PSG drop Mbappe from squad for Asian tour

PSG drop Mbappe from squad for Asian tour
PSG drop Mbappe from squad for Asian tour

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Jeddah - Yasmine El Tohamy - SAO PAULO: Arab investors are eyeing opportunities as Brazil’s football industry begins to undergo an organizational revolution with profound consequences for the sport and the business surrounding it.

Earlier this month, the UAE’s Mubadala Capital signed an agreement with a football league formed last year in Brazil comprising 15 clubs, including the ones with the biggest numbers of fans such as Flamengo, Corinthians and Sao Paulo.

The deal establishes that starting in 2025, those clubs will negotiate as a group their commercial and TV rights regarding the Brazilian championship. Mubadala will advise them in the process, and will have the right to buy a share of such rights.

The multimillion-dollar transaction includes two blocs – one comprising seven top-division clubs, and another comprising eight second-division clubs.

Another two leagues – one with 24 clubs and another with four – reached a similar deal with a US fund.

Such transactions will not only inject millions of dollars into the industry, allowing it to invest in infrastructure and training new talents, but will also lead to a more professional approach to management, marketing and business opportunities, experts say.

That transformation is also being catalyzed by a 2021 law that allows Brazilian clubs, which have historically been not-for-profit associations, to become corporations.

Known as the SAF law and conceived to help Brazilian clubs solve long-time financial problems with the support of private investors, it has revolutionized the industry.

“Everything is changing fast now with the SAF law and the leagues. Both elements are important drivers and will lead to an unprecedented level of professionalism, business development and international exposure,” Fernando Ferreira, director of Bridge Sports Capital – which intermediates sales of football clubs’ shares to investors – told Arab News.

Football represents only 0.5 percent of Brazil’s gross domestic product, while in Spain it is 1.8 percent, he said.

“Football still has much to grow in the world as a whole when we compare it to the level of entertainment and professionalism attained by US sports. In Brazil, that’s only the beginning,” he added.

Investors who get into the business now, such as Mubadala, have fantastic opportunities in their hands, Ferreira said, adding that about 50 clubs could be totally or partially bought within a couple of years.

Only a handful of them have already been sold. That is the case with Bahia, a club from the city of Salvador founded 92 years ago.

In May, City Football Group – owned by Abu Dhabi United Group – announced that it bought 90 percent of the club.

The conglomerate already owns Britain’s Manchester City and a number of other clubs worldwide, including Uruguay’s Montevideo City Torque.

“Owning clubs in countries that traditionally export athletes, like Brazil and other Latin American nations, is a strategic way of having a steady provider of talents,” Ferreira said.

Brazil is the major source of international footballers, with 1,000 expats every year. In Saudi Arabia, the UAE and Qatar, there are more than 100 Brazilian players now, said lawyer and sports consultant Pedro Trengrouse.

“The presence of Brazilian athletes has been decisive in leagues all over the globe. That was not only the case for Pele in the US and Zico in Japan, but also for several other players,” Trengrouse told Arab News.

In Arab nations, Brazilian idols can help increase the competitive level and draw larger audiences to stadiums, thus contributing to the sport’s sustainability, Ferreira said.

“But those nations need to keep investing in the formation of local athletes,” he added, noting that some Gulf countries have been doing so, considering Saudi Arabia’s performance in last year’s World Cup, which included a victory over tournament winner Argentina.

Deals involving Arab investors and Brazilian clubs and players will keep growing in number in the next few years, said Francisco Clemente Pinto, a partner at KPMG who heads its media and sports division in the Latin American country.

“There’s no doubt that other investors from the Arab world are preparing for their next moves in the Brazilian market, and it’s not only a commercial partnership,” he told Arab News.

Arab countries have been working with Brazilian football managers for decades, and know that the South American nation is an expert in creating new talents. That is something they want to learn, Pinto said.

The next transformation in the Brazilian football industry will involve initial public offerings by a number of clubs, he added, something that will further attract investments and promote the entry of new international actors.

“Clubs that are already operating in the stock markets tend to be better valuated by potential investors, so the ones that have already become corporations have an advantage now in comparison to the others,” Pinto said.

A recently launched KPMG study that he led showed that only two Latin American clubs are currently listed as public companies: Chile’s Colo-Colo and Universidad Catolica.

While Brazil is the main target for investors now, some of its neighbors have also been continually attracting partners, especially countries where clubs have been allowed to become corporations such as Chile, Uruguay and Mexico, said Christian Sujoy, CEO of Global Sport Management Group, a consulting agency with offices in several nations including Argentina and Panama.

Although Argentina is a leading nation in the football world and the third-biggest provider of players for international leagues, partnerships with Argentinian clubs are now out of the question.

“Argentinian legislation doesn’t allow clubs to be companies, so partial or total acquisitions of teams aren’t possible now,” Sujoy said.

Other relevant markets in the region include Ecuador, Colombia and Mexico, Ferreira said.

For Trengrouse, the growing relationship between Arab investors and the Brazilian football industry can strengthen partnerships in other economic segments.

“Mubadala invests not only in Brazilian sports, but also operates Rio de Janeiro’s subway, roads in Sao Paulo state, and is financing a green-fuels industrial plant in Bahia. Football can boost other ventures with huge potential,” he said.

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