To be a finalist in the Copa Libertadores, do you have to become a public limited company? Botafogo and Atlético Mineiro, who will fight for the title on Saturday in Buenos Aires, could say yes, but their transformations from football clubs to companies carry risks.
The path towards this model, well implemented in Brazil and now debated in Argentina, was different but motivated in both cases by chilling debts: 189 million dollars at the current exchange rate for Fogão in 2022 and 360 million for Galo in 2023.
“Success came sooner than we imagined,” said John Textor, the controversial owner of the Rio de Janeiro team, recently.
Owner of a conglomerate of teams, including Olympique de Lyon, punished in France for its high debt, the American magnate changed the face of the Garrincha team, which was in the second division the year before its sale.
Textor took over 90% of the shares after committing to invest 70 million dollars at the current exchange rate until 2025. Since then, Botafogo became the most successful sports case of the Football Corporations (SAF) in Brazil.
– “Risky” model –
Last season they were close to winning the league, which they have not won since 1995. This season they can sign a historic double: Brasileirao – fighting for the lead with Palmeiras, with three games left – and their first Libertadores.
The good performance has to do in part with the investment of more than 70 million dollars in signings this year, an exorbitant value for South America.
With that money they hired the Argentine world champion Thiago Almada and the Brazilian international Luiz Henrique.
“Botafogo was practically a bankrupt club. The SAF made it possible to transform management off and on the field,” said economist Cesar Grafietti, from the consulting firm Convocados.
“Although the business model is quite risky,” he adds. It is based on “buying theoretically cheap players, trying to be champions and then selling them. But if you can’t sell them, you are left with a very large debt.”
Cariocas hope to close 2024 with a reduction of about 86 million dollars in their liabilities.
Both Botafogo and Mineiro were able to change their paths after Congress approved the SAF law in August 2021, which allowed the clubs to become companies after operating for a century as non-profit associations.
The legislation thus opened a roadmap to rescue football institutions in financial trouble. He did it despite the misgivings of fans, fearful that their teams would lose historical values or fall into the wrong hands.
In Argentina, venue of the Libertadores final, public limited companies have been a goal of the ultra-liberal president Javier Milei.
The idea, which causes sting due to the deep social roots of Argentines with their clubs, had a symbolic setback on Saturday in Asunción.
That day, Racing de Avellaneda, a club founded in 1903, won its first South American Cup by beating a SAF, Cruzeiro, Mineiro’s archrival in Belo Horizonte, 3-1.
– “From hell to purgatory” –
Unlike the Glorioso, the Galo was left in the hands of a small group of millionaires from Belo Horizonte who lent millions for years under very favorable conditions to the team of their loves.
Part of the loans from these “patrons”, as they are known in Brazil, were converted into shares when they bought the SAF in October 2023, almost two years after the albinegros won, with their money, their first league in half a century. .
Before becoming a public limited company, they signed stars like Hulk, Paulinho and Diego Costa.
“The SAF is an element that fell from the sky to rebuild,” businessman Rubens Menin, Galo’s largest shareholder, told the Globo Esporte portal in July.
“We left hell and arrived at purgatory,” he added, referring to the situation of the club, which was the most indebted in Brazil.
The improvement of the Mineiro, according to Grafietti, is related to the possibility of cleaning up debts given to the SAF (it has already reduced USD 120 million), and not to an institutional change, since it remains in the hands of the “patrons.”
“The sustainability (of Mineiro and Botafogo) will only be validated within three or four years, if they manage to maintain a level of income that allows them to not continually need capital injections,” says the expert.
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