Flamengo’s investment rationale:
A catalyst for future expansion: how a minority stake secures Flamengo’s bright future.An improved financial reality:
To preserve the club’s identity and governance integrity, Flamengo’s strategy focuses on selling a 20% minority stake, a structure that brings in PE capital and expertise without compromising control. This hybrid approach allows the club to pair its sporting dominance with institutional know-how in global media, commercialization, and corporate governance.
Through such a partnership, Flamengo can accelerate its professionalization. The addition of experienced executives and strategic advisors strengthens oversight while helping to unlock high-margin commercial and digital opportunities. With a domestic fanbase of over 50 million and a $50 million annual shirt deal with Betano, Flamengo already holds a commanding position in Brazilian football. Yet its global commercial potential, particularly across Europe and North America, remains largely untapped. PE may provide the edge for Flamengo to capitalize on these factors. Three specific initiatives illustrate where this partnership could unlock value:
- Adidas Tier-1 Partnership — leveraging the renewed deal to place Flamengo merchandise in Adidas stores worldwide, enhancing brand exposure and retail margins.
- Global Rollout of FLAbet — expanding the club’s proprietary betting platform to international audiences, capturing high-margin recurring revenue.
- Expansion of Digital Media Operations — scaling FlaTV and related platforms to monetize global fan engagement through subscriptions, partnerships, and digital advertising.
Collectively, these initiatives can significantly strengthen Flamengo’s commercial foundation, building sustainable, non-matchday revenue streams that enhance the club’s valuation.
Most importantly, this financial improvement supports Flamengo’s long-term ambitions, including the development of its own stadium. By generating reliable, diversified income, the club will be able to reduce dependence on volatile sporting revenues and finance infrastructure investment on its own terms.
Boosting stadium development:
With a cumulative commercial EBITDA of approximately $134 million* over five years, Flamengo is well-positioned to contribute significant equity toward its new stadium project, reducing reliance on debt financing and lowering future borrowing costs.In recent years, Flamengo has advanced plans to replace the iconic Maracanã with a stadium of its own. Stadium ownership will allow the club to shift from a lease-based structure to full operational control, unlocking a steady stream of both football and non-football revenues, ranging from matchday income and naming rights to concerts and hospitality events.
PE participation would enhance this process on multiple fronts. First, it would enable Flamengo to commit a larger share of equity, limiting leverage, lowering the interest payments on the debt, and improving long-term financial flexibility. Finally, A private-equity minority investor could further enhance this by structuring a US-style private-placement (USPP) refinancing, like Tottenham Hotspur’s 2019 bond issue, which secured 25- to 30-year maturities at rates below 3%.*
Furthermore, through Flamengo’s renewed financial sustainability with the improvement of its non-football-related activities, the club will be able to stabilize its EBITDA margin and debt servicing ratio (DSCR).
* Note: For this analysis, the numbers in Flamengo’s financial statements have been consulted, multiplied by the average yearly BRL/USD conversion rate for consistency reasons. Small differences may therefore exist with financial numbers found online.
* Note: The US private placement is a way for a company to raise capital by selling debt or equity directly to a small group of accredited or institutional investors, rather than the public. This method allows for greater flexibility, lower transaction costs, and less regulatory scrutiny than a public offering, but the securities are less liquid. In the case of Tottenham Hotspur, it made possible a 2019 refinancing of £525 million USPP at an average interest rate of 2.66% with long maturities, some extending to 2051.
Maintaining control:
Preserving majority ownership remains essential to protect Flamengo’s identity and governance integrity, preventing the alienation of club identity or financial mismanagement.
The experience of Botafogo, acquired by John Textor’s Eagle Football Holdings in 2022, illustrates both the potential and pitfalls of majority PE control. Despite winning the 2024 Série A championship, Textor has faced growing fan discontent over Eagle’s Multi-Club Ownership (MCO) model, which has blurred lines of autonomy and fostered perceptions of Botafogo as a “feeder club.”
Similarly, the case of Vasco de Gama, following its 2022 777 partners takeover, has marked the vulnerability of clubs to financial instability and mismanagement in the case of a majority takeover.
