It was quite a week for Botafogo. On November 30, they won the Copa Libertadores for the first time in their history, beating Brazilian rivals Atletico Mineiro 3-1 in the final. Then a week later, they won the Brazilian domestic title for the first time since 1995, pipping defending champions Palmeiras.
But there was something else significant, relatively minor in the immediate afterglow of glory but something we’ll probably see much more in the coming years: Botafogo were the first Brazilian club to win a major honour under a foreign owner, made possible by relatively new laws that could make the country among the most attractive destinations for football investors in the world.
John Textor, the American businessman who made his money in various technology enterprises and who is better known to a European audience as the owner of Lyon and a minority stakeholder in Crystal Palace, has been in charge of Botafogo since 2022.
This was notable because it wouldn’t have been possible a year earlier. “It was an opportunity to be a part of the transformation of Brazilian football and the professionalisation of it,” Textor tells The Athletic. “It was a legendary club — really the greatest club in the history of Brazil — that had fallen on hard times and not won anything in many, many years. It was a great growth opportunity.”
John Textor (second from left) after Botafogo won the championship (Mauro Pimentel/AFP via Getty Images)
Until 2021, most Brazilian football clubs were essentially run as sporting associations rather than businesses. They weren’t quite supporter-owned in the sense an English fan might understand it, but they were mostly governed by presidents who were elected by their fans/members. The clubs were exempt from tax, were not run for profit and outside investors were not allowed. A few were allowed to exist as private companies, but for the most part, clubs were these sporting associations.
The trouble was that the ‘not for profit’ bit had been taken to the other extreme, meaning there was a financial crisis in Brazilian football to the point that some clubs were in danger of disappearing. In 2020, a report by the financial auditors Ernst and Young analysed the finances of 23 Brazilian clubs and estimated they carried a total debt of 10.3 billion Reals — just under $2billion, or nearly £1.5billion. And a lot of this debt was to the Brazilian tax man, and with revenue having fallen thanks to the Covid-19 pandemic, something had to change.
So the law was changed, allowing football clubs to convert themselves into businesses in the same way many European clubs are businesses, and crucially allowed them to accept ‘outside’ investment.
These new structures are known as Sociedade Anônima do Futebol or ‘SAFs’ — which literally translates as ‘football anonymous society’. The law change allowed Brazilian clubs to sell up to 90 per cent of their shares to basically whoever they want, which plenty have done and plenty more could follow.
All in, of the 20 clubs that competed in Serie A in the season that has just finished, seven have made the switch to an SAF structure, although not all have been taken over.
In addition to Textor, City Football Group added Bahia to its vast international network of clubs (which stands at 12 in 12 countries on five continents) in 2022, in the same year Vasco da Gama were gobbled up by 777 Partners (though they are in limbo after the collapse of Josh Wander’s group this year), while Cruzeiro were taken over by former Brazil striker Ronaldo in 2021 and then re-sold to businessman Pedro Lourenco last year.
Atletico Mineiro are 75 per cent owned by Galo Holding, a group of Brazilian investors. Cuiaba were only formed in 2001 and owned by the Dresch family even before their conversion. And while Fortaleza transformed into a SAF in 2023 they haven’t sold any of their shares as yet, and plan to follow a German model where no outside party will be able to own a majority.
Then there’s Red Bull’s Brazilian outpost, Bragantino. That’s a slightly different situation because that club converted into a private company in 2019 and the ownership was transferred from the Chedid family, who previously controlled it, to Red Bull shortly afterwards.
Another clutch of clubs won’t, in the immediate future at least, convert. Flamengo, Sao Paulo, Corinthians and Palmeiras are the biggest sides in the country, and have relatively stable finances and/or manageable debts, so they have no immediate need to change.
