Atlético-MG’s finances in 2021: champion sees his winning project threatened by the biggest debt in Brazilian football | sport business

In general terms, miners would not wait for the results of an administrative and financial restructuring to only then invest. With the money borrowed by patrons at low interest rates, Atlético-MG would qualify football while cleaning up the house.

The sporting results appeared. In 2021, the club won its second Campeonato Brasileiro, after a 50-year hiatus from the first, won the Copa do Brasil and reached the Libertadores semi-final. And the financials?

In this report, ge explains to fans the numbers contained in the most recent financial statements, referring to last year, and projects the main consequences of the situation for the present and future.

+ Brazilian football finances in 2021: revenues grow again, but clubs still face debt and crises

+ Rodrigo Capelo’s column: How not to be involved in finance? The solution to decontextualized numbers is to ask questions

Atlético-MG’s finances — Photo: Infoesporte

The good news is that Atlético-MG’s revenue increased a lot in 2021, driven mainly by competition awards, but not just them. Investments in the qualification of football show their value in this aspect, insofar as they drive revenue up high.

The bad news is that, although the flow of money has increased, the financial crisis remains severe, something that is mainly perceived by the level of indebtedness. With R$ 1.3 billion, the Minas Gerais club has the biggest debt in Brazilian football and is far from having the money to pay it off.

The relationship between income and debts of Atlético-MG

Source: Financial statements

The analysis of revenue begins with the broadcasting rights and awards, whose origin is in these same rights for competitions such as the Brazilian Championship, Copa do Brasil and Libertadores. It is necessary to understand why this revenue soared.

As the 2020 Brasileirão ended only in 2021 because of the pandemic, part of its payments were postponed to the next balance sheet. In other words, last year’s revenue was inflated by payments that would have belonged to the arrears under normal conditions.

In addition, with the gain in performance, the alvinegra association greatly increased the variable part. Prizes are paid in the Copa do Brasil and Libertadores as teams advance from stages. With the rise in the dollar, transfers from the continental competition, made by Conmebol, rose.

The billing profile of Atlético-MG in 2021

Source: Financial statements

In the commercial and marketing area, Atlético-MG more than tripled the amount it had registered in 2020. In 2021, BRL 77 million was accounted for, a number that includes sponsorships and licensing.

Revenues directly linked to the fans also exploded. Even though the pandemic forced the team to play behind closed doors for part of the season, just 14 games were enough to generate BRL 43 million at the box office. In the number shown in the graph above, supporters and social activities are still added in this column.

In the transfers of athletes, the Minas Gerais club accounted for R$ 38 million net (discounting third-party participations and commissions). It wasn’t a bad result, but it’s below what the biggest sellers of players in the country collect – more than three times that amount.

The comparison between budget (with projections made by the board before the season started) and balance (with realized numbers) shows how the board handled the finances during this period.

In the recipes, there were many more expectations exceeded than frustrated. Broadcast and awards, marketing and commercial and stadium generated significantly more money than the athletics management expected. In player transfers, the frustration was considerable.

in BRL million Budgeted Accomplished Difference
broadcast rights 183 279 96
marketing and commercial 24 77 53
Ticket offices and stadium 19 43 24
Supporter and social partners 33 21 -12
Others 15 18 3
Player transfers 120 38 -82
Total 394 475 81
football salary sheet -191 -308 -116
Financial result -24 -55 -31
net income 5 101 96

On the expense side, the ge separates the compensation from the football department, as it is the factor that has the greatest correlation with on-field performance. Salaries, image rights, labor charges, animals, arena rights and deductions are within this line.

Atlético-MG had a cost of BRL 191 million in remuneration and ended up far exceeding its own projection, having spent BRL 308 million in total. It is the third largest sheet in Brazilian football, behind only Flamengo and Palmeiras.

Part of this difference between budgeted and realized is explained by the awards paid to athletes, for sporting merit, in knockout competitions. Another part, because arena rights and deductions get bigger as broadcast revenues increase.

The financial result includes interest on debts and other financial and non-sporting items. Because of excessive indebtedness, mainly, a significant amount is wasted.

