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On December 18, local time, Brazilian football legend and "alien" Ronaldo invested 400 million reais (about 78 million euros) to buy 90% of the shares of the B club Cruzeiro, becoming the largest shareholder of the club with a century-old glorious history; and in May 1993, it was here that Ronaldo, who was only 17 years old at the time, made his career debut. At the signing ceremony, Ronaldo, 45, said, "I've always wanted to give back to Cruzeiro and we're going to reinvigorate this team." But, digging a little deeper, there are three stories behind this investment: how has the operating model of Brazilian football changed completely? How did Cruzeiro go from being the dominant force in Brazilian football to decaying? How did Ronaldo transform from a world-class player to a successful businessman?
In fact, a few years ago, such a transaction was simply impossible to complete. Although in Brazil there are also corporate football clubs like Red Bull Bragantino, in this kingdom of football, the vast majority of sports clubs are non-profit member organizations whose presidents are elected by the club's members, and membership fees are usually paid for the use of the club's tennis courts, swimming pools, football fields and other facilities. This has led to some members who usually have their own interests or are loyal to someone, and eventually elect a layman to run the club. Who pays the money and who has the final say, of course, is understandable, but it can also lead to serious problems. That is, the incompetent, obsessed with the pursuit of honor, often spending money indiscriminately, eventually leaving the club unable to make ends meet and falling into serious debt. Cruzeiro is one of many examples.
In 1997, Cruzeiro won the Copa Libertadores for the first time in 23 years
Founded on 2 January 1921, Cruzeiro was a giant in Brazilian football after winning the Copa Libertadores twice, and until the last decade, they were the top teams in Brazilian football – winning back-to-back Brazilian titles in 2013 and 2014 and consecutive Copa do Brasil in 2017 and 2018. But then, cruzeiro began to crack, and the club's arrears spiraled due to poor management. When Cruzeiro was relegated for the first time in its history in 2019, the club had more than BRL 1 billion in debt. To make matters worse, some of the club's directors were arrested on suspicion of money laundering, corruption and other crimes related to the management of the club.
Over the past two seasons, Cruzeiro in The League Two has been overwhelmed by the double pressure of huge debts and police investigations, and this season they have only finished 14th and barely stayed in the Second Division. However, in August, the Brazilian government passed a new law that allows clubs to set up limited companies to manage their professional football. This means that these clubs, which are in deep financial crisis, can now negotiate certain debts as limited companies through the Brazilian judicial system and, more importantly, they can attract outside investment. While many see this new law as a panacea for all the problems of Brazilian football, it is clearly overly optimistic that there are many potential dangers in this new model, and may even push the club into the abyss of perdition.
Cruzeiro was the first club to take action: they registered Cruzeiro Football Club LLC at the end of November, and on December 17, the club voted to approve a proposal that would allow investors to hold 90% of the limited company's shares. After some negotiations, Brazilian investment bank XP announced that, through their mediation, Ronaldo, through his company Tara Sports, will invest BRL 400 million in Cruzeiro Professional Football Club in return, in return, he will receive a 90% stake.
While Cruzeiro fans see Ronaldo as a savior, things are not easy and the problems facing the club will not be solved immediately. Ronal is well aware of cruzeiro's predicament and he knows better about the difficulties of owning a football club. In 2018, Ronaldo first acquired a stake in the Spanish club Valladolid through Tara Sports, after which he pushed the club's stake from 51% to 82%. Since then, he has repaid the club's €25 million debt, revamped the stadium, and managed to use the profits to improve the treatment of young players, which has led to a significant increase in the value of the club. But Valladolid was relegated last season, with fans protesting against Ronaldo, berating him for not coming to the pitch on the day of relegation. Prior to Valladolid, Ronaldo was a minority shareholder in the U.S. Second Division League, fort Lauderdale Forwards, but the Florida-based club went bankrupt in 2017.
Now that Ronaldo has joined Cruzeiro, while the experienced investment club will surely learn the lessons of his previous failures, it is clear that it is still a challenge greater than any challenge he has faced before. While Valladolid is a club with a long history, the fan base is limited, compared to The 9 million fans, Cruzeiro is a giant in Brazilian football and Cruzeiro fans want to see their teams compete for the title trophy rather than struggle in the lower leagues.
There's also the problem that Ronaldo's acquisition of Cruzeiro is not the same as buying clubs in other countries, as he is Cruzeiro's first ever owner. Aside from the $400 million that was "invested in the next few years," Ronaldo has yet to make it clear that he will come up with more money to pay off the club's huge debts and invest, and while he is looking forward to tapping into Cruzeiro's huge potential, the first problem for his club now is how to repay the huge debt of more than 1 billion reais. Clearly, the deep-seated management problems that plagued Cruzeiro did not magically dissipate with Ronaldo's arrival. As Ronaldo said on social media, "I'm not a hero and I don't have the superpowers to change the reality of the club, but I know this responsibility is great and I will achieve the club's long-term growth through resourcefulness and sustainable management..."
Now, many people regard Ronaldo as the "white knight" who saved his old club. In fact, Ronaldo can indeed be called the peak of his debut in Cruzeiro. After the 1994 World Cup in the United States, Eindhoven signed him for $4.7 million, which is definitely an astronomical amount for a player who is only 17 years old. It was also from then on that Ronaldo left Brazil and began his conquest of Europe and the world.
But in Brazil, many people also question whether he bought Cruzeiro out of love for the club. Brazilian football journalist Paulo Galvo once said, "When he was a player, Ronaldo never really cared who he played for, he only cared about whether he would play and whether he would make money." Now, after Ronaldo became the owner of the Cruzeiro club, Andrei Lizek, host of Sport de Brasil and former investigative journalist, said something similar, "I don't believe Ronaldo would buy Cruzeiro because he loved the club that started his career, and now he is a businessman, in fact, carefully note that in his life, he rarely mentions Cruzeiro." 」 ”
It is worth noting that after Ronaldo retired from playing in the sea for many years, he earned more money than he earned when he was a player. In addition to owning a football club, he is the owner of a player agency and has invested in e-sports, audiovisual content production, and data collection.
From a business perspective, Ronaldo's investment in Cruzeiro can go down two paths: one is that he can invest enough money to get Cruzeiro back into the top league, pay off some of the debts and make the club profitable, and the other is to imitate the model of City Football Group or Red Bull International Football Group, establishing a club at the top of the pyramid, and the rest of the clubs are for projects that serve the long-term development of the group. In October, in an interview with the media, Ronaldo said he would like to invest in both Charlton and Brentford before choosing Valladolid.
For Ronaldo and Cruzeiro, the future holds its doors. Now that Cruzeiro has sailed into an unknown territory, where the future will go, only time to give the answer...