What Will It Take to Get Brazil Back on Track?

The proverbial phrase “when it rains it pours” captures Brazil’s woes today. As it prepares to host the 2016 Summer Olympics in Rio de Janeiro in August, the country is wracked by worsening political uncertainty, a severe recession that has caused its economy to shrink nearly 4% last year (with similar projections for this year), and the Zika virus outbreak that originated on its soil in April 2015 and has since spread to Central America, South America and the Caribbean.

The political uncertainty is rooted in a $2 billion corruption scandalinvolving the state-owned oil firm Petrobras. It now threatens Brazil’s president, Dilma Rousseff, with impeachment. The country’s economy has already been weathering export declines in the past two years, thanks to the slowdown in China, Brazil’s biggest trading partner. Alongside, its currency has been battered by a strong dollar, and capital inflows have been steadily negative. Not surprisingly, all the three big ratings agencies — Standard & Poor’s, Moody’s and Fitch — have in the past six months downgraded the country to non-investment or junk grade.

Much of the weakness in the Brazilian economy over the past year is because businesses are reluctant to make investments or major decisions in view of the political uncertainty, according to L. Felipe Monteiro, professor of strategy at INSEAD in France and a senior fellow at Wharton’s Mack Institute for Innovation Management. Monteiro is an expert on Brazil, having taught there and advised foreign companies investing in that country.

Monteiro pointed to one currency data point to highlight how much a role uncertainty is playing in the current scenario. “Just in the last 10 days, the [Brazilian] real appreciated 10% with the prospect that there will be some change in the government,” he said. The real has fallen more than 55% against the U.S. dollar in the past two years, but strengthened from levels of 4.1 to the dollar to 3.62 on Monday.

Monteiro discussed Brazil’s troubles and the road ahead for the country on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

“[One] positive aspect is how [Brazil’s] democratic institutions are showing their strength.”–L. Felipe Monteiro

The Threat of Impeachment

In discussing the cause of the Brazilian real’s latest uptick, Monteiro cited anti-government rallies on March 13 that drew some 3.5 million protestors across the country who demanded Rousseff’s impeachment. Rousseff increased that sentiment further last week by naming former President Luiz Inácio Lula da Silva — popularly called Lula — as her chief of staff, but a Brazilian court suspended that appointment and the country’s Supreme Court upheld that suspension.

Rousseff’s move would have ensured that Lula could be tried for alleged crimes only in the Supreme Court, and keep him beyond the reach of lower courts. Lula, who ran the country from 2003 to 2010, is suspected of involvement in the Petrobras scandal, and was detained and questioned after police raided his home in early March.

According to Monteiro, there is an “80%-85% chance of [Rousseff’s impeachment] occurring.” He noted that the political process for that impeachment is already underway. In fact, Brazil’s congress will henceforth hold extraordinary sessions twice every week to extract a vote on impeachment. “Now we are talking in terms of weeks or a couple of months,” he said. “Maybe by the Olympics we will have a new president.”

The impeachment could occur during or just before the Olympics, according to Mauro Guillen, Wharton professor of management and director of the school’s Lauder Institute. He foresaw a gathering sentiment that could force out Rousseff. “If there is impeachment, it might unlock the political situation, which is one of total paralysis Twitter ,” he said. “Another possibility is that social protests may just become impossible to contain. There could be enough unrest to force the President out of office. All of that could happen during or before the Olympics, because people would perceive that the rest of the world is paying attention.”

Guillen described Brazil’s current situation as one of a stalemate. “If you go back three years, the problems were the slowing down of the Chinese economy that reduced Brazil’s export earnings and also the collapse in commodity prices,” he said. “Then you had the time bomb of corruption that finally exploded.”

The investigation into the corruption scandal at Petrobras is focused on politicians and executives at top engineering and construction companies colluding to inflate the value of contracts awarded by the oil company. In the past two years of the so-called Lava Jato (or “Operation Car Wash”) probe led by investigative judge Sergio Moro, several top businessmen have been sentenced to long jail terms, and scores of politicians are under scrutiny for money laundering and tax evasion. “Most of the corruption has been focused on Petrobras, but there are reasons to believe that you will see similar schemes of corruption in other companies as well,” said Monteiro.

