In general terms, miners will not wait for the results of administrative and financial restructuring, then they will invest. With money borrowed from sponsors at low interest rates, Atletico-MG will clean up the house as well as qualify for football.
The results of the games came out. In 2021, the club won its second Campeonato Brasileiro, after a gap of 50 years already, won the Copa du Brazil and reached the semi-finals of the Libertadores. And finance?
In this report, ge explains to the audience the figures included in the recent financial statements, which refers to the previous year, and presents the important results of the situation for the present and the future.
+ 2021 Brazilian football financing: revenues rise again, but clubs still face debts and crises
+ Rodrigo Capello’s column: How not to get involved in finance? The solution to irrelevant numbers is to ask questions.
Finance of Atlético-MG – Photo: Infoesporte
The good news is that Atlético-MG’s revenue grew significantly in 2021, driven primarily by competitive awards, but not just by them. Investing in football qualifiers shows its value in this aspect, as far as they increase revenue.
The bad news is that, although the flow of money has increased, the financial crisis is still severe, mainly from the level of indebtedness. With R $ 1.3 billion, the Minas Gerais club has the biggest debt in Brazilian football and has no money to pay it off.
The relationship between Atletico-MG’s income and debt
Source: Financial Statements
Analysis of earnings begins with broadcasting rights and awards, which are in the same rights as competitions in the original Brazilian Championship, Copa du Brazil and Libertadores. It is important to understand why this income has increased.
Since the 2020 Brasileirão epidemic ended only in 2021, some of its payments have been deferred to the next balance sheet. In other words, last year’s revenue was higher than payments that were normally related to arrears.
In addition, with the increase in efficiency, the aloe vera association greatly increased the variable segment. Prizes are paid in Copa du Brazil and Libertadores as teams advance through the stages. With the rise of the dollar, the transition from the continental competition conducted by Cannibal increased.
Atlético-MG’s billing profile in 2021
Source: Financial Statements
In the commercial and marketing segment, Atlético-MG more than tripled the amount registered in 2020. In 2021, BRL accounted for مل 77 million, including sponsorship and licensing.
Revenue directly linked to the audience also exploded. Although epidemics forced the team to play behind closed doors for part of the season, just 14 games at the box office were enough to earn BRL 43 million. As shown in the graph above, this column still includes supportive and social activities.
In the transfer of players, the Minas Gerais Club accounted for a net R 38 million (third party participation and discounts on commissions). It wasn’t a bad result, but it’s less than what the biggest sellers of players in the country collect – three times that amount.
The comparison between the budget (with estimates made by the board before the start of the season) and the balance (with the numbers realized) shows how the board handled the finances during that period.
In the recipes, expectations were much higher than disappointment. Broadcast and Awards, Marketing and Commercial, and Athletics Management made more money than expected. There was a lot of frustration in the transfer of players.
|In BRL million||Budget||Full||Difference|
|Marketing and Commercial||24||77||53|
|Ticket offices and stadiums||19||43||24|
|Supportive and social partners||33||21||-12|
|Football pay sheet||-191||-308||-116|
|The actual arrival||5||101||96|
On the cost side, ge separates compensation from the football department, as this is the factor that has the most to do with on-field performance. Salary, photo rights, labor charges, animal, field rights and deductions are within this line.
Atlético-MG’s compensation cost BRL 191 million and was much higher than its own estimate, which cost a total of BRL 308 million. It is the third largest sheet in Brazilian football, behind only Flamingo and Palmyra.
Part of the difference between budget and feeling is evident from the rewards given to players for the merits of sports in knockout competitions. Another part, because with the increase in broadcast revenue, the rights and deductions of the field increase.
The financial result includes interest on loans and other financial and non-sports items. Being overly indebted can lead to a significant loss of money.
In 2021, Atletico-MG had BRL 19 million in interest on late taxes and another BRL 58 million on financing. In financial income, there is a rebate of R $ 23 million and debt forgiveness – but this amount did not enter the cash register; It will only stop going out over time. With the combination of other less relevant numbers, we come to the conclusion shown in the table above.
