Bandeira de Mello and Pedro Almeida comment on the 2017 financial report
President and Vice President of the Cabinet discuss the importance of professional management for sporting results, investment in the youth academy and its own stadium
By Isabela Abirached - inFollowing the release of Brazilian clubs' 2017 financial statements at the start of this season, the consulting firm BDO produced a report detailing the results of the main players in the national football scene. According to the analysis, Flamengo once again far outperformed its rivals, achieving a new record. President Eduardo Bandeira de Mello explained the importance of the club's professionalization, which yields consistent, long-term results, the desire of every Flamengo fan.
"Financial sustainability and management that inspires market confidence are absolutely fundamental to achieving lasting success in sporting events, whether in football or in the Olympics. And restoring the club's credibility and economic and financial health will certainly also enable us to find a definitive solution for our football stadium, whether through the concession of the Maracanã stadium—which will require significant investment in adaptation—or through the construction of our own stadium," said Bandeira de Mello, who concluded with Flamengo's main plans for football.
"Our unprecedented financial strength and professional management have allowed us to usher in a new era of investment in our professional squad, and the continuation of this responsible policy will ensure that we are always competing for the best talent in the near future and reducing our vulnerability to international market attacks on our squad. At the same time, we are pursuing two essential paths for long-term results: investment in our youth academy—restoring a lost red-and-black competence that has already borne fruit with incredibly talented red-and-black athletes playing for our first team and being called up to Brazilian national teams at all levels—and investment in our training center, with working conditions unmatched by any other club in Brazil, and possibly in South America. We will invest increasingly in infrastructure and talent development to reclaim our vocation as a club that develops stars and wins not by chance, but consistently and repeatedly," concluded the president.
Revenue
Considering the revenues of the 22 major Brazilian teams, they reached their highest level in history: R$5,1 billion. However, the rise on the national stage was significantly impacted by Flamengo's results. Flamengo was the leading club in revenue last year, with R$648,7 million, followed by Palmeiras, which came in second, with R$145 million less.
One of Flamengo's plans for the coming years is to diversify its revenue sources, aiming for increasingly stable and self-sufficient financial health. And although television fees still dominate the club's budget, its "dependence" is decreasing, as Vice President of the Presidency, Pedro Almeida, has shown.
"If we compare 2016 and 2017, the only revenue that decreased was from television fees—from R$297 million to R$200 million. We saw a R$24 million increase in sponsorship fees, R$23 million in box office receipts, and revenue from the fan membership program nearly doubled, going from R$27 million to R$43 million. This shows that we are committed to seeking a better balance between Flamengo's revenue sources and growing each of them consistently over time," explained the director, who also praised the club's extensive list of sponsors.
"Paying debts, honoring commitments, and executing within budget are new standards established in Brazilian football, and Flamengo is a key benchmark for this mindset. In addition to experiencing growth across all our revenue streams, we no longer have just one major sponsor, which reduces the risk that, should this specific sponsorship be withdrawn, we'll lose track of our budget planning," said Almeida.
Growth
The most positive surplus in Brazilian football was also that of the Rio de Janeiro club, which boasts an impressive R$159 million. Next in line is Palmeiras, with R$57 million. Pedro Almeida believes Flamengo's financial success can be attributed to two factors.
"Budget Planning and Execution. The club has been consistently increasing its revenue over the past four years, averaging 24% per year. There may be one-off factors, such as a player sale, but this consistent double-digit growth is something that can't be achieved by chance; it can only be achieved through planning and disciplined execution," he commented.
On the way
In the club's Strategic Planning, since the beginning of the new management, there are three cycles foreseen: Financial Recovery (2013-2015), Resumption of Investments (2015-2018) and Virtuous Cycle (2018-2020): Flamengo is in the final phase of the second moment, as explained by Pedro Almeida.
"We are a little over halfway through the execution of our 2013-2020 Strategic Plan, in the final phase of the second cycle. And the results of debt reduction combined with the investments we've made in football over the past two years show that we are executing exactly as planned. So the current outlook is: revenue growth will continue, perhaps at a slower pace, and investments will remain strong, as we will have less debt to pay. All of this is based on an already established foundation, in which we will make strategic investments to maximize sporting results," said the vice president.
According to an analysis by the consulting firm BDO, after a decline in 2016, the net debt of Brazil's largest clubs grew again in 2017, reaching R$6,9 billion. Flamengo bucked the trend, and in another record year, saw its net debt fall by 23%, decreasing by more than R$100 million—from R$435 million to R$334 million. Regarding tax debt, Flamengo ranks second, with a 6% increase compared to 2016, but this debt has already been settled through PROFUT, with installments defined in terms of amount and payment date.
"We're almost reaching an optimal level of net debt, and our tax debt is balanced with the PROFUT. In other words, our bank debt currently stands at around 5% of our revenue," explained Pedro Almeida.
Among the main sources of revenue—TV fees, transfers, ticket sales, and fan membership fees—player sales were a key driver for Brazilian clubs overall during this period. Flamengo had a significant impact on this indicator, with the sale of young talent Vinicius Junior, but Almeida emphasizes that Flamengo's financial health does not depend on player sales.
"The sale of athletes, whether from the youth academy or not, is a powerful financial instrument for Flamengo's cash flow, especially because, due to club policy, Flamengo doesn't make budget projections based on player sales each year. But it's clear that the sale of the athlete was great for Flamengo, not only financially, but also for putting us on the global map of clubs that develop athletes. Vinicius Junior demonstrated to the world the quality of the young players in our youth academy, the result of long-term planning that will never stop. Investing in the youth academy is a Flamengo philosophy that has already clearly demonstrated excellent sporting results and talent serving the professional team," he explained.
Flamengo is a nonprofit organization: the club's goal is to "win, win, win." And so, Pedro Almeida emphasizes the ultimate goal of all the Mais Querido's administrative work.
"I want to make one thing clear to the fans: no one celebrates financial results; we celebrate titles, in football and in the Olympics, and we celebrate our idols. This is the essence of Flamengo. Therefore, financial results are merely a means to an end: winning titles and developing and signing idols. I understand that it's possible to become a champion by chance, but no club in the world can achieve consistent performance and results by chance. We are preparing to avoid relying on chance. Having money doesn't guarantee us winning everything, but it certainly guarantees us a consistent title fight in the coming years. While not having money and relying on chance guarantees failure in the long run," he concluded.