These examples underline why maintaining a controlling stake is critical: minority capital can professionalize operations without exposing Flamengo to the governance risks seen in majority takeovers across Série A.
Private Equity’s investment rationale:
An untapped market presenting attractive returns.
For PE, even a minority stake in Flamengo presents an intriguing investment proposition built around four central pillars: Market Opportunity, Value Creation, Structuring Advantage, and Comparative Precedent.
Market Opportunity — The Untapped Frontier
South America remains the emotional epicentre of global football, yet its financial structures have long lagged its cultural dominance. While European clubs have experienced a decade of valuation inflation through global media rights and PE-backed ownership, Brazil’s football economy remains undervalued relative to its fanbase scale and media reach.
That imbalance is starting to shift. Following billion-dollar transactions involving European clubs like Chelsea, AC Milan, and Olympique Lyonnais, investors are beginning to look south. Brazil presents prime opportunities.
The 2021 introduction of SAF was the regulatory breakthrough that institutional capital had been waiting for. It brought shareholder rights, transparency standards, and investor protections, opening the gates to private capital across Série A.
From a valuation perspective, the entry point is compelling. As of this moment, Brazilian clubs trade at a significant EV/revenue discount compared to their European peers. For a fund investing in Flamengo, a club boasting more than 50 million domestic fans and global brand potential, the opportunity lies in multiple expansion as governance improves, commercial monetization matures, and investor sentiment in the Série A increases.
Value Creation — Tangible Levers for Growth
Flamengo offers investors a clear roadmap for value creation built on scalable, non-football revenue streams. Its FlaTV platform already generates $33 million annually, while FLAbet provides a foundation for recurring, digital-first income. Together, they create a diversified revenue stream that compounds independently of on-pitch performance, a perfect return for private capital investors.
Commercial expansion adds another growth lever. Increased global club exposure strengthens its sponsorship tiers, most notably with its long-standing partner Adidas, currently worth $14.2 million per year. Continued digital and international growth could elevate Flamengo into Adidas’ tier 1, potentially granting annual fees of more than $25 million as well as global availability in all Adidas stores, further boosting royalty income.
Structuring Advantage — Minority LBO Appeal
From a transaction-design perspective, using a holding company presents an elegant proposition for PE entry. A minority investment executed via a HoldCo vehicle, like the structure used in the Chelsea transaction, confines leverage at the investor level rather than on the club’s balance sheet. This ensures Flamengo’s financial stability remains unaffected by acquisition financing while preserving transparency and governance credibility.
Furthermore, the HoldCo approach also maximizes exit flexibility: subsequent SAF transactions, a strategic sale to a global sports-fund platform, or even a partial IPO is not out of the question.
Comparative Precedent — The Regional Template for Minority Investment
Flamengo represents a case of financialevolution: the first large-scale minority investment in a club on the South American continent. It bridges the gap between passion and private capital, providing exposure to the world’s most vibrant football economy with mitigated governance risk.
In essence, Flamengo’s minority sale mirrors successful precedents such as the City Football Group and Paris Saint-Germain minority transactions, minority acquisitions designed not merely to buy into football but to institutionalize the commercial potential on a global scale.
Underlying Numbers:
A valuation framework built on sustainable growth and disciplined leverage.
Over the past decade, Flamengo’s transformation has not only reaffirmed its domestic dominance but also established a financial foundation strong enough to be evaluated in private-equity terms. The financial model for a prospective minority sale is anchored on two guiding principles:
- Sustainable commercial growth, driven by scalable non-football revenues; and
- Controlled leverage, preserving long-term financial flexibility.
Before exploring the model outcomes, the key assumptions and benchmarks underlying the valuation are outlined below.
Comparable Transactions (Benchmark Set)
- Sample: 6 benchmark deals across Brazil and Europe (2022–2024)
- Included clubs: Botafogo, Cruzeiro, AC Milan, Olympique Lyonnais, Everton, Atalanta
- Average EV/Revenue multiple:2.53x
- Range: 2.0 – 3.1x
- Rationale: All represent recent acquisitions of top-flight clubs with comparable revenue scale and governance structure (SAF or top-tier European).
