanisms that allocate most of the resources are Brazil’s Lottery Law, which sends money directly to the Brazilian Olympic and Paralympic committees and also to the confederations of each sport; the Sports Incentive Law, a mechanism similar to the Rouanet Law, which allows companies to make tax waivers to support sports projects; and the Athlete Scholarship, a monthly payment to athletes who achieve certain results, starting with youth sports.

There are also budget resources from the sports departments of the federal, state and municipal administrations. In addition, in 2008, a sui generis program was created to support the careers of high-performance athletes, the High-Performance Athletes Program (PAAR, in Portuguese) of the Armed Forces. It provides that athletes with a chance of winning medals can apply to join the Army, Navy or Air Force to take part in military competitions. For the athlete, this guarantees income, retirement and use of the Forces’ facilities for training.

“Looking back over history, we can see that, over time, Brazil has been expanding and improving its participation in high-performance sports,” says Fernando Henrique Carneiro, a researcher at the Group for Research and Sociocritical Training in Physical Education, Sport and Leisure at the University of Brasilia (Avante/UnB, in Portuguese).

“So much so that in Tokyo [Olympic Games, in 2021], the country had its best results, which was very much the result of what was being built up for the Rio 2016 Games cycle. Over time, the Lula and Dilma governments have been structuring public policies for the sector,” he explains.

This funding system was a fundamental turning point for Brazilian Olympic sports. Until 2000 – at the Sydney Games – Brazil had taken part in 17 Olympics and won 66 medals: 12 gold, 19 silver and 35 bronze.

With resources guaranteed, the scenario changed dramatically. In the following six Olympics – from Athens in 2004 to Paris this year – the country won 102 medals: 28 gold, 30 silver and 44 bronze. In 2004, only lottery funds were guaranteed. As of 2008, all policies were in place.

Read below how Brazil’s main sources of sports funding work.

Lottery Law

The oldest mechanism for funding high-performance sports in Brazil, the Lottery funds the budget of the Brazilian Olympic Committee (COB, in Portuguese), the Brazilian Paralympic Committee (CPB, in Portuguese) and other smaller sports entities.

This type of fund transfer began in 1941, but the current model for allocating resources was designed in 2001, with the Agnelo/Piva Law. It stipulates that 2% of gross lottery revenues – minus prizes paid out – should go to the COB (85%) and the CPB (15%). A series of laws approved since then have led to this division being changed, but most of the money still goes to these two organizations.

Through the committees, part of the money is distributed to the confederations that make up each of them. In this way, the lotteries also benefit the entities that manage each of the Olympic sports.

Data compiled by Avante/UnB shows that, between 2003 and 2023, the Lottery passed on more than BRL 8.1 billion (US$ 1,48 billion) to sports in amounts without monetary correction. In 2023 alone, there were BRL 883 million (US$ 161,6 million) in funds for the beneficiary organizations.

Athletic Grant

In 2004, another important pillar for high-performance sports was created: the Bolsa Atleta (“Athletic Grant”, in English). The program was created to enable athletes who achieve good results to have a stable source of income and maintain their dedication to training and competition.

Since payments began in 2005, the program has allocated BRL 1.77 billion (US$ 324 million) in grants to 37,595 athletes in all categories.

At the beginning, the program didn’t have a specific focus on high performance. With the arrival of major sporting events in the country, Athletic Grant was adapted to provide more support for athletes competing at the top of their disciplines.

“The legislation said that [the program] was to benefit athletes and that the only condition was that they remain active in sport,” explains João Victor Moretti de Souza, sports technical coordinator at the Sports Intelligence Research Institute at the Federal University of Paraná (Ipie/UFPR, in Portuguese). To win the benefit, you had to show results, but the program “didn’t determine whether the athlete had to win [medals] again.”

With the policy of attracting major sporting events, which culminated in the Olympic Games held in Rio de Janeiro in 2016, Athletic Grant gained new rules for maintaining remuneration and a new category aimed at Olympic athletes who have the best results. The monthly amounts for these athletes currently range from BRL 3,437 (US$ 627) to BRL 16,629 (US$ 3,036).

In Paris, the four Brazilian athletes who won gold medals were beneficiaries of the program: Beatriz Souza, from judo, Rebeca Andrade, from artistic gymnastics, and Ana Patrícia and Duda, from beach volleyball.

For Hugo Hoyama, a Brazilian table tennis legend, the program has changed athletes’ lives. He benefited from the grant from 2005 to 2015 in different categories. Hoyama recalls that, at the beginning of his career, he depended on his family for financial support. His father was a civil servant and was able to financially support his son. “By achieving good results, I was able to get some sponsors. Then I was able to support myself while being a professional athlete,” he says.

When he started receiving the Athlete Grant, Hoyama says that the money helped pay for health insurance, something that wasn’t guaranteed before. “Athletes can get injured or sick. Having a health insurance plan helps them have treatment,” he says. He also used the money for travel and training.

For Moretti, the Athletic Grant has a good result for what it sets out to do. “It supports athletes in a very direct way, taking away the participation of organizations,” he says. However, he also points out that there is room for improvement. “It would be possible to invest more in junior leagues. Then, in the professional categories, [remuneration] could be left more to committees and clubs,” he says. This would help foster the careers of athletes at the beginning of their careers, who find it more difficult to financially make ends meet themselves compared to those who have already secured good results.

The researcher points out, however, that several paths can lead to sporting success. “Some countries offer coaches and accommodation for athletes, for example. There’s no recipe for reaching good results, and in Brazil, the Athletic Grant has made a difference,” he says.

