Negotiations to create a Brazilian league modeled after the English Premier League have dragged on for a year and a half. The 40 teams that would make up the first and second divisions have reached an impasse over revenue distribution and have split into two—Liga de Futebol Brasileiro (Libra) and Liga Forte de Futebol (LFF)—each supporting a different proposal.
The latest move came last week, when LFF selected 1190 Sports, a sports marketing firm, as its business advisor. 1190 holds the international broadcast rights for the current national soccer league until 2024.
The 1190 deal was joined by Serengeti Asset Management and Life Capital Partners, LFF’s prospective investors. Those firms have agreed to invest $956 million (4.85 billion reais) for a 20% stake in the new league’s commercial rights for the next 50 years—if all 40 teams sign on.
LFF has the support of 22 clubs, mostly from the second division, with a few first-division teams (Internacional, Fluminense and Atletico-MG) in the mix. Four third-division teams bring the total to 26.
If LFF cannot convince Libra to form the league jointly, Serengeti will instead invest $436 million (2.185 billion reais) in LFF—if the 22 first- and second-division clubs sign the agreement, according to details from a leaked term sheet reported by UOL Sports and confirmed by Sportico with an independent source. As of Dec. 31, 2022, Serengeti reported $1,152,869,672 in assets under management. Serengeti did not respond to Sportico’s request for comment.
Libra, the first group that set out to create a league, has its own financing in place. Advised by Codajas Sports Kapital, Libra agreed to sell a 20% stake of its commercial rights for the next 50 years to Mubadala Capital for $940 million (4.75 billion reais). The parties signed an exclusivity agreement last September.
“We are moving forward. Everything is being prepared to form a league,” Lawrence Magrath, the co-founder of Codajas Sports Kapital, said in a phone interview. “Mubadala is working on the documents, they have lawyers and consultants working toward this goal for months.”
Mubadala Capital is a wholly owned asset management subsidiary of Mubadala Investment Company, the investment vehicle of the government of Abu Dhabi, with approximately $17 billion of assets under management.
Libra has the other 18 teams from the first and second divisions signed up, including eight of Brazil’s top 10 clubs, such as Flamengo, Corinthians, Palmeiras and Vasco da Gama. According to a survey conducted by CNN Esportes, Libra’s clubs cover 75% of Brazilian supporters.
Initially, the sticking point was a difference in revenue allocations. Libra proposed a 40-30-30 split, with 40% of future broadcast and commercial revenues shared equally and the remainder divided based on performance (30%) and fan base (30%). LFF suggested a 45-30-25 model, and wanted to cap the difference in revenue between the highest- and lowest-earning clubs at a multiple of 3.5x.
Libra says it modified its proposal to reduce the revenue gap between highest and lowest clubs even more, to a multiple of 3.3x.
But Atletico-MG president Sergio Coelho, who supports LFF, said there is still no agreement on the revenue gap multiple, and seemed to blame Libra. “Generating scenarios on the spreadsheets with several variables that result in a multiple is very different from accepting a principle and agreeing on a rule,” he said in a message. He added there are other points the sides “have no agreement on,” including unanimous approval (rather than a qualified majority) for major statutory changes.
“In Brazilian football, all the value is in the first division. Nobody wants to buy the second division,” Ricardo Fort, a former Coca Cola executive and the founder of Sport by Fort, a sports marketing and consulting firm connected to the Libra group, said in a phone interview. “There is a risk of limiting the interest of the market, because the market doesn’t want to buy both divisions.”
Currently, the two sides continue to talk with the goal of finalizing an arrangement by the end of June, in time to negotiate the next broadcast deal with Brazilian broadcaster TV Globo. Clubs have a domestic broadcast deal with TV Globo until 2024.
“What happens if the league is not formed? I believe CBF [Brazilian Football Confederation] will continue to run the league for the next few years,” Magrath said.
In that scenario, the two groups will sell their media rights separately to prospective investors. “And in that case,” Magrath said, “11 of the largest clubs that created Libra will probably make considerably more money than the LFF’s nine clubs with medium to small fan bases.”