- Observation: Brazilian assets (Cruzeiro 2.0×, Botafogo 3.1×) trade at the lower end of the European range, highlighting the valuation discount indicated above.
Flamengo Valuation Inputs
- Revenue base (incl. transfers): $227.7 million
- Applied multiple: 2.53 (peer-set average)
- Implied Enterprise Value: $575.3 million
- Net debt: $65.0 million
- Equity value: $510.3 million
This implies an attractive valuation entry point for a minority investor given Flamengo’s growth trajectory.
Investment Structure
- Stake acquired: 20% minority interest
- Entry value: $102.06 million
- Financing mix: 50 % equity / 50 % debt
- Debt: $51.03 million (9 % interest, paid annually out of Flamengo’s EBITDA)
- Equity: $51.03 million
- Annual interest payment: $4.59 million
This conservative structure ensures that financial leverage remains external to the club’s balance sheet, while allowing the investor to enhance returns through a modest degree of structured financing.
The Forecast:
A data-driven projection of Flamengo’s commercial and financial evolution.
Within the financial model, three scenarios, low, base, and high, have been developed to capture both downside protection and upside potential.
The tables below outline the projected revenue drivers and cost structure under each case, forming the foundation for Flamengo’s medium-term financial trajectory.
Revenue forecasts:
Table 1 Revenue forecasts for the 2025 season based on three scenarios.
| Category | Low (in $mln.) | Growth | Base | Growth | High | Growth |
|---|---|---|---|---|---|---|
| Fixed Broadcasting Rights | 30.7 | 3% | 37.5 | 6% | 55.1 | 9% |
| Participation & Performance | 8.0 | 3% | 28.5 | 6% | 69.7 | 9% |
| Sponsorship & Advertising | 53.6 | 3% | 55.9 | 6% | 58.2 | 10% |
| Digital Media & On-Demand | 33.5 | 10% | 33.5 | 15% | 33.5 | 20% |
| Licensing & Royalties | 14.3 | 10% | 14.3 | 15% | 14.3 | 20% |
| Gaming operations | 47.0 | 0-5% | 47.0 | 0-5% | 47.0 | 0-5% |
| Total Projected Revenue (excl. Player trading) | 187.1 | 216.7 | 277.8 |
The table above outlines Flamengo’s projected revenue streams under each scenario, with associated annual growth rates applied beyond the 2025 base year. Substantial growth is expected in the Digital Media & On-Demand and Licensing & Royalties categories, both of which range from 10 to 20% annual growth. These assumptions reflect the anticipated impact of PE’s operational expertise, accelerating global digital expansion and demand for international merchandise.
Conversely, Gaming operations are modelled equally conservatively in all three scenarios. Gaming operations consist of: Box office, Stadium, and Fan Member revenue. Box office and Stadium revenue grow in line with 5% (inflation), whereas Fan Member revenue has remained at 0% throughout the forecast.
This distinction underscores the dual purpose of the investment: to strengthen Flamengo’s financial sustainability while maintaining the club’s cultural and community identity, a win-win outcome for both investors and supporters.
Cost forecasts (base case):
Table 2 Cost and financial forecasts for the 2025 season based on the base scenario.
| Category | Total (in $mln.) | Percentage |
| Salaries, charges, and benefits to employees | 101 | 36.3% of revenue |
| Expenses with games and competitions | 33 | 11.7% of revenue |
| Image rights | 33 | 11.8% of revenue |
| Reduction of economic rights of professional athletes | 7 | 2.7% of revenue |
| Materials | 7 | 2.5% of revenue |
| Athlete negotiations | 10 | 25.0% of player trading |
| Other | 18 | 6.6% of revenue |
| Total COGS | 165 | 76.2% of revenue |
| OPEX | 28 | 13.8% of revenue |
| EBITDA | 22 | 10.0% EBITDA margin |
| Net financial expenses | 9 | 13% on current debt |
| Extraordinary expenses | 4.6 | 9% debt repayment of HoldCo debt |
| Profit before tax | 9 | 4.1% of revenue |
| Tax | 2 | 21.5% weighted average |
| Profit after tax | 7 | 3.2% of revenue |
Cost assumptions remain fixed as a proportion of revenue throughout all scenarios, providing a conservative and transparent modelling approach. The only variable cost element is Athlete Negotiations (e.g., agent fees), maintained at 25 % of annual player-trading income. Because player trading and amortization can fluctuate materially year to year, both are set equal at $40 million annually, allowing the model to isolate the structural benefits of PE-driven growth in non-football recurring revenues.