Sports Incentive Law and other tax breaks

The third pillar of sports funding is tax investment, through tax breaks. The Sports Incentive Law, approved in 2006, established a mechanism similar to the Rouanet Law, in which non-profit institutions can claim funds from the income tax owed to the state by individuals and companies.

Initially, the law was due to run until 2015. However, its validity was extended twice: first, until 2022; then, until 2029. In addition, the percentages of tax breaks allowed were also increased. The original text allowed companies to donate 1% of their income tax, while individuals could donate 6%. Currently, the amounts have increased to 2% and 7%, respectively.

Most of these resources, however, have been applied to sports with a social purpose, leisure and social inclusion. In 2023, BRL 983 million (US$ 179,2 million) in tax exemptions of various kinds were allocated to sports, of which BRL 273 million (US$ 49,7 million) went to high-performance athletes. The Incentive Law alone was responsible for BRL 652 million (US$ 118,8 million).

Edson Bindilatti, a bobsled athlete at the Winter Olympics, points out that this law is little known in Brazil, which reduces the chances of attracting funding. “It’s not a donation to the athlete; it’s a sponsorship. Companies can advertise it as a sponsorship,” he says.

“I think that if there was a system in which companies understood that they would have this benefit of promoting their brand through sports, there would be many more companies willing to invest,” says Bindilatti, who has also competed in athletics.

Researcher Suélen Castro, from Ipie/UFPR, says that the Sports Incentive Law may seem like an accessible mechanism, since any organization can register its project with the Ministry of Sports to qualify for funding. However, sports projects face two main difficulties.

The first is technical: it is relatively complicated to meet all the requirements for the project to be approved, one of them being proof of technical operational capacity. “One example is that organizations need to have a functioning website. But often they only have accounts on social media platforms,” says Suélen. Writing projects can also be difficult for those without experience of fundraising.

The second issue emerges when it comes to fundraising. “Generally, the best-known organizations, which already can articulate, receive more funds,” he says. Ipie’s survey shows that Pinheiros, a traditional elite club in São Paulo, is the champion in fundraising based on the Incentive Law, with BRL 200 million (US$ 36,6 million) between 2007 and 2023. Next come two youth sports organizations: Instituto Esporte Educação and Instituto Reação. Then comes the Brazilian Judo Confederation (US$ 13,9 million) and Minas Tênis Clube (US$ 13 million).

The disparities are also regional: from a total of BRL 652 million (around US$ 119 million) in 2023, BRL 460 million (around US$ 84 miliion) went to initiatives from southeastern Brazil. Suélen argues that it reproduces the market logic. “It’s important to think about mechanisms to decentralize these resources.”

Other resources

There are also other sources – smaller sources – of funding for sports. One of them is budget resources. These are the amounts allocated via the Ministry of Sport and state and municipal departments dedicated to the sector.

According to the Avante survey, these funds amounted to BRL 355 million (US$ 65 million) in 2023, around 11% of the total allocated to sport. Of this amount, BRL 114 million (US$ 20,8 million) went to high-performance sports.

Suélen explains that budget resources have always been unstable. Even though the budget provided for investments, as there is no obligation to spend money – as there is for health and education – contingencies were common. This was the reason for the development of mechanisms that don’t depend on the ministry and departments, which was considered a victory by the sports movement.

However, there is another side to this reality. There is no public planning or investing in sports. When the resources come from the Lottery Law, the committees and confederations have total freedom to decide how to spend it. Via the Incentive Law, companies decide who they will support. Only the Athletic Grant has rules defined by the public authorities.

This movement strengthens the private use of public resources. According to Fernando Henrique Carneiro, a researcher at Avante, at UnB, the movement to direct resources to private entities intensified after the Olympic cycle that ended in 2016, with the Rio Games, and then with the government of Jair Bolsonaro (Liberal Party). “The budget is out of the picture and these groups are now in charge of high-performance policy,” he explains.

What about the future?

Suélen Castro, from Ipie, says that the fight for resources is important, but more financial resources alone won’t improve Brazil’s sports policy. “Here, at the institute, we advocate a sports information system that can map all public and private investments in the area across the country.”

Today, investments are made according to the decisions of each entity, without coordination.

To try to organize these investments, the General Sports Law was approved in 2023. It provides organization to investments, similar to what happens in education. Municipalities, states and the federal government have specific obligations, which help to establish common efforts. In addition, the law provides for the creation of the National Sports Fund, which has not yet been regulated.

“It’s still difficult to predict how these mechanisms will work, because the law was approved recently approved and they haven’t yet been implemented,” says Suélen. But the fund is a hope for stabilizing a new source of funding for sports, both for beginners and high-performance athletes.

In addition, although there hasn’t really been a decrease in funding for sport under the Bolsonaro administration, the results of the Paris Olympics were already worse than those of Tokyo. With Bolsonaro, the Ministry of Sport was suppressed and became a department linked to the Ministry of Citizenship.

Some state programs aimed at youth sports were canceled, most notably Segundo Tempo, which sought to get children involved in a variety of sports. One of the greatest exponents of this program is canoeist Isaquias Queiroz, who won a silver medal in the C1 1000 meters in Paris and tied with Torben Grael and Robert Scheidt as the greatest Brazilian male Olympic medalists, with five each.

“In those six years [the Temer government and the Bolsonaro government], we haven’t had that many social programs and opportunities for Brazilian children in sports. It threatens the future because we have fewer athletes being trained to develop and become great champions,” said Ricardo Leyser, the Dilma government’s sports minister, in an interview with Brasil de Fato’s Central do Brasil program.