Liverpool owners Fenway Sports Group are eyeing two Brazilian football clubs, according to reports in Brazil.
FSG have been linked with making a move into South America in recent months having reportedly been in the running to take ownership of Cruzeiro before Brazil and Barcelona legend Ronaldo purchased the club in December.
Following that, FSG were linked with another storied Brazilian club, Botafogo, but it was to be another US billionaire that would take the reins there, with Crystal Palace investor John Textor taking control of the club.
Now, according to Brazilian media outlets Esportes News Mundo and Bola VIP, FSG are back and looking at the potential of Athletico Paranaense and Internacional, both of whom play in the Campeonato Brasileiro Serie A, with AC Milan's US owners, the investment management firm Elliott Management Corp, also linked with seeking to acquire a Brazilian club.
Only last week, Genoa's US owners, the Miami-based 777 Partners, took a controlling 70 per cent stake in Serie B side Vasco da Gama in a £101m deal. The US investment fund also has stakes in Sevilla and the British Basketball League and will see 777 become the latest investors looking to tap into what is expected to be a changing landscape in Brazilian football in the near future.
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For 2022 the main focus for John Henry and FSG is expected to be the acquisition of an NBA team to add to the Reds, the Boston Red Sox, RFK Racing and the Pittsburgh Penguins NHL team that they bought in November, but football isn't totally off the agenda if the right deal becomes available in the market, with the RedBird Capital investment of $750m that FSG received for 11 per cent of the business in March of last year earmarked for investment in infrastructure of existing properties and growth and acquisition.
The Campeonato Brasileiro Serie A, is one of the few remaining leagues globally that is under the control of the national football federation, with the Brazilian Football Confederation (CBF) sitting at the top.
Many of the clubs are agitating for change on that front and want to create a new entity to take over the running of the league and be able to better determine their commercial deals and revenue sharing, as well as seeking outside investment to provide a platform for the growth of the Brazilian domestic game.
Brazil's success at national level across many decades has seen the country become synonymous with skill and triumph at the beautiful game. But at domestic level it has been able to truly project itself upon the wider footballing world and tap into the ever growing revenue streams that exist.
For investors, a continent that eats, sleeps and breathes football, creates some of the world's best players and attracts huge crowds, having its own major competitions such as the Copa Libertadores, is enticing. And with Brazilian football now opening itself up to investment at club level and, potentially, at league level, it is a market that is set to experience accelerated growth in the coming years.
Last year Cruzeiro became the first Brazilian club to make the switch from a non-profit entity to a corporate one in a bid to restructure its finances, forming a ‘Sociedade Anônima’ (SA) to attract investors into the club, which had been forbidden under the non-profit model that had come under strain during the pandemic, exacerbating an already difficult financial situation.
That is a path that other clubs are following and one that is now opening up more opportunities for outside investment.
South America has been a target for clubs seeking to expand their club portfolios with RB Leipzig and Red Bull Salzburg owners Red Bull also having Brazilian side, Red Bull Bragantino in their group, while Manchester City owners City Football Group have both Uruguayan side Montevideo City Torque and Bolivia side Club Bolivar in their ranks.
As well as the benefits that could exist through the growth of the Brazilian domestic game, which seeks to tap into a large and passionate demographic through increased investment, there is also the prospect of getting hold of some of Brazilian football's young gems and finding a home for them before moving them to one of their European giants, either to find a starring role or to flip and make a big profit in the big-spending European market.
City have focused their attention on South America over the past two years, their scouting network having identified talent and the club acting to bring them into the club.
Seven players have arrived, or are set to arrive, in recent months. Eighteen-year-olds Nahuel Bustos, Yan Couto, Diego Rosa and Metinho have all joined in the past year for a combined £21.5m. They were joined by teenagers Dario Sarmiento, Kayky and Kluiverth Aguilar, the combined cost of the trio standing at just over £14m.
All of them have either headed straight out of the Etihad or are set to when they arrive.
City's multi-club ownership model saw Bustos and Couto spend last year with Girona, while Rosa and Aguilar went to Lommel. Sarmiento and Metinho will also head out to one of the European clubs under CFG ownership to begin their journey on the continent and to get them the grounding that City chiefs hope will serve them well enough to either challenge for a place in the first team or have their value raised significantly to see a return on their investment. Kayky has already featured for Manchester City in the Premier League.
Liverpool's Brazilian contingent, not to mention the club's popularity in the football-mad nation, has made a strong link.
Alisson Becker, Fabinho and Roberto Firmino are all stars for both club and country, while Liverpool made a move to land teenage goalkeeping prospect Marcelo Pitaluga last year, with Brazilian goalkeeping legend Claudio Taffarel joining the coaching staff.
Finding Brazil's next stars and being able to have them develop within a network of FSG-owned clubs can deliver value, although FSG will be also be wary of the potential pitfalls of investing big money into Brazilian football.
Brazilian football clubs' debt rose to $1.9bn in 2020, almost double the combined $1.05bn in revenues that the clubs delivered.
Those high levels of debt, allied with alleged corruption in recent years have held back the growth of the game domestically and made it harder for Brazil to keep its best players in its own league and avoid them departing for Europe.
Pedro Mesquita, head of investment banking at Brazilian for XP Investments, who advised on the Cruzeiro and Botafogo deals for Ronaldo and Textor, believes that the goal should be to generate value by growing the Brazilian game and that more deals will be concluded in 2022.
He told the Financial Times : "If you hold on to your talents, you will have the best championship in the world.
"The law has opened a new path. There will be at least another five or six big transactions by the end of the year."
According to Forbes magazine's latest list of the most valuable sporting empires in the world, FSG sit third behind Arsenal and LA Rams owner Stanley Kroenke's group and Formula One owners Liberty Media. The value of FSG's empire stands at $9.8bn (£7.2bn). The goal for 2022 and beyond and part of the firm's 'FSG 3.0' plan will be to grow that even further through growth and acquisition in growth markets. Brazil has the potential to be one of those.