“If there is impeachment, it might unlock the political situation, which is one of total paralysis.”–Mauro Guillen

Impact on Capital Inflows

The business impact of all that is paralysis. “Everybody is … waiting to see what happens,” said Monteiro. Guillen noted that tracking short-term capital flows into the country gives a sense of business sentiment. Brazil had net capital outflows of $4.4 billion as of January 2016, worsening from $2.4 billion of outflows in the previous month, research services firm Trading Economics.com reported, citing data from Brazil’s central bank, Banco Central do Brazil. Net capital flows into Brazil peaked in May 2007 at $15.8 billion, but have been in negative territory continuously since early 2010.

Guillen saw some respite for the Brazilian currency in the U.S. Federal Reserve’s recent decision to postpone further monetary tightening measures (and higher interest rates). “If interest rates go up in the U.S., that might push Brazil over the edge at this point,” he said. He noted that the Federal Reserve in September decided not to raise interest rates. “The main motivation for that decision was to avoid putting too much pressure on emerging markets,” he added.

It also helps that Brazil has strong foreign currency reserves on hand, said Guillen. “[However], if there is a sentiment in the market that things might be about to collapse [and] there won’t be enough to compensate for massive outflows of short term capital, [then things could get worse],” he said.

“[One] positive aspect is how [Brazil’s] democratic institutions are showing their strength,” said Monteiro, adding that it should give Brazil’s global partners some confidence. “It’s very easy for other countries in such a situation to turn to non-democratic solutions.”

Difficult Transition Ahead

Meanwhile, the political setting in Brazil doesn’t point to an easy transition to a new regime. Since Rousseff’s re-election to a second term last year, Brazil has had an electorate divided between the supporters of Rousseff and those opposed to her, Guillen noted. “This has turned into an unsustainable situation, in which the President is clinging to power but has very little legitimacy left,” he said. In such a scenario, economic reforms are a far cry, he noted, adding, “The country is in gridlock.”

Monteiro agreed on the polarization within the country. “Brazilians are soccer fans, and two sections of people are trying to support their own teams,” he said. “But I don’t think the solution will come from this polarization; it will come from finding a way of working with the two sides.”

It doesn’t help that the country is governed by a fragile alliance of Rousseff’s Workers’ Party and the Brazilian Democratic Movement Party (PMDB). Eduardo Cunha, a PMDB member and president of Brazil’s lower house of Congress, is at the forefront of the move to impeach Rousseff and is also being investigated in the Petrobras scandal.

“If interest rates go up in the U.S., that might push Brazil over the edge at this point.”–Mauro Guillen

According to Monteiro, the political impasse could resolve in one of three ways. One is where after Rousseff is impeached, a transition government headed by the vice president will be in charge until the next election in 2018. The second possibility is to nullify the previous elections and hold fresh elections. “The third option is getting a new person — an outsider — someone like the former chief justice of the Supreme Court [Joaquim] Barbosa,” he said. “There must be some new blood, new solutions on the table. Overall, there is dissatisfaction with the old political class. The middle ground is somewhere there. Brazil can no longer … live with this level of corruption.”

Amid all that, the Zika virus outbreak may not be a big issue by the time the Olympics begin, according to both Monteiro and Guillen. Monteiro noted that with the onset of winter by August, it will no longer be mosquito-breeding season. Guillen said that while the virus has been mostly concentrated in the northeastern parts of the country, a big problem is people transmitting it to one another while traveling around the country.

Zika is suspected to be linked to microcephaly, a condition that affects mothers-to-be and causes their newborns to have undersized skulls and brains. Since October last year, when reporting microcephaly became obligatory in Brazil, a total of 745 microcephaly cases have been confirmed, the Wall Street Journal reported, citing Brazilian health ministry data.

As for the Olympics, the big worry is the underwhelming enthusiasm it has generated. As of early March, less than half the 7.5 million tickets on offer had been sold, according to a report in the Buenos Aires Herald. That compares with the 8.2 million tickets sold for the 2012 London Olympics out of 8.5 million on offer, according to a report by the International Olympic Committee.

Brazil and South Africa: Could Turmoil Lead to Default?

MIC LISTEN TO THE PODCAST:

Franklin Allen on the risks facing Brazil and South Africa

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The economic slowdown in China has taken an economic toll on supplier countries – particularly emerging markets – that provide raw materials and other inputs. Some analysts say it is a key reason why investors are now worried that Brazil and South Africa could default on loans. But Wharton finance professor Franklin Allen says he does not expect either country to default. And while the slowdown in China has certainly led to weaker demand for such commodity exporters, “I think particularly Brazil — but also to some extent South Africa — has many additional problems” – notably, corruption.

