August 4 – Cruzeiro has become the first major Brazilian club to abandon its non-profit entity status in favour of a company structure – ‘Sociedade Anônima’ – as the club moves to restructure its finances.
Yesterday (Tuesday) the club’s counsel approved the change with 217 votes in favour and five against. By becoming an S/A, the club from Belo Horizonte wants to attract investors, generate new revenue streams and reduce its deficit. As non-profit entities, clubs are prohibited from receiving outside investment or sharing any surplus income, as they are owned by the members.
The new structure will also allow for foreign investment in Cruzeiro. The 2020 balance sheet showed debts in excess of 900 million reals (£125,000) with revenue in the second division just 120 million reals (£166,000). The switch to an S/A is still subject to the government sanctioning law 5516/2019, but in 1993 Zico’s Law already provided for professional football clubs to become companies.
The vast majority of Brazilian clubs labour under unhealthy balance sheets, with ever-mounting debts, often leading to dysfunctional day-to-day operations and dramatic results on the field. In recent seasons, Cruzeiro, once the pride of Minas Gerais, slid down the table and ultimately were relegated from Brazil’s Serie A for the first time ever in 2019.
In the top flight only Red Bull Bragantino, a part of the energy drink’s club network, is an S/A.
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