What is known about the sale of Cruzeiro to Ronaldo’s company

During Saturday, it was announced the purchase of SAF (Sociedade Anônima do Futebol) Cruzeiro by a company owned by ex-player Ronaldo. The value disclosed was R$ 400 million. But there are still a number of questions about the business model of this pioneering transaction in Brazilian football. Therefore, in this post, we will unravel what is already known about the operation and how it will shape the club’s future.

First, let us remember that Cruzeiro founded its SAF last week. It has already communicated to the CBF to transfer the rights of competition and player contracts from the associative club to the company. It is the first club to carry out this operation under the new law of the Sociedade Anônima do Futebol, approved this year.

Last Friday, the powers of the club approved that up to 90% of SAF do Cruzeiro be sold. The sale to Ronaldo was announced the day after this endorsement, live with the president of Cruzeiro, Sergio Rodrigues, and Ronaldo. There was a statement from XP Investimentos, the intermediary of the deal, with some information about the deal.

In the document, he stated that there would be investments of R$ 400 million, “over the next few years” through the company Tara Sports. The stated objective is “the financial and operational rebalancing of the club’s football department”.

See details:

What was signed between Ronaldo and Cruzeiro?

The parties signed a protocol of intent. This is an important step for the transaction, but it does not mean that it is complete. Basically, there was an agreement on the terms of the negotiation (values, conditions), but it is still necessary to endorse them with the verification of documents from both parties.

This next verification process is called “Due Diligence” in which the two parties carry out a kind of audit on the future partner. In a statement on his channel, Ronaldo confirmed that this type of procedure will be carried out. XP’s statement states that “completion of the transaction is subject to the completion of a series of conditions precedent.” Audits usually take a few months. For ESPN, Sergio Rodrigues said that he only found out about Ronaldo’s proposal in early December.

What is Ronaldo’s company that will buy Cruzeiro?

Tara Sports is a company founded in Madrid for the acquisition and management of Real Valladolid — a Spanish club purchased by Ronaldo. The only partner and administrator is Ronaldo Nazário himself by the Spanish commercial registers. Its purpose is to provide consultancy and advisory services in the artistic and sporting environment. The head office is in Plaza de Lealtad, in Madrid.

The company has a capital of 21.157 million euros (R$ 135 million). Founded in 2018, Tara Sports had an initial capital of €3,000. But, in 2019, Ronaldo increased the investment. It was precisely the period in which the former player increased his participation in the Spanish club.

What is the interaction between Cruzeiro and Valladolid?

The two clubs, theoretically, will be part of the same group. It remains unclear whether Ronaldo will set up a subsidiary of Tara Sports in Brazil or whether the Spanish company will simply acquire the shares of SAF do Cruzeiro.

Under FIFA rules, there is no impediment for a business group to participate in more than one club around the world as long as they do not compete in the same competitions. The City group, for example, has clubs across the UK, Uruguay, USA and Spain, among others.

How is the Cruzeiro debt?

Cruzeiro has a net debt of around R$1 billion. The debts remain with the associative club, but SAF has the obligation to transfer 20% of its income, and 50% of the dividends, to pay the debts, under the terms of the new corporation law. In other words, Ronaldo’s company will have around 80% of the free revenue to fund the club’s football.

In the first half of 2021, Cruzeiro had revenues of R$69 million. There are TV rents committed until the end of 2022 due to advances from previous administrations. Therefore, there were wage delays.

Ronaldo is expected to inject money to solve urgent problems, as stated by the Cruzeiro president. In a recent interview with the Flow podcast, Ronaldo said: “Football is profitable. A database like the one Cruzeiro has is a money-making machine. Doing minimally well, you don’t need to be a genius, it’s going to work.”

How was Cruise rated?

Before being sold, Cruzeiro carried out an evaluation procedure for its brand. It had a target amount to be collected, which was not disclosed. According to Sergio Santos Rodrigues, for ESPN, there were other proposals, and Ronaldo’s was the best.

How will Ronaldo’s management be?

So far only Ronaldo’s name has appeared as a partner for the purchase of Cruzeiro. He bought Real Valladolid for €30m — then helped pay off €25m in debt. The following year, 2019, it acquired another percentage until it reached 70%. In an interview with the same podcast Flow, he stated that he did not buy a club in the US because the cost of the franchise alone was US$70 million.

The president of Cruzeiro, Sergio Rodrigues, stated that the total amount of R$ 400 million will be invested in five years of operation. And he informed that the priority will be to pay the debt that generated a transfer ban at FIFA — a hiring veto.

On his channel, Ronaldo stated that he would use European management experience, including financial controls. In Spain, La Liga has the most restrictive administrative rules on the continent, limiting payrolls to a percentage of revenues. This is verified by a control body. The former player spoke of a sustainable cruise.

About Abhishek Pratap

Food maven. Unapologetic travel fanatic. MCU's fan. Infuriatingly humble creator. Award-winning pop culture ninja.

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