Investing In Brazilian Football – Opportunities & Risks Under The New Legal Regime

Brazil, “o país do futebol”, is arguably the country most synonymous with football. Yet despite the national team’s continuous success, and some of the largest, most ardent, fan bases in the world, Brazilian football clubs trail European clubs significantly in financial fire power. Brazilian clubs generate just 2% of global football revenue.1

The COVID pandemic has significantly weakened the already poor financial position of Brazilian clubs. A recent study2 of 23 Brazilian clubs by EY identified that:

• Debt levels in 2020 stood at R $10.3bn (US $1.9bn), up 19% from 2019, an average of R $450m (US $83m) per club; and

• Combined Revenue fell 14% year-on-year (YoY) to R $5.3bn (US $998m). Further, commercial revenue made up just 13% of total income compared to an average of 43% amongst European clubs analysed in the Deloitte Money League.3

On top of the precarious financial position, for decades Brazilian clubs have been stricken with poor governance by elected officials, who are often unpaid, appointed based on popularity and who offer short-term fixes. As a result Brazilian football has been an unattractive proposition for many outside investors.