In this Knowledge in 5 interview – the second in a three-part series (see part one here) — Allen points out that currency and credit markets will continue to provide the best indicators of the economic health for the two countries. More generally, he also sees a “significant, [although] maybe not a major, probability” of a global financial crisis of some kind as a result the slowing global economy and adjustment problems that may crop up when the U.S. Federal reserve starts raising interest rates – most likely by year end.

Meanwhile, Christine Lagarde, head of the International Monetary Fund, noted this week that emerging market countries (and bond markets) expect rising corporate bankruptcies when the Fed finally starts to move up interests rates. The IMF has counseled the Fed to hold increases off until 2016. At the same time, the Institute of International Finance, a trade group, announced that emerging markets saw the largest divestment of assets since 2008 – some $40 billion worth – during the third quarter.

An edited transcript follows.

Knowledge@Wharton: Brazil might be exhibit “A” for how emerging markets are being affected by China and a general global economic slowdown. Its currency is down more than 30% this year against the dollar. Investors are increasingly betting that Brazil and also South Africa might default on their debts. The South African rand is down about 15%. It used to be thought that emerging markets would be the new economic locomotive, pulling other economies along, perhaps as the U.S. has for decades. What do you think is going on?

“I don’t think it is likely that [Brazil and South Africa] will default, but it is certainly now a possibility … [that] investors are worried about, so they are pulling the money out now.”

Franklin Allen: I think particularly Brazil — but also to some extent South Africa also — has many additional problems on top of those problems that we have been discussing [See: “The China Syndrome — How Volatility Is Affecting ASEAN”].

In Brazil, there is the issue of the corruption. There is the problem that the finance minister, who was expected to get the finances in order and be very tough, does not seem to have full support in the cabinet. The president [Dilma Rousseff] is very weak — her approval ratings are down to 8%, I believe, which is one of the lowest scores seen in any country.

They are supposed to have financial transactions taxed to plug a hole in the deficits, but she did not get that through, so now they are looking at a deficit of 8% to 10% — that kind of number. This is within a country with quite high debt levels, I believe 60% to 70% … in a year’s time if they do not plug the gap. And they are paying 7% real rates of interest on much of this debt. It is quite an unstable situation. I don’t think it is likely that they will default, but it is certainly now a possibility, and I think that is something that investors are worried about, so they are pulling the money out now, and things are not good there.

Hopefully, they will be able to pass some other kind of tax, and plug the deficit, and get the public finances in order, but they are still far away from doing that. And then on top of that they have got all of these global issues. So if you are an investor in Brazil currently — and it looks like the U.S. is going to put its rates up — now it seems as if it is time to get your money out before the exchange rate plummets even more, and get a high return in the U.S.

I think that is a lot of what is happening. In terms of the real economy, the slowdown in China is obviously not a good thing for them. It is an interesting question how much of that is driving the current problems, as opposed to their idiosyncratic factors, just in terms of the corruption scandals and the political scandals, and so on. South Africa has a bit of the same [situation].

We have not talked about India, but India is the bright point. They seem to be still growing at reasonable rates, but they are not that big of an economy. They have a big population, but they are not a huge economy in global terms. It is a big problem that so much of the growth was provided by emerging market countries, and now that is not going to happen nearly as much, at least for the next few years.

Knowledge@Wharton: If things were going to spin further out of control, say in Brazil or in South Africa, talking about these defaults and that sort of thing, what are the warning signs that we should be looking at? And if they did default, what would be the effects?

 

“It is a big problem that so much of the growth was provided by emerging market countries, and now that is not going to happen nearly as much, at least for the next few years.”

Allen: The currencies are probably the best indicator. Also the bond yield, the government bond yields, although those are probably a little bit less reliable because the government — if they have government controlled banks — can get the banks to buy them and so on. But I think [with the] exchange rate, that is what we are seeing: indications that there are problems in these places. If they were to default in Brazil or in South Africa, I think that would be serious problems for those economies. I am not so sure they would be a big problem globally. But you never know; it may be that people are not expecting that with quite the probability that they should. But let’s hope they are, so that if it happens, it will not be too disruptive in the global economy.

Knowledge@Wharton: Would you say that, in general, the global economy seems to be slowing, but most likely is going to be avoiding any big financial crises? How would you rate the potential for a major financial crisis right now?

