Brazil football model a la Premier League

Article posted by Coliseum, January 10^th, 2023

Image: Coliseum GSVA

For most of his extraordinary time as a footballer, the Late Pelé played in Brazil for the club Santos FC. But so many compatriots of the legendary player have had to venture abroad in search of financial rewards and stronger competition.

‘Financial Times’ stated that this is something a pair of opposing consortiums vying to create a new domestic competition in the football-mad country is hoping to change.

Edson Arantes do Nascimento, better known by his nickname Pelé, was a Brazilian professional footballer who played as a forward. Regarded as one of the greatest players of all time and labeled ‘the greatest’ by FIFA, he was among the most successful and popular sports figures of the 20^th century. He passed away on December 29^th, 2022.

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Santos Futebol Clube, commonly known simply as Santos or Santos FC and nicknamed the Peixe, is a Brazilian sports club based in Vila Belmiro, a bairro in the City of Santos. It is also the team with the most goals in football history.

‘Financial Times’ further stated that the model – inspired by the English Premier League (UK) – will be controlled by clubs, rather than the national federation. The idea is to unlock the game’s commercial potential in Brazil and improve its quality, with the backing of big money.

In theory, a club-led structure should enable collective negotiation of transmission rights, leading to more lucrative deals than those obtained on the current individualized basis. Higher wages could in turn convince young talent to stay at home for longer.

Informed Lawrence Magrath, Co-Founder of Codajas Sports Kapital, “Our vision is that in 10 years we can reach the French league in terms of overall revenues.”

Codajas Sports Kapital’s Liga do Futebol Brasileiro project, or Libra, has the support of 16 clubs from the existing top two nationwide divisions.

With bankers at BTG Pactual (Brazilian financial company) advising, the group is in exclusive talks with Mubadala Capital, an arm of the Abu Dhabi sovereign fund, over a potential injection of R$4.75bn ($890mn) for a 20 percent interest in the venture.

Together with an expansion of sponsorship and marketing, boosters of a new league believe it could help Brazilian club football reach the kind of international projection enjoyed by top European sides.

The Premier League team Manchester United F.C. (UK), the LaLiga team Real Madrid CF (Spain), the Ligue 1 team Paris Saint-Germain F.C. (France), and the Serie A team Juventus F.C. (Italy) have become household names around the globe in the past few decades on the back of overseas promotion. Yet, despite Brazil’s strong claim to be the spiritual home of the “beautiful game”, the same cannot be said for the likes of the Brazilian sports clubs Clube de Regatas do Flamengo, Sport Club Corinthians Paulista or the Brazilian professional football club Sociedade Esportiva Palmeiras.

Added Magrath, “We firmly believe that in 20 years we can be the second-biggest league in the world, only after the [English] Premier League. We have the raw materials and a time zone that’s consumer-friendly globally for transmissions.”

However, disagreements over how to divvy up broadcast receipts between clubs in a fair and competitive manner have caused a split.

A breakaway initiative, Liga Forte Futebol, has 26 clubs on board and is being advised by investment firm XP and New York (US)-based professional services group Alvarez and Marsal. It is in discussions with an unnamed group of US investors.

If selling a slice of the league to private shareholders other than clubs might prove controversial in other countries, there has been little if any resistance among the faithful in Brazil. This could be down to negative perceptions of the federation because of past corruption scandals, the prospect of greater resources for teams, or simply a lack of awareness.

Both plans are part of a wider push to professionalize the business of football in Brazil. Bad financial management has left many clubs drowning in debt. The situation is often blamed on the traditional ways they are run: As not-for-profit associations controlled by fans with elected Presidents.

But following new legislation to encourage private capital into teams, a handful of takeovers have drawn funding commitments worth tens of millions of dollars.

Amir Somoggi, Managing Director at consultancy Sports Value, estimates that the combined turnover of Brazil’s top 20 clubs could roughly double to around $2.6 bn within five years of a new league.

Stated Somoggi, “But the clubs will need to stop these arguments over money and think big.”

The consensus is that only one unified proposition will prevail.

Stated one person involved behind the scenes, “The objective is to have all 40 clubs from Serie A and B within a single proposal. The tendency now is to negotiate a merger.”

A year-and-a-half since discussions around a new league first emerged, there is now pressure to pick up the tempo. The clock is ticking on the respective 90-day periods both outfits have to reach agreements with their prospective backers. Meanwhile, talks with Brazil’s main broadcaster Globo over new contracts beginning in 2025 are expected to start this year.

With most of the national squad plying their trade at European clubs, the team’s flashes of brilliance in the Gulf gave a flavor of what a revitalized domestic league might have to offer. The question is whether those behind the proposals can discover a binding team spirit.

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