Daily Management Review

Brazil's Soccer Clubs Are Preparing For A Gold Rush In Order To Close The Gap With Europe's Elite


Brazil's Soccer Clubs Are Preparing For A Gold Rush In Order To Close The Gap With Europe's Elite
A new legislation designed to allow Brazilian soccer clubs to obtain foreign investment is garnering hundreds of millions of dollars to a region known as football's largest source of talent, a shift that could allow Brazilian clubs to compete with Europe's top tier.
The influx of new, mostly foreign, capital coincides with an agreement last May by Brazil's largest clubs to form a league modeled after the Premier League in the United Kingdom, which will centralize negotiations to sell transmission rights and marketing contracts.
The recent events have resulted in a funding bonanza for the Brazilian teams, which have long been fan-owned and closed to outside investors.
This could permit Brazil, the world's biggest exporter of football players , to retain its best talent within the country for longer periods of time and then charge higher fees for talented football players who choose to move abroad.
According to two people familiar with the situation, the biggest deal in the works is for a 51% stake in Brazilian league champion Atletico Mineiro, who said the club had met with dozens of investors. According to one of the sources, the transaction could be worth 1 billion reais ($200 million).
The individuals requested anonymity in order to discuss private matters. A request for comment was not returned by the club.
10 fan-owned Brazilian soccer clubs in the least will turn into companies that will be owned by investors within the next two years, predicted Guilherme Avila, sports investment banking partner at XP, a Brazilian broker.
The sale of Cruzeiro to retired Real Madrid and Brazil striker Ronaldo in December became the first transaction to take advantage of the law, which was approved roughly a year ago.
Earlier this year, a deal was struck for Rio de Janeiro's cash-strapped Botafogo. Vasco da Gama, its crosstown rival, was sold earlier this month.
The second-division Esporte Clube Bahia could be sold to City Football Group, an Abu Dhabi company that owns Manchester City and ten other football clubs.
The ongoing talks between Bahia and City Football Group were announced earlier this year by the Brazilian club's president, Guilherme Bellintani. According to Bellintani, the deal is worth 650 million reais ($126.4 million).
City Football Group did not respond to questions about the Bahia deal. Bahia did not respond to an inquiry about the matter.
Talks about lucrative TV rights are expected to begin next year, with a focus on 2025 and beyond.
The Brazilian network TV Globo purchased exclusive rights to the national soccer championship and many regional tournaments from the clubs until 2024. However, as in England, Italy, Spain, and Germany, the league will divide the rights into packages for which various groups could bid, including Globo as well as other local and international media organizations that express interest.
Last year, clubs in Brazil's first division earned 3.5 billion reais ($687 million) in transmission rights, the majority of which came from Globo and a portion from Amazon Prime.
In comparison, the Premier League in England, which has the highest soccer transmission rights revenue in the world, received $3.9 billion in 2021 from broadcasters such as Sky Sports, BT Sport, and Amazon.com Inc's Prime Video.
In a foreshadowing of things to come, Globo's long-held exclusive rights to the regional championship in Sao Paulo were split for the first time last year between local broadcaster Record and YouTube, with a slice of pay-per-view games going to HBO Max/TNT Sports as well as Globo. Revenue increased by 30% as a result of the new model.