“You will have… years to pay”; Duílio and Caixa reach agreement for Corinthians to pay off astronomical debt and details are brought

The proceedings between Corinthians and Caixa Econômica Federal reached an apparently positive outcome for Timão. After many negotiations, the resolution for Alvinegro’s pending issues with the bank was found, but not without many exchanges of barbs in public and transactions interrupted over time. Finally, the new financing agreement for Neo Química Arena was signed.

For the agreement to be finalized (even without the presence of Duílio Monteiro Alves, president of Corinthians, who concluded the hiring of midfielder Fausto Vera), both parties had to give in. Caixa extended the deadlines and offered a grace period for the beginning of payment, in addition to negotiating rates considered excellent by the alvinegra board.

On the other hand, Timão, which had given the headquarters of the social club as a guarantee in the first contract, agreed to also offer the revenues from TV broadcasting rights and sales of players. However, despite the subject being a recurring topic among Corinthians fans and football fans in general, the relationship between the bank and the Club has raised doubts in the public for many years.

Questions about the final debt, total value of the Arena and payment deadlines, hover over the fans. However, as the contract is confidential, not all questions are answered. But, according to GE findings, some topics have been clarified so that the public can better understand the debt that has haunted Parque de São Jorge for more than a decade. Follow below.

The new agreement was negotiated since, still in 2016, Corinthians suspended the payment of installments of the financing obtained with Caixa for a few months. The problem was resolved at the time, but in 2018, news began to appear, reporting that the bank intended to execute the contract guarantees and, in the following year, Caixa claimed a delay in six installments and filed a lawsuit against Alvinegro.

After moving the procedures to the courts, Corinthians definitively suspended payments and began to draw up a new agreement. Caixa claimed that it had already provisioned to zero the loan with the Club, that is, the state-owned company no longer counted on the return of the financed money. Even so, he chose to negotiate the value.

the value in question is R$ 400 million, financed in 2013, for the construction of the alvinegro stadium. Initially, the operation would be moved with Banco do Brasil, but, finally, the agreement was finalized with BNDES (National Social Development Bank) and intermediated by Caixa, through the ProCopa Arenas program, which offered special conditions due to the World Cup. World 2014, based in Brazil.

The amount transferred by the Club to the bank revolves around BRL 165 millionaccording to the board itself. the current debt is around R$ 611 million, taking into account the interest and monetary corrections, provided for in the contract, which increased the final amount of the debt.

Already the payment term of the new agreement will be me 2041. With the grace period offered until the end of the year, the maturities will begin in 2023, when Timão will only pay the interest on the debt of R$ 611 million and, from 2025, the Club must pay the installments of the so-called main valuewhich is the part intended to reduce the amount of the initial financing.

The installments will be paid every three months.in 216 times, between January 2023 and December 2041. There is no conclusive amount regarding the installments to be paid, since the total debt amount (R$ 611 million) is adjusted annually by the CDI rate (linked to the Selic, which is currently 13.25%), plus 2%. On the topic, the board of Corinthians has already presented projections and to the Deliberative Council of the Club, on June 27.

It is important to point out that, over the years, inflation, that is, the general increase in the prices of goods and services, will affect the amounts allocated to Timão. This is because, in the same way that the value of the financing installment will change due to interest, Corinthians’ revenue will also increase, provided by the box office and other Arena properties. Therefore, BRL 100 million in 2040 will be worth much less than BRL 100 million today.

In this way, the total cost of the Arena is ‘open’ due to the movements of the financial world. Today, the value could be closed at R$ 1.5 billion. However, the same rule mentioned above applies here: the amount stipulated in 2022 will not have the same weight as in 2041.

and here it comes in the importance of naming rights Arena to settle the debt. This is because Corinthians believes that it will be possible to pay more than half of the debt with the state-owned company only with the money received from the negotiation. This is because the agreement with Hypera Pharma, signed in 2020 for R$ 300 million, to be paid over 20 years, was corrected by the IGPM (which in 2021 was 17.78%) and currently revolves around R$ 400 million.

However, the IGPM is different from the CDI rate, explained above. Thus, the difference may not always be advantageous to Corinthians. This because “O IGPM has a strong exchange rate component. From 2020 onwards, the exchange rate took a big leap and we had periods of unrealistic Selic, well below the fair value for the Brazilian economic profile. When there are two different indices there is always a risk of mismatch. For good and for bad“, explains César Grafietti, economist and partner at the consultancy Convocados.

Also according to the economist’s explanation, the new contract ”
It has a good side, which is to organize the payment, leaving cash slack in the short term. On the other hand, it will be a long period of cash consumption, because the naming rights pay one part, the box office pays another part, and there is still maintenance. In the long term, a financial burden will follow, which can be offset if it brings sporting benefits.

“, clarified Grafietti.

However, not all parts of the Corinthians council see an advantage in the agreed agreement. Rozallah Santoro, opposition counselor at Corinthians, graduated in Engineering and postgraduate in Financial Market, sees the following disadvantages in the new contract with Caixa:

What most draws the attention of those who analyze is the issue of indexing. We had a debt with Caixa that was based on the incentive line for the World Cup stadiums, which had a contractual interest rate of TJLP (Long Term Interest Rate) + 3.6% per year. And it was renegotiated to CDI (Interbank Deposit Certificate) + 2%. To give an idea of ​​the impact, the first year of projection of TJLP + 3.6% would be around 10.5% per year. The CDI for this year is already at 13.5%. With another 2%, he is at 15.5%. So it’s 5% more interest per year“, he declared.

On the side of the white-and-white management, there is no doubt about the good deal made. According to Wesley Melo, CFO of Corinthians, the stadium is self-sustaining, and the Club will not need to take money out of the box to pay for it, despite knowing the difficulty of not being able to count on the revenue from the box office in the long term.

This extension was important to provide a feasible payment flow, which we can honor. It wouldn’t do any good to make an agreement that later would have difficulty honoring, not this one, but the club’s next managements. The commitment belongs to Corinthians, not to whoever is in the chair. It was necessary to put this longer term to make everyone satisfied and confident of the payment: fans, press, opposition, Caixa, everyone“, Wesley clarified.

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