Rodrigo Klein: Corporate Law in Brazilian Football

In August 2021, Law No. 14193 entered into force [1]which brought with it many changes for Brazilian football teams, the most important of which, without a doubt, is the possibility of clubs becoming a football joint stock company, the so-called SAF(s)Anonymous Football Association).

Under Section 2, Clause 1 of the new legislation, football clubs can now stop being non-profit civil associations, that is, non-commercial companies, to become commercial companies, which has a series of consequences, both legally. point of view, as well as management and growth.

In the United States and in most European countries there was a “club company”, as its name implies, a commercial company, conducting an organized economic activity, with the aim of profit and, of course, providing high-quality football to its fans.

Here in Brazil, with few exceptions, football teams are historically known as debt-burdened institutions, with questionable management, delayed salaries and stadiums in disrepair. Until then, since they were not considered corporations in the legal sense of the term, they could not even benefit from the judicial reorganization that had been instituted, provided for in Law No. 11.101/05 [2].

Now, when it becomes the SAF, clubs can apply for injunctive or extrajudicial redemption and, in addition to being classified as commercial companies, there is also an express provision in Article 13, Clause 2 of Law 14.193/21, regarding this concession. Therefore, the possibility of renegotiating debts with creditors opens up, including discounts on the amount due and long-term installments, which will certainly be a great encouragement.

Within just a few months of the new law taking effect, several big clubs expressed interest in becoming SAFs and applying for court restitution, in an effort to settle their debts. The most symbolic is the Cruzeiro Esporte Clube of Minas Gerais, negotiating the sale of 90% of the SAF to former player Ronaldo Nazario, as one of the acquisition conditions was a redemption request. According to news portal Globo Esporte [3]The club has accumulated debts of nearly one billion Brazilian riyals with many creditors.

After leaving the financial field, it is important to analyze the benefits of the new legislation also from the perspective of the club’s growth. When corporations themselves become, and more specifically under the corporate ritual, being able even to trade their shares on the stock exchange, the club will have shareholders, who will inject money by buying and selling shares, generating cash and, in turn, providing larger investments.

Additionally, speaking of shareholders, one can read: Owners, that is, from now on, teams that join SAF will have owners, to a greater or lesser degree, which may be a positive outcome.

The shareholder will certainly aim for the return on his investment, and at this point the wheel of prosperity begins to turn, because for a football club to make a profit, it means a surplus between the subtraction of “income – expenses”, it must have the ability to generate wealth.

Given that the biggest source of income for football clubs is currently the sale of image rights, a team aiming for greater financial return should rank well in the major leagues. So it will be necessary to win matches, tournaments and, in the end, be champions. To achieve all this, it is necessary to have good management, excellent players and a structure that promotes the development of the team. That is why many European teams have become real “machines”, bypassing even the great teams.

It appears that the coming years will be one of many changes and development in the Brazilian football scenario, starting now on the criteria of demand, management, governance and Commitment, rooted in the business world, will also be present in football clubs. Let’s wait for the next move scenes, hoping the VAR won’t stop us.

Leave a Comment