Nowhere is the news of FIFA's ban on third-party ownership "likely to have quite such a seismic effect as in Brazil, where outside investors occupy a vital role in football's financial food chain," according to James Young of ESPN. In the short term, a ban on third-party ownership "is likely to create serious cash-flow issues for financially strapped Brazilian clubs, which frequently rely on the sale of percentages of their promising young players to third parties just to pay the bills." In the longer term, however, "the move may be a positive step since it forces clubs to stir from their collective torpor and encourages much-needed reform of the underperforming domestic game, which is plagued by financial woes, low attendance and an archaic fixture calendar." According to an estimate by Globoesporte's Martin Fernandez, about 80% of players in Brazil are fatiados ("sliced up") among multiple owners -- "generally clubs, agents, investment funds and even the players themselves." Recent Brazil national team call-up Ricardo Goulart is "owned" 45% by agent and investor Higor Luiz Fernandes Sousa, 5% by the Sport Base group, and 50% by his club, Cruzeiro. This "apparently chaotic situation poses two main problems for Brazilian clubs."
LOSING OUT ON TRANSER FEES: One is a loss of control over their principal assets, "including a lack of autonomy when it comes to deciding when to sell a player or not." Perhaps more seriously, "it strips teams of one of their main income streams -- transfer fees from the sale of players to Europe," which according to the Folha de São Paulo newspaper amounted to 23% of the income of top clubs in '13. The €3.2M ($4M) sale of Corinthians central defender Cleber to Bundesliga side Hamburg SV in August "is a perfect example." His club "received nothing from the deal," with the money instead going to investment company Elenko Sports (80%), his agent (10%) and the player (10%). Despite the obvious problems it creates, the financial frailty of the Brazilian game "makes third-party investors a necessary evil." According to a report by sports research agency BDO last year, Brazil's top 24 teams are €1.8B ($2.2B) in debt. The country's biggest club, Flamengo, which boasts of "having 30 million fans across Brazil," currently owes close to €242M ($307M). Reports of clubs being unable to pay player salaries or make image-rights payments "are alarmingly common." Brazil's top clubs "recently met with government officials to pressure for the passing of a proposed law to reschedule their massive tax debts." Brazil Football Minister Toninho Nascimento said, "If the law isn't passed, some clubs won't make it to the end of the year." According to Globoesporte's Martin Fernandes, in the same week that FIFA announced its forthcoming ban, "no fewer than seven Brazilian clubs offered shares in their players to the same investor -- just so they could afford to pay their monthly bills." Brazil Sports Minister Aldo Rebelo said, "The clubs are dependent on investors. They're so fragile that they can't even put a team together without agents" (ESPN, 10/8).
