The "Itaquerão" stadium on the eastern edge of Brazil's largest and richest city is slated to host the World Cup's opening match in June 2014 - an event meant to showcase the country's arrival as a major economic power.
Yet in the latest of several problems plaguing preparations for the event, and a sign of broader issues with big infrastructure projects in Brazil, the companies building Itaquerão have yet to receive a promised 400 million reais ($200 million) loan from state-controlled banks.
The builders say they will stop construction soon unless the banks drop their demands for additional financing guarantees.
A delay could, in turn, force the government and FIFA to push the Cup's opening match to a different city, find an alternate stadium for games in Sao Paulo - or in a worst-case scenario, leave the city totally out of the Cup.
"There's a risk of work stopping or (the stadium) not being ready on time," said Andres Sanchez, former president of Brazilian club Corinthians, which with local building partner Odebrecht has been financing construction of Itaquerão for the past two years.
Red-faced and smoking incessantly while downing one coffee after another, Sanchez made a series of colourful statements meant to convey just how serious that risk is in an interview with Reuters on Wednesday at the half-finished stadium site.
Some observers say he is bluffing and using the media to try to pressure the banks, and President Dilma Rousseff's government, to accept less stringent terms for the loans.
Sanchez, who has been put forth by the companies as an unofficial spokesman in recent months, indicated that he believes a last-minute agreement is possible, even likely. But he rejected the notion that he is making empty threats.
"I'm not going to pay for you to hold a party," he said. "This isn't a technical problem with construction... We've put forth several (guarantees), but the bank wants more, so we have this impasse."
With an estimated construction cost of 820 million reais, the stadium is certainly expensive to build without public financing. It will have a permanent capacity of 48,000 people - and 20,000 more temporary seats for the World Cup - plus a huge video screen.
Asked when he would stop construction, Sanchez declined to provide a date but said it would happen within weeks.
Itaquerão is hardly the only Cup venue with problems.
FIFA has expressed concerns over delays at several stadiums in the 12 Brazilian host cities, especially the venue for the final in Rio de Janeiro. Several transport projects related to the Cup, such as a train link at Sao Paulo's domestic airport, have also been plagued by problems and won't be ready until after the tournament is over.
Many Brazilians believe the venues will be ready on time, citing other recent World Cups and Olympic Games that came down to the wire but turned out fine. Yet Sanchez said as many as four host cities might end up being left out of the tournament because of problems.
"The stadium most at risk is Corinthians'," he said. "If they don't do the opening game here, they'll do it elsewhere."
Sanchez has said that, unless the financing is approved, Corinthians will build a less ambitious stadium that can host its club games but not meet FIFA's standards for the World Cup.
There have been contentious political and legal issues with Itaquerão from the beginning. The stadium was a pet project of Rousseff's predecessor, Luiz Inacio Lula da Silva, a leftist and committed Corinthians fan who was determined to site it in a relatively poor area of the city in order to foment development.
However, the stadium is about 10 miles (16 km) from downtown, and even further from the wealthier western half of Sao Paulo. Journeys from downtown to the international airport - which is relatively close - often take two hours or more.
The area is surrounded by one-story brick houses and some of the city's most dangerous neighborhoods, although it will have an easy link to Sao Paulo's train network.
The location has led to concerns that the stadium may not attract lucrative real-estate development once the Cup is over, or big crowds for other large, non-football events. Both elements have often been seen as necessary for modern stadiums in the United States, for example, to be financially viable.
Sanchez indicated Corinthians doesn't want to share its stadium for mega-events such as concerts, saying any events "can't happen on the grass," which the club believes must be protected for football.
"You can do weddings, birthdays, shows, parties... whatever you want, as long as you pay," he said.
Concerns over the stadium's future revenues help explain part of the financing problem. The rest can be traced to two common issues in Brazil - a notoriously complex regulatory framework and the seemingly constant, sometimes murky presence of the state.
Corinthians and Odebrecht were forced to create a real estate investment trust vehicle, known in Brazil as FIIs, to obtain loans, since under local law clubs are specifically forbidden to borrow from financial institutions.
The government promised funding for Itaquerão's construction from state development bank BNDES - often regarded as the only viable source of long-term financing in Brazil, because of a history of runaway inflation and government mismanagement that retarded the development of the banking system.
Yet BNDES is forbidden by law from making loans directly to FIIs. So it does so through third-party institutions - in this case, Banco do Brasil SA, the nation's largest bank which is also government-run.
Which leads to the problem at Itaquerão: Banco do Brasil has declined to pass along the funds. Sanchez says the bank believes the collateral offered by the consortium - including cash flows stemming from the sale of the stadium's naming rights as well as from ticket and event hosting revenues - is insufficient.
A spokesman for Brasilia-based Banco do Brasil said the structure of the financing for Itaquerão was approved eight months ago but declined to say whether the collateral met its standards, or what other guarantees it was seeking.
As the companies wait, they are resorting to loans from private-sector banks that are much more expensive. Sanchez said that paying borrowing costs "of 30 percent, 40 percent a year" is taking a heavy toll.
Sources told Reuters that the companies have already spent about 30 million reais paying interest on loans from some private-sector banks to start the project.
Many expect a political solution to the impasse - but it's not clear where that will come from.
Rousseff has made infrastructure development a key focus as Brazil prepares to host the Cup and the 2016 Olympics, while also trying to remedy logistical bottlenecks caused by fast economic growth last decade.
Yet, speaking separately this week, a senior government official told Reuters the administration has no intention of pressuring anyone into action.
- Sports & Recreation
- Sao Paulo
- Dilma Rousseff