Off the pitch

Brazilian Football Confederation plans financial reforms.

Brazilian top-flight football clubs have been accumulating debts throughout the last decade and are currently struggling to pay creditors, putting at risk their own financial viability.  

Among the multiple structural issues that hinder the development of Brazilian football, two intertwined problems loom over local clubs. Firstly, most clubs are run as non-profit organisations by short-sighted boards elected by silverware-thirsty members and, secondly, the Brazilian Football Association (“CBF”) struggles to enforce measures to guarantee healthy governance of football clubs.  

In this context, Cruzeiro, one of the most popular clubs in Brazil was the subject of a police investigation after the board was accused of money laundering and fraud. Cruzeiro’s performance on the pitch suffered as a result of the turmoil and the club was relegated, compounding their economic problems 

A sports finance specialist working at a leading Brazilian bank, who has assisted the CBF in multiple regulatory projects told us, “The Pelé law in Brazil, which regulates professional sports contemplates sanctions for mismanagement. At the same time, several clubs have their own statutes, which allow members to seek legal action if the board misbehaves. But the main problem is that there are no external independent bodies who can regulate the clubs’ autonomy.”  

Questioned about a potential solution to the problem, the sports finance specialist said, “The CBF is trying to implement a financial fair play system, similar to the one implemented by UEFA in Europe [limiting clubs’ expenditures to their earnings]. I am confident that this will help clubs to run their finances properly, as it will start with warnings and escalate to sanctions. However, the core problem remains in the clubs’ ownership, as not-for-profit associations, presidents and boards are not required to provide financial guarantees.” 

Brazilian clubs are not particularly attractive to foreign investors … it is easier to invest in players. 

Former Premier League player and agent 

A former Premier League footballer and player agent with interests in Brazil told us, “Brazilian clubs are not particularly attractive to foreign investors, as they cannot compete with European rivals in terms of profits generated by TV-rights and sponsorship deals. It is easier to invest in players, but Brazilian clubs inflate transfer fees once young players make their debuts in the top-flight. Since Brazilian clubs are desperate for cash, they sell players’ rights to third-party investors, which makes it even harder for European clubs to negotiate with their Brazilian counterparts. It’s a mess.”

Brazilian clubs need a common negotiating front to sell their TV rights deals.”   

Sports finance specialist 

The sports finance specialist emphasised that “the Brazilian football market is a place with lots of opportunities for foreign investors but, again, the individualist nature of Brazilian clubs, which stands in the way of CBF’s reform attempts, puts investors off. Like in Europe, Brazilian clubs need a common negotiating front to sell their TV rights deals. These are the things that international investors appreciate.” 


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