Sao Paulo Investor Sees a Chance for Rugby in Soccer’s Slump

(Bloomberg) -- Eduardo Mufarej has a alternative for Brazilian soccer fans fed up with lackluster performance, political scandals and Neymar's near misses.

The Sao Paulo-based private equity titan chairs Brazil Rugby, which has been beating the drum for the sport in the lead-up to the Games. As the sport -- pronounced ‘hugby' in Portuguese -- returns to the Olympics for the first time in 92 years, he says it has a chance to build a following.

National soccer has given restive fans reason to look elsewhere. A slide that began with a 7-1 loss in Brazil in the semifinal of the 2014 World Cup has continued with a pair of scoreless draws in Brazil's first two Olympics matches. In the game with Iraq on Sunday, fans loudly booed the Brazilians. With a game to play, the team faces very real elimination from the Games.

On top of the disappointing performance, the national soccer federation has been plagued with decades of misbehavior. The last three presidents were indicted by the U.S. Department of Justice on corruption charges.

“People are looking for alternatives in this country,” Mufarej said in an interview in Rio. “Fans want to feel connected to a sport that reflects the values and ethics they admire.”

About 7 million viewers tuned in to watch rugby when RedeTV broadcast the first free-to-air game in April, a 36-14 defeat to Uruguay. About 15,000 supporters have turned up to watch the team play matches in Sao Paulo. Both results were “way beyond our expectations,” said Mufarej, who was previously a managing partner at Tarpon Investimentos SA and is currently the chief executive officer of Somos Educacao SA, an education provider.

Banco Bradesco and Heineken have signed to sponsor Rugby Brazil, but the sport has a long way to go. The rugby union's annual budget is just 18 million reais ($5.7 million), 25 times less than its soccer equivalent boasts, and soccer continues to dominate the airwaves. Soccer accounted for about two-thirds of all TV sports programming in Brazil in 2011, according to research from Deloitte LLP.

The Olympics is a high-profile moment. As the host country, Brazil gets automatic entry into the 12-team pool, and the men's team lost to Fiji on Tuesday. It plays the U.S. at 5 p.m. on Tuesday then faces Argentina Wednesday. Women's rugby finished Tuesday, and Brazil's team finished 9th.

Mufarej believes the timeline for success is short. Brazilians' viewing habits -- soccer aside -- are often determined by the ability to produce top class athletes. Tennis, for example, enjoyed a surge in interest when Gustavo Kuerton featured among the world's best in the last two decades. Most recently, a number of successful Brazilian mixed martial art fighters has led to a boom in UFC viewership.

To make rugby stick, Mufarej said, Brazil doesn't need to win a gold at the Olympics. It does need to qualify for at least one of the next two World Cups: “2023 is a must.”

To contact the reporter on this story: Tariq Panja in London at tpanja@bloomberg.net. To contact the editors responsible for this story: Janet Paskin at jpaskin@bloomberg.net, Peter Millard