Tondela is the “first step”: Flamengo plans to buy clubs across Europe and around the world. sports business

Tondela is the "first step": Flamengo plans to buy clubs across Europe and around the world.  sports business

Flamengo is running for closure, still in 2021, with the purchase of Tondela, a club from Portugal, to which the Rio team intends to add its brand. The deadline is “very tight” according to Rodrigo Tostes, Vice President of Finance Rubro-Negro, who in an exclusive interview Give, revealed that the entry into Portuguese soil is the first step in a much larger plan.

The goal, in three years, is to break into the top six places in the Portuguese Championship. According to Toasts, this is a period of “maturity” for the project, which, if successful, will open the way for purchases of other clubs in France, Germany, the United States, Africa, China and elsewhere where there is potential for investment. .

At the moment, the board is in talks with investors who the club considers will invest 50 million euros to purchase Tondela. Flamengo intends to be a conglomerate of clubs around the world to spread the Rubro-Negra brand and increase its millions of fans base in Brazil.

– This is just the first step. This strategy will not work if it is only a club outside Brazil. Everyone (potential investors) we’re talking with say, we put. We want to have a club in Germany, one in Spain, one in France, one in Africa, one in China, one in the United States, in other words, this is not a club project. (Time to start the second stage) It depends on the success of the first “case”. We need at least three years to mature this project, taking the club to the top spot in the Portuguese Championship, that’s the idea. After that we think about step two – explained toastes.

Beiro, Tondela’s mascot before the match against Portimonense – Photo: Instagram reproduction

The investment teaser for the acquisition of Tondela presented to potential interested parties was made in conjunction with BTG Pactual Bank, Ernst & Young Consultancy and Win the Game Company. In it, Flamengo presents its restructuring over the years and places as its main asset the football base and, of course, the fans. The development and sales of young players is seen as one of the main income prospects for both the Rio de Janeiro club and new ventures on Portuguese soil.

– We wanted this year. it’s tight. Too tight, for many factors. We are still working with this year’s deadline. But it’s too tight, it’s not easy. We are working hard,” Tostes said.

Rodrigo Tosts (right) is Flamengo’s deputy finance officer – Photo: Reproduction

Recipes with base range

In the document, Flamengo highlighted the sale of Lucas Paqueta for 35 million euros, Vinicius Jr. for 45 million euros and Rainier for 30 million euros. The club draws a connection between the sales of athletes and the minutes they work with professionals, before pointing to the sale for low prices of players who do not have so many opportunities in the team, such as striker Rodrigo Muniz, sold for Gaya 8 million euros, and midfielder Vinicius, who turned out for 2.5 million euros.

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Flamengo also indicates that it could be a great provider of talent to the European team. According to the document, out of an average of 40 players who complete the progression through the youth categories, only five are used in the professional squad, the other ten are loaned and 25 are sacked each year. Tostes explained how the transfer of players to the Portuguese club would work.

– It’s still under discussion. It is not an ally. It is a separate club with the Flamengo brand, which will have a percentage of Flamengo and obligations with that club. From, I don’t know, guessing, providing all support for a base category, “management” (management), “scout” (scouts), etc. Are there any athletes here that the club was interested in? He has to buy an athlete. Flamengo won’t offer anything for a boy for free. There I have 35% of operations, the boy has 65%. It is a business like any other. I am leaving my brand and I will have a percentage of the business. Administration there will be done by the club, here Flamengo with veto rights, what the brand can use, who can’t.

Vinicius Jr. on his final day at the Flamengo Training Center – Photo: Gilvan de Souza / Flamengo

Tondela and a selection of Portugal

One of the points raised in the presentation for the likes of Tondela was the amount of international talks conducted by clubs in the country. In the graph of the document, the balance of international transfers from the Portuguese league between 2011 and 2020 is the largest on the planet, with US$2.9 billion, ahead of Brazil with US$2 billion. It is also mentioned that three Portuguese clubs lead the list of net profits with international transfers in the last 10 years: Sporting, Benfica and Porto.