Ronaldo, former player and owner of Cruzeiro, gestures before a match against Corinthians (Miguel Schincariol/Getty Images)
The rest are theoretically up for grabs. The point was emphasised recently when Evangelos Marinakis, owner of Nottingham Forest and Olympiacos, confirmed in an interview with Sky Sports that he is investigating a takeover of Vasco, to add to his portfolio of clubs.
Edu left his job as Arsenal sporting director in November, eventually to join Marinakis’ multi-club empire and help expand it around the world. An official announcement about Edu’s role is not expected in the immediate future, but The Athletic understands he has already started preliminary work on Vasco, gathering information before a potential takeover.
Plenty more will come in the next few years. BlueCo, the owner of Chelsea, has already started its multi-club expansion with the purchase of Strasbourg in France, and is looking further afield, as are other multi-club groups. Santos, the club of Pele and Neymar who have fallen on hard times but who have won promotion back to the top tier for next season, are thought of as a prime candidate to be taken over.
Clubs in the lower leagues are targets for investors too. Guarani, a Serie B club this season, are a candidate for investment. Even Portuguesa, a club who only play in the regional Sao Paulo leagues, have recently converted into an SAF.
Another lower-league team who have been taken over as a SAF is Coritiba, Brazilian champions in the 1980s but who now play in Serie B. They are perhaps the perfect example of what could happen much more, for better or worse, because they were taken over by Treecorp, a private equity fund that had no previous involvement in football: its existing businesses included a series of veterinary companies, a portal for paying parking fees and a burger chain.
“When we saw the first transactions happening, we were quite sceptical,” Bruno D’Ancona, Treecorp’s managing partner, tells The Athletic. “We don’t have a tradition of companies investing in football, but now it’s a big, investable industry. When we lost our preconceived ideas of the industry, we said let’s dive into it.
“The industry is globally booming. Fan attendance has been growing, media rights have been increasing. It’s different to other investments, because despite the current business environment it’s less influenced by the current scenario (of the individual company), and more in line with global trends.”
Marinakis is looking to invest in a Brazilian club (Michael Steele/Getty Images)
But apart from the fact that they are now available, what makes Brazilian clubs attractive to outside investors?
They are relatively cheap, for a start. Come back to us when you’ve got at least a billion if you want to buy any of the top teams in the Premier League, but Textor paid around $330million for Botafogo. Ronaldo sold his 90 per cent stake in Cruzeiro for around $117m.
It can also be, from a business perspective at least, a blank slate for a potential investor.
“Everything about Botafogo from the beginning was like a start-up,” says Textor. “We had barely any employees. We had to build an all-new company, an all-new professional staff, coaches, players, and so there’s this level of excitement and trust and loyalty that you get in a start-up. You don’t have to win anybody over. You don’t have to convince people to drop their old ways of doing things. I’m a very unconventional thinker, and so my approaches were embraced, and not rejected. So it’s very different to start a club as opposed to buying a club and trying to turn it around.”
Footballers are also one of Brazil’s key exports. A report by football think tank CIES Football Observatory in May found that Brazil is by far the nation with the most expatriate players, with 1,338 plying their trade abroad. “It’s an industry that Brazil is intrinsically good at,” says D’Ancona.
If you own a Brazilian club that produces a young talent that can be sold to Europe, those dollar signs will start spinning around your eyes like a cartoon. But perhaps more relevant in the modern world of ownership is that this talent production line is even more appealing to multi-club groups. It’s a relatively bleak prospect in terms of shipping young footballers around the world like commodities, but if Bahia produce a brilliant young player, Manchester City can essentially control his future, perhaps move him to one of the other City Football Group clubs to acclimatise to European football before bringing them to the mothership.
Or, those players can be a source of revenue. “Instead of selling a player to Porto or Benfica, they will place them within the group, and then sell them to a big club in the Premier League, for example,” says Marcos Motta, a lawyer who has also advised clubs who have changed structure. “There is no ‘middle club’ now — the multi-club organisation is the middle club.”