Allen: I think there is a significant, [although] maybe not a major, probability of that. I think the other big issue is that as the U.S. unwinds its quantitative easing, what these flows are going to be, how big they are going to be, how they are going to adjust. I don’t think we have much of an idea about that yet. We will get a much better idea once we start seeing a few of these rises in the U.S. policy rate, and how quickly they are doing it.

Brazil junked

WHEN Dilma Rousseff, Brazil's president, presented a budget with a gaping primary deficit (before interest payments) of 0.5% of GDP last week, many (including this newspaper) despaired. It was only a matter of time, the worriers warned, before such fiscal incontinence would cost Brazil its cherished investment-grade credit rating. Few expected the raters to react quite so quickly. On September 9th Standard & Poor's, which in 2008 had led the way in upgrading Brazil to respectability, became the first agency to downgrade the country's foreign-currency government debt back to junk. S&P has kept Brazil on negative watch, saying it has a one-in-three chance of sinking deeper into speculative territory.

To some extent, S&P's decision had been priced in already. For months the cost of insuring Brazilian government bonds against default has been higher than for Turkish ones, which are rated as junk. Following last week's budget announcement the real slid by 6% against the dollar. 

Related topics

• Bond markets
• Fixed-income securities
• Government bonds
• Latin American politics
• Brazilian politics

As our article went to press markets were nevertheless bracing for a jumpy Thursday (S&P moved after they closed the night before). In after-hours trading in New York, a basket of Brazilian equities lost 4%; Petrobras, the state-controlled oil giant, saw its American-listed shares drop by 5%. Another hint that not everything was priced in, notes Alberto Ramos of Goldman Sachs, an investment bank, were the 200 anxious e-mails which flooded his inbox in the hour following S&P's announcement.

Some capital flight is inevitable. Pension and mutual funds which can only hold investment-grade assets will now offload Brazilian government bonds at a brisker pace, in anticipation of similar downgrades by Moody's and Fitch (typically, two of the big three rating agencies need to declare junk status to force divestment). This will not cripple Brazil of today, with its diversified economy and plump foreign-exchange reserves, as it might have in more chaotic days. But the government's already-high borrowing costs will rise further, raising the risk of another downgrade. Capital will also become pricier for companies. None of this will help Brazil shake off the recession it slid into in the second quarter. 

How politicians will react is less clear. The downgrade is certainly a slap in the face for the finance minister, Joaquim Levy, a hawkish former investment banker brought in last year mainly to prevent it. To be fair, many of his proposed fiscal measures, including modest cuts to welfare spending, were watered down by an unruly Congress over which Ms Rousseff—with her popularity in single digits and a huge corruption scandal plaguing her coalition—has no control. Only Congress can unlock the roughly 90% of the budget that is currently ring-fenced, that it might be sheared. S&P may yet motivate them to do so. Then again, now that the cosh has fallen, congressmen (and ministers inimical to Mr Levy's belt-tightening) may conclude that further austerity is pointless. It wouldn't be the first time.

Brazilians close their eyes and hope for the best

By Rogério Simões

Editor's note: Rogério Simões is a Brazilian journalist, former Head of the BBC's Brazilian Service and former Executive Editor at Epoca magazine. He is based in London. The opinions expressed in this commentary are solely his.

(CNN) -- Uncertainty normally comes with the new. This year's Brazilian presidential elections, though, have been like no other. After Sunday's polls gave President Dilma Rousseff, from the left-wing Worker's Party (PT), another four-year term with a narrow margin of victory, Brazilians embarked on a guessing exercise about what her next government will look like.

On the surface it doesn't seem a vote for change, but the President knows it should be. There were exuberant celebrations in the PT camp and frustration in the faces of supporters of the defeated centrist candidate, Aecio Neves, from PSDB. But no one could say for sure what the result means for the next four years.

Rogério Simões

Since massive street protests in June 2013 called for change in Brazilian politics and economy, that word has been around in almost every political statement -- including Rousseff's victory speech on Sunday night. As she addressed supporters in Brasilia, the President said she had not forgotten the message from the streets. "The most repeated word in these elections has been 'change'. And I know that I have been re-elected to make the big changes the Brazilian society demands."

Rousseff had already hinted that her second term will be different from her first -- "new government, new ideas" was her campaign slogan. "I want to be a much better president than I've been so far", she said on Sunday, while also talking about "building bridges" with political opponents. The challenges, in the economy and in politics, are huge.