Flamengo mentions that eight Portuguese clubs analyzed their composition. Of these, six had the proper structure, only two were in the Portuguese First Division, and eventually, Tondela was appointed as the main target to be the only one on the list with only one controlling shareholder and a “well-located” structure. had gone. In the country, the only “representative of the central region of Portugal”.

business structure and risk

In the proposed business structure, Flamengo would build an “offshore” referred to as “Club de Regattas International” that would provide the Rubro-Negra brand in Portugal for 35% of the deal, while investors would provide 50 million euros for the remaining 65. %. Both parties will be part of another company, which is described in the teaser as “Fla International Holding Company”. Flamengo will not invest money in the operation. The document also details the likelihood of investors leaving later, along with the possibility of selling percentages.

The risk of an unprecedented project is not overlooked by investors and, in order to convince them of the feasibility of the initiative, Tostes explained that it took almost no time for Flamengo to prepare the presentation for those interested in investing money in the project. Took two years. But it does not suit any investor. The club wants partners who understand that Tondela is only the first step. When asked what it takes to get the project off the ground, Tostas is clear.

– Pennies. Just think: why doesn’t someone come here and put in €50 million? Because this is the first time in Latin America this is being done under the terms we are proposing to do a “brand valuation” (brand value assessment), add the brand of a club that has no owners. That’s why investors have to show several things so that they can understand that it is safe. This business is a watershed in Latin America. We understand that on the other hand they see risk.

Game goals and investment rounds

The document also highlights that a fresh round of investment will be needed as the club reaches its goal of playing in the Europa League. Subsequently, “investments will be needed to implement the second phase of the project (to become a regular participant in the Champions League) and provide investors with the event of potential liquidity”. According to the goals set out in the presentation to investors, Tondela should compete in the Conference League in two years, in the Europa League in four years, and in the Champions League for between seven and eight years.

Tondela on the field against Benfica for the Portuguese Championship – Photo: Tiago Petinga / Reuters via pool

And is there an investor already? According to Toasts, there is no shortage of interested parties. Red-black finance deputy explained Give What stage is the conversation actually in:

– It’s a lot. We’re talking, nothing is off. How does such a process work? You go and talk to 50 people, ten show interest in asking for more information, you pass, five develop into conversations and start discussing more detailed aspects. We are at that point. We are in talks with several small groups to understand their demands. These are people who have already invested in football, others who have never invested, and we have to try to fit what Flamengo thinks is right. There may be more than one investor to collect the 50 million Euros we want to bring.

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On Monday, Toasts met with Flamengo president Rodolfo Landim for more than three hours, to align the conversation with an already diminishing universe of potential investors.

On the other hand, we’ve been hearing a lot from the perspective of what the investors’ needs are, that’s how you build this kind of project. It’s not just what Flamengo wants, it’s what’s important to the other side. We had a three-hour meeting to discuss a contract with an investor in normal terms. Now we are talking about a step before buying the club, which will provide the capital. Flamengo will enter with the brand, it will enter with investor capital so that we can make this investment in the club.

Tondela shirt 1, in green and yellow — Photo: Disclosure

One of the recurring questions about the project pertains to Tondela uniforms from the time the Flamengo brand was introduced. Tostes says this will require a special study and the main thing is to develop the uniform in such a way that it also respects the traditions and the local fans.

– This question was asked to me by all the club presidents with whom I spoke there. My answer was: We are doing a business that is taking brand. We have 46 million fans. It seems clear to me that we have to find a way to use the branding on the club’s uniform, along with the name of the club, to monetize this asset, or the investor won’t make any money. This. Change the color of the uniform? I would say that I would not do that. But I think we have to appoint special people to present the proposal. Before we contribute 46 million fans, whether the team has a million or 500 thousand, we have to respect the fans out there, so as not to lose 500 thousand for the loss of 46 million. We’re doing this project for fans of Flamengo, but we can’t lose fans of the other team, or other teams that would be somewhere near Flamengo. This is a prerequisite.

About the author: Sarah Gracie

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