Edu has left Arsenal to join Marinakis’ multi-club group (Alex Burstow/Arsenal FC via Getty Images)
Minimal red tape is also attractive. “There are very lenient ownership rules,” says Motta. “There is no financial fair play: if an investor wants to put $1billion into a club, that’s OK. If he wants to have one of his parent companies sponsor their club for $1billion, they can do it.”
Other revenue streams are opening up too, notably gambling sponsorships. Of the 20 clubs in the top flight in 2024, 15 of them had a betting company as their main shirt sponsor, and the other five — Gremio, Cuiaba, Internacional, Palmeiras and Red Bull Bragantino — either have secondary sponsorship agreements with gambling platforms or have done in the past couple of years.
Committed and passionate fans don’t hurt, either. “In Brazil there’s a connection between club and community, which is stronger than most parts of the world,” says Textor. “People can get offended when they hear me say that, but it’s just true.”
Textor has provided an example for other investors that it can work. After the astonishing season Botafogo have enjoyed, he is viewed by many in Brazil as a symbol of everything that can go right when an outside investor comes in. A few weeks ago he was having lunch in Rio, and he was asked for a selfie: not an especially unusual thing, but the selfie-seeker supported Botafogo’s crosstown rivals, Vasco, and said he wanted an owner like Textor for his club.
“It’s been very, very difficult at times,” Textor says, “but at the same time you get thank-yous and hugs in the street. Most of the negative stuff is a very small percentage on social media and gets covered by the press. But pretty much there’s been a groundswell of support from the very beginning.”
“It’s a movement,” says D’Ancona. “His strategy is different from ours, but it’s an encouraging result. There’s a group of investors that will be excited about what Textor has been able to do.”
Which is all slightly surprising when you consider how different Textor’s reputation is in Brazil to Europe, where he owns 40 per cent of Crystal Palace, where he failed in a bid to take over Everton and where his Belgian club Molenbeek were relegated to the second tier last season. Most seriously Lyon — where Textor’s Eagle Football Group bought a 77 per cent stake in 2022 — have been provisionally relegated to Ligue 2 by financial conduct authorities unless they significantly improve their balance sheets by the end of this season. Textor told journalists there was “no chance” of them being relegated, but no wonder he was waving around Botafogo’s Libertadores prize money cheque of £23million like he had just won the lottery.
This isn’t necessarily a new world with gold in the footballing streets, and there are notes of caution and potential drawbacks. Just because one group succeeds doesn’t mean everyone will.
There’s also the uncertainty that a potential breakaway league could bring. For a few years, there have been moves for a group of clubs to move away from the traditional power structures and do something similar to England’s biggest and brightest in 1992. In theory, it could be lucrative, but despite a lot of talk it hasn’t happened yet and it would be unwise to buy a Brazilian club on the basis of these inevitable riches.
Instinctively, one might wonder about fan backlash. Football fans tend to be inherently opposed to change, but in this case there seems to have been widespread acknowledgment that the way things were going could not continue, so there wasn’t significant protest. That said, one of the wedge issues in the recent election for Flamengo president was the prospect of converting into a SAF: both parties were keen to paint their opponent as in favour of a SAF while positioning themselves against it.
Could SAFs make the Brazilian league more competitive? Much like many places around the world, before Botafogo won this season a few big, wealthy clubs dominated, with Palmeiras, Corinthians and Flamengo sharing eight of the nine previous Serie A titles. But in theory, if clubs like Botafogo receive outside investment, they could close the gap.
You could think of this as a relatively depressing state of affairs, the start of a widespread flogging of some of the world’s most storied football clubs. But it’s a situation born from an economic reality that means Botafogo’s success under Textor might be the first of many.
“I would say jump in — the water’s good,” Textor says, when asked if he has any advice for potential investors. “Come join us. It will change your life and it’ll change your business. Just come to Brazil, and you’ll see.”
(Top photo: Andre Ricardo/Eurasia Sport Images/Getty Images)