So what should Brazilians expect? In her speech, she mentioned wide-ranging political reform. A new direction in the economy? Unlikely. A friendlier approach towards a fragmented Congress? Who knows. A more positive dialogue with the private sector? Possibly. Or nothing of that sort. Dilma Rousseff Part II is still to be revealed.

Almost half of the country wanted a different outcome. Rousseff won with 51.6% of the valid votes, while Neves received 48.4% -- the closest presidential election result in 25 years. The President's performance was 1.4 million votes short of the 55.8 million she got four years ago, while the opposition increased their base from 43.7 million in 2010 to 50.9 million.

Brazilians endured three months of a fiercely fought campaign -- or as some have called it, "dirty" and "shameful" after a number of personal attacks that were both baseless and tasteless. Many voters lost their composure too, with political differences ruining friendships and keeping relatives apart. A wish that something new would come out of this battle was evident in late August when, after the tragic death of socialist candidate Eduardo Campos in a plane crash, his running mate and environmentalist Marina Silva took the helm on their ticket.

In a few weeks opinion polls showed Silva ahead of Dilma Rousseff in a second round simulation. But the scaremongering from the government's camp that Silva's lack of political support could lead her government to collapse made her support drop as quickly as it had risen. The task of trying to dethrone Rousseff in the second round fell to Aecio Neves, with support from a defeated Marina Silva. Brazilians watched the sixth edition of the same PT vs. PSDB face-off that has marked every Brazilian presidential election since 1994.

Dilma Rousseff was re-elected thanks to her party's record in power. In the 12 years that the PT has governed Brazil, extreme poverty has been reduced by more than half. Social programs that increased the income of the poorest now reach 14 million families, most of them in northern regions. In those areas, Rousseff easily won the trust of the voters, beating her opponent by margins that reached 70%. But she came close to losing the election due to poor recent economic results and the word that many today associate with her party's red star: corruption.

Although the unemployment rate remains low, at 5%, analysts expect layoffs to increase in the months to come. Brazil's economy is technically in recession -- its GDP fell in the last two quarters -- and the IMF predicts only 0.3% growth in 2014.

Members of Rouseff's PT party were convicted and jailed for illegal campaign funding and the bribing of Congressmen. And a new (and still ongoing) corruption scandal at the heart of Petrobras, the Brazilian state oil company, hit the government at its core. Poor economic data and sleaze are issues that tend to shock and concern the better-off and well-educated, mainly located in the south of Brazil, where Aecio Neves performed very well. In the State of Sao Paulo, the richest and most populated, he got 64% of the vote.

Massive street protests, a stalled economy, corruption; Dilma Rousseff survived it all -- just. Her main tasks now are to unite a divided nation, find a way of making Brazil's economy grow again, bring down an inflation rate that is stubbornly high (6.75%) and change something. The Brazilian President knows that she has not won this contest because of what she's promised to do in the future, as she didn't even present a formal plan for her second term. She's won because of the past, and the future is still being planned.

In opinion polls, 70% of Brazilians have repeatedly said they wanted change in the federal government. Unsure about how to achieve that, they decided to close their eyes, keep things as they are and hope for the best.

The opinions expressed in this commentary are solely those of the author

After World Cup, Brazil’s refugees host their own games

• by 
 
• Jill Langlois 

• @JillLanglois

The first ever Refugees World Cup took place in early August, with 200 people representing 16 countries.

Jean Katumba is sitting at a school-style chair and fold-down desk. As he leans back in his seat, he chats with the 10 or so other people who have formed a circle in the middle of a plain white room at the offices of Caritas, an organization in São Paulo that helps refugees upon their arrival in Brazil. There is a low hum of voices and sporadic laughter as the group waits for the meeting to start.

Caritas is always teeming with people who need help with things like documentation, housing, and employment, but today’s meeting has nothing to do with the necessities. This small group of refugees has gathered to discuss the organization of the first ever Refugees World Cup.

Katumba, 38, laughs when asked if he plans on playing for the Democratic Republic of Congo, the country he fled one year ago because of political persecution. “I’m a civil engineer. You don’t want me to play on your team.”

