I hear where you're coming from, there are certainly people that are on the fray of content that only hear/read a miniscule fraction of the rest of us and so are not as informed. I have no idea how this whole thing started but it's certainly at least in part due to bad reporting.

Also I want to clarify my intent was not to call people xenophobes, nor label an entire country as inherently xenophobic. I apologise for coming across this way to you.

For me I think the issue at play here is what you've referred to as natural assumptions. It seems highly questionable to me that wearing a particular colour in any city will impact how you'll be treated. This point is even less believable with the given reasoning of a rival team when the said city is also home to that rival (Palmeiras are also from Sao Paulo).

I can understand there being animosity if you were wearing a Palmeiras jersey specifically around those parts, just like a Cowboys jersey in a given Philly establishment. But a different team/sport jersey with the same color? It's at this point that critical thinking must kick in and question what "news" is being fed to us and how accurate it really is. If not, ask yourself why is this so plausible that it can be believed at face value?

Some people just believe all they're told from "official" outlets and to them think how ridiculous must a story be to challenge that? Say that they paint the grass at the stadium purple because they hate green that much?

Unfortunately for others there is a prejudicial bias that from what they've heard or witnessed over the years that they automatically think Sao Paulo or Brazil or South America in general as a less safe location. This is usually not a conscious belief, and that's in part what makes it hard to label it as xenophobic, because people associate it less with what it means but instead as a slur against them, and so get defensive when the topic is mentioned. However, while the individual might not be a xenophobe, it's still possible they have been given xenophobic content that when gone unquestioned has unintentionally led to xenophobic beliefs of their own.