Why isn’t there more private investment into Brazilian football clubs?

Recently, Brazilian sports websites and newspapers have been flooded with news about the acquisition of Clube Atlético Bragantino by Red Bull1. Although further details on the legal structure of the transaction and of the club have not been disclosed, the fact is that the newly-called Red Bull Bragantino effectively represents Red Bull taking charge of the traditional club, founded in São Paulo state in 1928 and nationally known for being runner-up at the 1991 Brazilian National First Division. Red Bull Bragantino started its journey at 2019 Brazilian National Second Division on April 26, 2019.

The initiative is not Red Bull’s first investment in Brazilian football. In 2007, the company founded Red Bull Brasil, also based in São Paulo state. Despite climbing from São Paulo State Championship fourth division to first division in six years,2 the club was never able to succeed at national level, reaching the Brazilian Fourth Division and the Brazilian Cup only once. Therefore, the emergence of Red Bull Bragantino is widely seen as a substantial change to Red Bull’s strategy in Brazil, giving up on climbing divisions with their first club and taking charge of more traditional and higher profile one that already plays the national second division.

Considering that private investments into football clubs (buy-outs, mergers and acquisitions etc) have seen a significant global increase in recent years, especially in European football, it may seem surprising that the acquisition of a second division club in Brazil raised so much attention. But the fact is that private investments and M&A activity involving Brazilian clubs is not as common as many think, especially amongst higher divisions clubs.

Brazil is not only a huge market (with a population of over two hundred million, the majority of whom are passionate about football) but also historically known as one of the best producers of elite football players. Based on this, Brazil seems to be a great environment to attract investment (including from abroad). So why aren’t more high-profile investments being made into the country’s football clubs?