But there are plenty of refugees in São Paulo who will play for their home countries. A total of approximately 200 people represented 16 countries—including Syria, Colombia, Mali, Afghanistan, Sierra Leone, Pakistan, and Côte d’Ivoire—during the Refugees World Cup, which took place on Aug. 2 and 3, just three weeks after Brazil wrapped up its hosting duties of FIFA’s 20th World Cup. Nigeria beat Cameroon in the final round.

While the two-day tournament was supported by Caritas, the UNHCR, UN Women, UNAIDS, and the Red Cross in São Paulo, it was the refugees themselves who had been involved with everything from team selections to the composition of the Cup’s official song.

They ran into planning hiccups here and there—like the need to move the tournament dates up because of many participants’ celebration of Ramadan—but Katumba says things had gone quite smoothly.

“Lots of people who come here didn’t want to help because they have other more important things to deal with,” he says, referring to other clients of Caritas, many of whom are still making their way through the difficulties of being refugees in Brazil. “But I think this [tournament] is important as well because everybody needs to have some time to enjoy themselves. We need to have fun. There will even be other cultural events going on at the same time. This is really going to bring people together.”

According to 2013 data from the National Committee for Refugees (CONARE), there are around 5,200 recognized refugees from 80 different countries currently living in Brazil. Most have left their homelands because of conflict, war, and persecution. About 30% of requests for refugee status are made in the southeast region of the country. And São Paulo receives the most requests out of all Brazilian states. In the last four years, the number of requests for refugee status in Brazil has increased by 800%. In 2010, Brazil received 500 requests, a number that jumped to 5,200 by the end of 2013.

Jean Desire, 24, knows both the struggles of being a refugee and the joy that an event like the Refugees World Cup can bring to those who have had to flee their homes. He was a professional soccer player before he had to leave Côte d’Ivoire because of the 2010 election crisis. Now, he decided to help organize the Refugees World Cup, for reasons beyond the love of the game.

“Soccer is something universal, something we can all enjoy,” says Desire. “We might all come from different places and from difficult situations, but this is something we can do together.”

A ball fit for Brazil

BACK in the day when Babbage played football (with a round ball, not the pointy sort), the game was an attacking one, with five forwards, three halfbacks, and just two defenders to assist the goalkeeper. Twinkle-toed magicians like the late Sir Stanley Matthews apart, the heavy leather ball—cobbled together from 18 rectangular panels, with thick lacing across the slit for inflating the rubber bladder within—robbed players of any attempt at subtlety.

When dry, the old leather ball moved with reasonably predictability. But on a rain-soaked pitch (the rule in Babbage’s northern England), the sodden leather lump would slither through the muddy grass as if in treacle. Heading it from a corner kick could leave a player dazed for days. The beautiful game was more in the mind than on any wind-swept heath. 

Football today is a far better spectacle. English teams may still insist on attacking down the wings, only to lose possession with the hit-or-miss of an airborne cross into the goal area (one reason, many suggest, for the national side’s long drought in World Cup success, despite an abundance of talent), but the modern game—when played at its highest level in places like Spain, Portugal, Italy, Argentina and Brazil—is all about maintaining possession, while probing defences and patiently building an attack. Such defensive play may produce fewer goals. And regretfully too many tournaments are settled these days by penalty shoot-outs. But when the ball is in motion, the choreography and artistry of today’s top-class players can be spell-binding beyond belief.

Depending as it does on delicacy of touch, the game demands a lot from the ball itself. It needs to be neither too heavy nor too light (15 ounces, or 425 grams, is reckoned to be about right) and should respond deftly to the tap of the foot. Yet, at the same time, the ball must be able to cannon off the boot in a shot at goal. If that were not enough, it should fly far and straight for a long pass, while being able to swerve abruptly in a free-kick or penalty. All told, the ball needs to have a reasonably high coefficient of restitution (efficiency of absorbing energy from a kick), but not so much as to bounce around the pitch like a beachball. Such conflicting requirements make designing match balls a challenging exercise, as much in aerodynamics as in mechanics and materials science.

Thanks to computer modelling and wind-tunnel testing, the Brazuca ball designed by Adidas for the 2014 World Cup, now underway in Brazil, is the best yet—and certainly a vast improvement over the disastrous Jabulani ball Adidas provided for the 2010 World Cup in South Africa. The eight-panel Jabulani was criticised by players and coaches for being too smooth and too light, and for changing direction erratically during flight. By contrast, the Brazuca uses six x-shaped panels in a slightly heavier case, with much deeper seams and a dimpled finish similar to that of a basketball. 

