City Football Group has acquired a 90% stake in the Salvadoran club. Photo: Felipe Oliveira
By Lake Tororo in the capital of El Salvador, the city in northern Brazil that was the country's first capital, is the Fonte Nova Arena, rebuilt for the 2014 World Cup final, home to newly promoted top division club EC Bahia and a sale to any potential owner. million
The new owner of EC Bahia last week was City Football Group, the head office of Abu Dhabi, which controls Manchester City, New York, Melbourne City, and now ten more clubs from Japan to Uruguay, China and India.
Another week, added another club. However, for all the CFG's global expansionism, this one is different. Even if Abu Dhabi hadn't launched CFG ten years ago, they might still consider buying from Brazil.
CFG is not the first to take advantage of the new legislation passed by the Brazilian government to allow foreign debt holders. loaded Brazilian clubs with premium legacies owned by members.
He definitely won't be the last. The new owners of Chelsea and Newcastle United have expressed interest in multi-club systems, a global format that national leagues or associations cannot satisfactorily regulate.
In Brazil, the possibilities are endless, but in a post-COVID world where finances Brazilian clubs are on the edge, big money games have seen their chance to move in.
This is partly due to access to one of Brazil's vast natural resources: an endless supply of football talent. City's Champions League rivals this week, Real Madrid, have thrived in the elite end of that market.
Vinicius Junior, Rodrigo and prodigy Andrik have been attracted by the club's well-established South American scouting network. Real Madrid also made a few mistakes, but overall benefited from Spain's less stringent work permit system. What they don't have is a first-class club in Brazil to recruit and filter talent through.
Real Madrid has always been the club that brought in the best talent from Brazil with Vinicius Junior in 2017. Credit: Getty IMages/Eric Alonso
New post-Brexit immigration rules for professional footballers give Premier League clubs free rein to exploit the South American market, and a revised agreement with the Football Association could make this even smoother.
But for CFG and others, the move goes beyond signing players and unlocks the potential of the huge Brazilian football market. Fighting corruption and bad administration, Brazilian football wants change.
It follows a rights model similar to the Premier League and benefits from the famous South American continental competition, the Copa Libertadores, and a Europa League-style second offering. South America also ranks six in the expanded FIFA Club World Cup starting in 2025. The fans of the big clubs are huge, and EC Bahia is no exception.
Investors see potential for growth in Brazil's football broadcasting rights market, which will move to a centralized sale in 2025, although this will take time and money. Brazil has big name clubs that resonate all over the world. It has thousands of players, among whom the next world star may appear.
The $200 million payment to CFG, as reported in the Brazilian media, implies a future investment as well as an acquisition. CFG has not disclosed how much it has valued the club and how much of that $200 million will be used to pay off debt. Revenues are unlikely to exceed £40m. The CFG will feel that its expertise can squeeze more out.
In August 2021, the Brazilian government passed the Sociedade Anonima do Futebol (SAF) law to try to bail out indebted member-owned democratic clubs, many of which had large outstanding tax liabilities.
The club's assets will be transferred to a new company, which can be sold, provided the new owner reaches an agreement with the creditors.
This is the de facto privatization of clubs founded in the early 20th century as multi-sport clubs that have provided sports facilities for their members and have grown into some of the biggest names in world football. Ten percent of the clubs bought by the SAF will remain in the hands of fans
The first wave of investors has already arrived. The original Ronaldo – an R9 for friends and fans – bought 90 percent of his former club, Cruzeiro. American investor John Textor, who owns French giant Lyon as well as a stake in Crystal Palace and other companies, owns 90 percent of Botafogo.
CFG wants to develop its brand in South America
Others are sure to follow. With CFG's presence in Brazil, the world's largest footballer-producing country, it may be that their biggest rivals cannot afford it.
Who will benefit from all this? CFG, of course, with endless Abu Dhabi resources and a well-oiled global operation. CFG dismisses any suggestion that its network is being used to reallocate costs, bypassing the city's profit and sustainability commitments.
He sees CFG as a way to grow the City brand. EC Bahia will give them more of that soft power. If it also brings them the world's leading talent for a fraction of the price they will have to pay later in his career, then the project was worth it.
Covid has pushed the financial problems of Brazilian football to the breaking point. head. The game struggled with such basic problems as the poor quality of the pitches and the bloodlust for manager layoffs. Democratically elected club presidents worked for the short term. The government and the banks did not dare to forfeit the debts of the clubs, which were revered local institutions.
This is another death knell for member-owned clubs in the modern era. The sale of EC Bahia to CFG was approved by a wide margin in a member poll. This week, similar conditions were offered to the recently relegated Juventude club in the south of the country.
Whether blue-chip clubs like Flamengo are allowed to come under the control of foreign investors is likely to be a political decision. However, change is happening quickly. Even in Spain last week, representatives of Barcelona were asked in a questionnaire how they would react to the privatization – partial or complete – of their club.
Textor was welcomed at Botafogo as a hero. It has since been criticized for replacing the dreaded pitch with synthetic turf in order to use the stadium for concerts to boost revenue.
Of all the CFG clubs since he bought City, he has never faced such a historic club or a club with such a large fan base. This is a long way to modernize the national football system. Unless, of course, modernization is a euphemism for something else.
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