In 2021, Atlético-MG had BRL 19 million in interest on late taxes and another BRL 58 million in interest on financing. Among the financial income, there are R$ 23 million in discounts and debt forgiveness – but this money did not enter the cash register; It will just stop going out over time. With the combination of other less relevant numbers, we arrive at the result shown in the table above.

The net result also deserves attention. As much as the financial statement shows a surplus (profit) of R$ 101 million in the year, it does not mean that there is money left over.

To arrive at this profit, R$ 240 million were considered in “accounting gains” from properties linked to the new stadium. There is no immediate cash effect, that is, this money did not fall into the Atletica bank account. It was entered on the balance sheet for accounting reasons. There would have been a violent deficit (loss) if this extraordinary record had not existed.

If the general number is not scary enough – R$ 1.3 billion –, the detailing of Atlético-MG’s debts raises a little more concern for fans. Or at least it should.

Regarding the maturity, no less than R$ 552 million will be demanded during 2022, framed in the short term. The rest is in the long term, so from 2023 onwards.

And therein lies the most serious result of having started an administrative and financial restructuring without giving up investments. As much as new revenue has been generated, the cost has also increased. There is no “left” money in everyday life for debts to be reduced.

Atlético-MG’s debt profile by maturity

Source: Financial statements

Atletico’s indebtedness is generous in all possible types of debt, but one of them stands out: loans from financial institutions or granted by patrons. The risks are different in each case. While banks charge higher interest rates, businessmen close to the administration only correct for the Selic, the basic rate.

The bank debt breaks down as follows:

  • BRL 399 million to financial institutions
  • BRL 238 million to individuals

The document does not specify the names of individuals, or what is considered a “related party” (someone with a formal connection to the club’s administration), but it is possible to deduce that they are the 4 Rs – Rubens Menin, Rafael Menin, Renato Salvador and Ricardo Guimaraes.

In the tax area, there are tax installments that have not been paid in the past. Most refer to Profut, which the club joined in 2015.

Among labor debts, there are current obligations (salaries and charges for the same season) and provisions that the board makes for lawsuits. The legal department estimates how much money Atlético-MG will pay when losing lawsuits filed by former employees, and this amount is paid as the executions proceed.

As an association with very high investments in reinforcements, debts with other clubs and agents have skyrocketed in recent years and reached R$ 112 million and R$ 101 million, respectively. There is still R$ 34 million owed in cash due to contract signatures. All these numbers appear in the chart below under “others” with suppliers.

Atlético-MG’s debt profile by type in 2021

Source: Financial statements

The people in charge of Atlético-MG know that it will not be possible to count on funds from patrons forever. So, the project entering its third year has reached a tipping point: either a way is found to make it sustainable or the investment philosophy will be at risk.

Ideally, the club would be able to increase its revenues to such high levels that, thanks to this, it would be possible to pay all costs and still gradually reduce debts. This is the dream of every top hat and also of those who demand daring and joy from football managers.

Invoicing did increase, but not to the point of closing this account. Close to half a billion, much for Atlético-MG’s own retrospect, almost half is collected from Flamengo and Palmeiras.

The question, then, becomes how to reduce this billionaire indebtedness in ways that do not depend on revenues and do not require such austerity. An answer has already been found. Less than a month ago, the Deliberative Council approved the sale of the other half of the mall that the association owns.

The estimate is to obtain R$ 320 million with the operation, a sum that would be used to reduce onerous debts (with an emphasis on loans from financial institutions). With cash in hand, it is even possible to bargain discounts and discount a greater part of the obligations. But it is clear, from now on, that this money will not be enough to solve the crisis.

Another way out is the company-club. Those almost R$ 240 million loaned by patrons and related parties, for example, could be converted into participation in the capital of an eventual SAF. In clearer Portuguese: the businessmen would become owners of a percentage of the club in exchange for the forgiveness of these debts.

In addition, it is possible to raise money by selling a percentage to another owner. With the entry of this partner, the injection of resources would allow more debts to be written off, to put the club in a financially healthy position, which does not require giving up its sporting ambitions.

These are not mere hypotheses. The sale of the mall and the migration to the club-company are measures that are in progress, depending on external negotiations, with other entities, and internal, political ones. Fans must follow them carefully. The sustainability of the project, which began three years ago and yielded the first cups, depends on this solution.

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