Adidas has been the sole supplier of balls for the World Cup since 1970. The late Adolf (“Adi”) Dassler, founder of the Adidas sportsware company in Bavaria, is said to have come up with the modern football design—with its 32 patches of pentagons and hexagons—as a way of making the bulbous old leather ball more spherical. Its familiar image of black pentagons and white hexagons resulted from the need to make the ball more visible on monochrome television sets of the day. The coloured patches also helped players—especially goalkeepers—judge the swerve on the ball better.

The idea of forming a sphere from a patchwork of 12 pentagons and 20 hexagons (known in solid geometry as a “truncated icosahedron”) was borrowed from the late Buckminster Fuller, an American architect and futurist, whose geodesic domes based on the same principle were popular during the 1960s. So much so that the Adidas ball, officially called the Telstar, was often referred to as simply the Buckminster (in much the same way that nanotechnology’s hollow molecules composed of pentagon/hexagon lattices of carbon atoms became known as “fullerenes”, and their spherical versions as “bucky balls”).

Over the years, the Buckminster ball—with its outer cover of polyurethane and poly vinyl chloride, has served league football well. Absorbing little water, its weight, size and compliance barely change during a match. Apart from being more spherical than the old 18-panel leather ball, the 32 panels of pentagons and hexagons (60 vertices and 90 edges all together) provide more seams which, like the dimples on a golfball, help “trip” the air flowing over it. 

Counter-intuitively, forcing the boundary layer of air passing over the surface of a ball in flight to flip from smooth, laminar flow to turbulent flow improves the ball’s aerodynamics no end. Instead of the boundary layer becoming detached from the surface as the air flows over the ball’s widest section, the more energetic turbulent air clings to the surface, delaying the onset of separation until it is much farther around the backside of the ball. The result is a smaller wake, and thus lower drag. With less energy spent on churning air in the wake behind it, the ball has more for moving forward—and thus flies farther and truer.

Like golfballs and other spherical sports balls, footballs rarely move through the air without at least some form of spin. Goalkeepers kick the ball up field with plenty of backspin, to gain height and distance. Indeed, most players pass the ball with a modicum of backspin, to help it stop dead at a colleague’s feet.

It does so because, with backspin, the ball’s upper surface is moving backwards relative to ball’s line of flight, while the lower side is moving forwards. The relative velocity of the air flowing over the top of the ball is therefore much greater than the air flowing under it. The result, known as the Magnus effect, is an upward force on the ball, like the lift of an aeroplane wing, which helps the ball scoot over the turf. On landing, the ball’s forward spinning under surface acts as a brake, bringing it quickly to a halt.

The Magnus effect—albeit about a vertical, rather than a horizontal, axis—is used most dramatically in free-kicks taken around the penalty area, where one in five attempts finish up in the net, according to World Cup statistics. Striking the ball with a glancing blow from the inner or outer side of the toe-cap can impart significant spin to the ball about a near-vertical axis, causing it to swerve left or right. David Beckham’s fame rests largely on his ability to score seemingly impossible goals from free-kicks by bending the ball unexpectedly around a wall of defenders.

The Brazuca ball is unlikely to disappoint players and spectators in Brazil. Two researchers, Sungchan Hong and Takeshi Asai, at the University of Tsukuba in Japan subjected five different ball designs to wind-tunnel tests and a kicking machine. Their studies, published in a recent issue of Scientific Reports, show why the Jabulani ball behaved so erratically. The ball’s drag varied excessively, depending on which face was pointing forward. It also suffered more variation in lift and side force than any of the other balls tested. Hence the wobbling players complained about in South Africa. Of the bunch, it was by far the worst.

Adidas clearly learned an important lesson. Some 600 professional football players have been practicing with the new ball for the past three years and sharing their experiences with the company. Meanwhile, results from Tsukuba show it behaves consistently, no matter which face is pointing forward. In wind-tunnel tests, it had the lowest variation in lift and side force of all the balls examined. Trajectories from the kicking machine hit the same spot repeatedly.

By all accounts, the Brazuca will fly far and straight when asked to do so, while allowing players to bend it like Beckham when needing to curl it round a wall of defenders. In Brazil, players will not be able to blame the ball for missed opportunities, as they could (and frequently did) in South Africa. Perhaps, then, football lovers the world over will be able to focus solely on the beauty of the game when played by the greatest practitioners around.