Football S/A: why is it time for clubs to become companies?

By Eduardo Carlezzo.

Among the 30 football clubs in the world with the greatest capacity to generate wealth, only 3 are constituted as an association.

In several areas of the economy and society it seems that in Brazil we have an incredible insistence on navigating against the world. And when we finally decide to take the same direction, we are at least 20 years behind. With regard to the structuring and corporate organization of football clubs, unfortunately, this is also the case.

A number close to 99% of football clubs in Brazil are constituted as an association, whose model is quite old and in several clubs it was born even before the now extinct Civil Code of 1917. Few clubs are constituted as a limited liability company.

When we look at the developed world, this scenario changes dramatically and we see that the rule is the constitution of clubs as a company, with well-defined owners and some even with shares traded on the stock exchange.

A quick look at the Deloitte Football Money League 2021 shows that of the 30 football clubs in the world with the greatest capacity to generate wealth, only 3 are constituted as an association: Barcelona, ​​Real Madrid and Schalke 04.

Barcelona is experiencing an unprecedented political crisis and this year 2021 revealed the existence of a very heavy debt of more than 7.5 billion reais, which puts the club in a very serious financial situation. Not coincidentally, the club's previous president resigned in October of the last year and new elections were called for March this year.

Nor does Real Madrid have a low debt: it is almost 6 billion reais. However, the crucial difference is that it has a short-term debt which is somehow manageable, which is not the case of Barcelona.

Schalke 04, one of the most traditional clubs in Germany, is in the last position in the championship and has a huge chance of being relegated. With debts in excess of R$ 1.5 billion, insolvency proceedings are already being openly talked in Germany. And what is one of the alternatives, although complex, that is placed on the table? Transformation into a company.

Therefore, it is clear that the 3 clubs formed as an association among the 30 richest people in the world have real financial problems. Just coincidence? I understand not.

Clubs constituted as an association, where no one owns anything, tend to have greater relaxation in the rules of financial control. A quick look at South America, where the associative model prevails, with the exception of Chile and Colombia, and partially from Uruguay, shows this.

Clubs formed as an association define their board by means of election, which is very similar to municipal elections. Within these clubs there are several political groups, similar to the parties, that every 3 or 4 years face each other at the polls in search of command.

Looking across the table, we have Bayern Munich, a dream for any professional football manager. He is incorporated as FC Bayern München AG, which is the company that operates and manages football. Its shareholders are FC Bayern München eV (the associative club), with 75% of the shares, and in the sequence 3 companies that need no presentation: Audi, Adidas and Allianz, each with 8.33% of the shares.

Bayern has a supervisory board composed of highly qualified professionals with interdisciplinary experience, among them the Volkswagen president, Adidas' legal director, the CEO of Deutsche Telekon and the former Prime Minister of Bavaria.

In an organized and coherent way, in mid-2019 the club announced that the current CEO, Karl-Heinz Rummenigge, would step down and be replaced by another club legend, Oliver Kahn, from January 1, 2022. Kahn is part of from the club's executive board since January 2020.

In the 19/20 season, the club had revenues of over R$ 4.5 billion, a reduction of almost 400 million compared to the previous season, due to the coronavirus, and a profit of more than 60 million.

This is what is expected of a football club: institutional and financial stability. If the business model is not the solution to all the ills in the world, I think that at least they have not yet invented something better.

The “non-profit” entity model is archaic, corporatist and capable of generating frequent organizational and economic instability. It is enough to look at the reality of Brazilian football to reach this conclusion, even though many make a gigantic force not to see this and pretend that we have the best model in the world. After all, for these people, clubs cannot have an owner.

I return to the example of Bayern, which, in my view, is the club with the greatest corporate credibility in world football. Instead of insane elections that deeply traumatize the organization of the club (and the example of Vasco da Gama is ripe for analysis), Bayern seek a management transition with serenity, transparency and long-time.

In the Brazilian case, considering that it is not legally and sportive possible for a company to invest with legal certainty in a club that has the associative format, the only possible way for this is to convert into a limited or limited company.

It is important to emphasize that it is not the laws that will magically solve the problems of Brazilian football. But it is the laws that can pave the way for anyone who wants to freely seek these solutions.

That is why we urgently need a regulatory framework for the transformation of football clubs into a business society and it is essential that the Federal Senate fulfill its role and vote on the bill that was approved in the Chamber of Deputies in 2019 and that is still shelved today.

For reasons like these exposed here, unfortunately for many years Brazilian football has been out of the investment route in football clubs. In South America I have already had the opportunity to witness or act in transactions in which investors preferred to invest in clubs in Uruguay or Chile, as they were countries with greater legal stability and that had specific laws for corporate investments in football clubs, than invest in Brazil.

In 2021, to the surprise of many, including myself, the City Football Group, which owns Manchester City, joined a club in Bolivia. And nothing from Brazil. How come?

We need to enter the international investment route. Today there is great global liquidity for investments in risky businesses and football is one of these assets. The external interest remains only in the talent of the Brazilian player. We need to equalize this relationship a little more. It is necessary to build interest not only in the purchase of players, but also in the purchase of clubs. Brazilian football and the economy will be thankful.

* Eduardo Carlezzo. Lawyer, partner at Carlezzo Advogados, specialist in sports law and author of the book Corporate Sports Law, This email address is being protected from spambots. You need JavaScript enabled to view it..


Todos os Direitos Reservados | 2020
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