The net result also deserves attention. Just because a financial statement shows a surplus (profit) of R $ 101 million a year, does not mean that there is money left over.
To reach this profit, R $ 240 million was considered in the “Accounting Gains” from the properties attached to the new stadium. There is no immediate cash effect, meaning the money did not reach the Atletica bank account. It was listed on the balance sheet for accounting reasons. Had it not been for this extraordinary record, there would have been a violent loss.
If the total number is not alarming enough – R $ 1.3 billion -, the details of Atlético-MG’s debts are of little concern to fans. Or at least.
In terms of maturity, no less than R $ 552 million will be demanded during 2022, prepared in the short term. The rest is long term, so from 2023 onwards.
And the most serious consequence is to start administrative and financial restructuring without abandoning investment in it. As new revenue has been generated, so has the cost. There is no “left” money in everyday life to reduce debt.
Atlético-MG loan profile by maturity
Source: Financial Statements
Atletico’s debtors are generous with all possible types of debt, but one of them stands out: loans from financial institutions or loans from sponsors. The risks are different in each case. While banks charge higher interest rates, business people close to the management adjust only for the basic interest rate.
The bank loan breaks down like this:
- BRL 399 million to financial institutions
- BRL to 238 million people
The document does not specify the names of these individuals, or the “relevant party” (someone who has a formal relationship with the club’s management), but it can be estimated that they are 4 rupees – Robbins. Menon, Rafael Menon, Renato Salvador and Ricardo Guimaraes.
In the area of taxes, there are tax installments that have not been paid in the past. Most refer to Profut, which the club joined in 2015.
In wage loans, there are current liabilities (salaries and charges for the same season) and conditions that the board makes for litigation. The legal department estimates how much Atlético-MG will pay for losing a lawsuit filed by a former employee, and this amount is paid as the execution process progresses.
As an association with huge investments in reinforcements, loans with other clubs and agents have skyrocketed in recent years, reaching R $ 112 million and R $ 101 million, respectively. Due to the signing of the agreement, R $ 34 million in cash is still due. All of these numbers appear in the chart below the “other” with the provider.
Atlético-MG’s loan profile by type in 2021
Source: Financial Statements
People in charge of Atlético-MG know that it will not always be possible to rely on sponsorship funds. Therefore, the project entering its third year has reached a critical point: either it will find a way to make it sustainable or the investment philosophy will be jeopardized.
Ideally, the club will be able to increase its income to such a high level that it will be possible to pay off all expenses and still gradually reduce the debts. This is the dream of every top hat and also of those who demand courage and happiness from football managers.
Invoicing increased, but not until the account was closed. Nearly half a billion, for Atlético-MG’s own past, about half Flamengo and Palmeiras have been accumulated.
The question then becomes how to reduce this billionaire debtor in ways that are not dependent on revenue and do not require such austerity. The answer has already been found. Less than a month ago, the Deliberati Council approved the sale of the remaining half of the property held by the association.
The estimate is to raise R $ 320 million with the operation, an amount that will be used to reduce heavy debt (with emphasis on financial institution loans). With cash in hand, it is possible to bargain for a discount and waive a large portion of the obligations. But from now on, it is clear that this amount will not be enough to solve the crisis.
The other way out is the company club. For example, a loan of approximately R $ 240 million from guardians and stakeholders could be converted into a share in the final SAF capital. In clear Portuguese: Merchants will become the owners of one per cent of the clubs in exchange for the forgiveness of these debts.
Also, it is possible to raise money by selling percentages to another owner. With the entry of this partner, the injection of resources will allow more debts to be forgiven to put the club in a financially healthy position, without having to give up its sporting ambitions.
These are not just assumptions. The sale of goods and the migration to the club company are initiatives that are ongoing, depending on external negotiations, with other entities, and internal, political. Fans should follow them carefully. The sustainability of the project, which began three years ago and won the first cup, depends on the solution.