No Profit? Here’s PROFUT!

“Some people think football is a matter of life and death. I assure you, it’s much more serious than that” –  Bill Shankly

PROFUT – Brazil’s Refinancing Programme for Sports Clubs

It is a well-known fact that all the top football clubs in Brazil have enormous debts. For decades, the managers and club executives spent tons of money – which they didn’t really have – trying to set up great squads and get short-term sporting results. They did that in order to please the fans (who are only interested in titles) and sponsors (who are interested in the exposure that comes with success in big tournaments).

In 2018 the Brazilian corporate investment bank ITAÚ BBA published, (using data from 2017), a study about the financial situation of the biggest Brazilian clubs from 2017, which can offer you (if you have good command of the Portuguese language) an insight into their finances. According to the study, in 2017 the amount of money owed in taxes (not only federal ones, but they represent a huge part of the debt) was around 3,7 billion reais, which would be more or less 840 million euros.

Naturally, one of the biggest victims of the clubs’ outstanding debts is the Brazilian federal government. The non-payment of tributes by football clubs has become so common – and tolerated because of the specificity of the sporting market and that nearly all the clubs are structured as associations. So much so that the government concluded that, if it didn’t help the clubs out in some way, the debts would never be paid, with close to zero consequences.

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Time to legislate

So in 2015, after a period of negotiations, the former president Dilma Roussef enacted the law known as ProFut Law (n. 13.155). It provides clubs the possibility to refinance their debts with the federal government, if they comply with certain rules, stated in article 4 such as:

  • Paying all their employment obligations
  • Paying all their tributes from the date of the acceptance
  • Having an autonomous fiscal council
  • Complying with some limitations concerning the anticipation of revenues
  • Structuring their finances to tackle the debt
  • Publishing financial balances
  • Stablishing the punishment of managers and executives for irregular or reckless management (removal and at least 5 years of ineligibility) by changing the Statutes
  • Cap of 80% of the club’s revenue to be spent by the football department

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These may sound like fairly stringent rules but this refinancing program is the most beneficial amongst ALL those offered by the federal government so far and there are a plethora of benefits for compliance such as:

  • Being able to pay debts in 60 instalments
  • A Reduction in fines by 70%
  • A Reduction of interest by 40%
  • A Reduction of legal fees by 100%

To handle this system and properly check whether clubs are complying with these rules or not, Article 19 created the APFUT – Autoridade Pública de Governança do Futebol, which would roughly translate as the Public Authority of Governance in Football. Their job is to monitor clubs, investigate irregularities and sanction the clubs accordingly.

The benefits for clubs are incredible and nearly all the biggest Brazilian clubs subscribed to ProFut with the exception of Palmeiras. However, some of them are not complying with all the rules, and some have already been kicked out.(Good thing you’re all fluent in Portuguese by this point!) Perhaps Brazil’s government need a word of warning:

“Neither a borrower nor a lender be; For loan oft loses both itself and friend.” – Shakespeare (Polonius)

The Power of Football

It is interesting to see how, in Brazil, football is still treated as an exception in every context. Clubs are granted a certain freedom to do whatever they feel like and most people are ok with it. Football in Brazil  has come to a point where the congressmen of Minas Gerais once ended their session at the State Assembly in order to watch Atlético Mineiro’s match in Libertadores this year!

The ProFut program is just another example of the power and influence of football in Brazil. Perhaps it’s time for us Brazilians to realise that, yes, football is probably the best thing on Earth, but it is now a serious business and a huge market worldwide.

André Oliveira

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