Brazilian soccer clubs face US$500 million deal with investors

Professional soccer clubs in Brazil are in the final stages of agreeing with investors to sell a portion of their commercial rights.

This deal can potentially resolve a longstanding conflict between rival factions vying for control of the sport in the country.

As stated in a press release on Wednesday, local company Life Capital Partners and Serengeti Asset Management will reportedly invest US$500 million over 50 years.

The valuation of the stake was confirmed by an anonymous source familiar with the matter.

While Brazil’s national team has achieved great success, its domestic leagues have suffered from years of financial mismanagement.

To address this issue, local teams have explored the idea of creating a league structure that would retain top soccer talent within the country for a longer period and attract foreign investment by selling lucrative broadcasting rights.

According to the statement, approximately 25 teams have already expressed their support for the proposal presented by Life Capital Partners.

Notably, prominent clubs such as Botafogo, Cruzeiro, and Vasco da Gama, part of a rival league initiative called Libra, will also be involved in the new arrangement.

Libra, backed by the investment arm of Abu Dhabi’s sovereign wealth fund, Mubadala Investment Co, aimed to allocate a larger share of revenues to the bigger clubs.

To address concerns from smaller clubs regarding the distribution of broadcast revenues, Botafogo, Cruzeiro, and Vasco have shown a willingness to collaborate with Libra and the proposed league structure, as reported by Bloomberg earlier this year.

The structure of the new deal bears similarities to agreements seen in European soccer, where companies like CVC have acquired stakes in the audiovisual rights of leagues such as France’s Ligue 1 and Spain’s La Liga.

Life Capital Partners (LCP) is an independent asset management firm based in Brazil, founded by entrepreneurs and investors Wilson de Lara, Carlos Gamboa, and João Leitão.

Serengeti, based in New York and established in 2007 by Jody LaNasa, shifted its focus to private investments in late 2021, resulting in the closure of its public credit fund.

As part of this transition, Jay Eisbruck, head of structured credit, and Raza Mujtaba, who led public investments, departed from the company.

With information from Bloomberg