This approach demonstrates that, even without aggressive cost-cutting or workforce reductions, PE involvement can yield robust returns through professionalized management and expanded commercial activity.
What’s more, with a cumulative commercial EBITDA of approximately $134 million over five years, Flamengo is well-positioned to contribute significant equity toward its new stadium project, reducing reliance on debt financing and lowering future borrowing costs.
Figure 1 The development of Flamengo’s key financial figures from 2022-29, with data from 2025-29 forecasted.
| Year | Revenue | Gross Profit | EBITDA | EBITDA Margin |
| 2022 | ~180 | ~25% | ~20 | ~10% |
| 2023 | ~185 | ~18% | ~15 | ~9% |
| 2024 | ~205 | ~27% | ~22 | ~11% |
| 2025 | ~215 | ~24% | ~22 | ~10% |
| 2026 | ~230 | ~24% | ~25 | ~10% |
| 2027 | ~250 | ~24% | ~28 | ~11% |
| 2028 | ~270 | ~25% | ~30 | ~11% |
| 2029 | ~290 | ~25% | ~32 | ~11% |
Financial results:
A win-win scenario enabling South America’s crown jewel to conquer the global stage.
With a base-case internal rate of return (IRR) of 21 %, a minority investment in Flamengo represents a compelling opportunity for PE investors seeking strong financial returns. Over a five-year holding period, value creation is driven by commercial expansion, professionalized governance, and operational scalability, while ensuring the club’s cultural and sporting integrity remain intact.
Flamengo Exit Outputs (base scenario):
- Revenue base (incl. transfers): $330.95 million
- Applied multiple: 3.00 (EV/Revenue avg. of peer set)
- Implied Enterprise Value: $992.86 million
- Net debt: $65 million
- Equity value: $927.86 million
- Stake value: 185.57 (20% of $927.86 million)
- Stake value (excl.debt): $134.54 million
- Money Multiple: 2.64 MOIC
- IRR: 21%
Interpretation
The model illustrates that a minority stake structure can achieve top-quartile PE-level returns while adhering to a conservative capital strategy.
Both Gaming operations and cost frameworks are modelled to sustain club accessibility and fan loyalty, key intangibles underpinning long-term value creation. Simultaneously, the consistent EBITDA performance ensures predictable cash generation to support stadium financing and reduce leverage.
This highlights the potential benefit of PE participation: top returns for the investor, coupled with sustainable growth and identity preservation for the club.
Table 3 Financial returns for three scenarios based on a 3.0 exit multiple.
| Case | 2030 Revenue | Exit Multiple | Implied EV | Stake (20%) | Value (excl. Debt) | MoIC | IRR (5 yrs) |
| Low | 267 | 3.0x | 802 | 147.43 | 96.41 | 1.89x | ~14 % |
| Base | 331 | 3.0x | 993 | 185.57 | 134.54 | 2.64x | ~21 % |
| High | 454 | 3.0x | 1,362 | 259.46 | 208.44 | 4.08x | ~33 % |
| Exit Multiple | Low Case | Base Case | High Case |
| 2.50x | ~6 % | ~15 % | ~26 % |
| 2.75x | ~10 % | ~18 % | ~29 % |
| 3.00x | ~14 % | ~21 % | ~33 % |
| 3.25x | ~17 % | ~24 % | ~35 % |
| 3.50x | ~19 % | ~27 % | ~38 % |
Conclusion — “From the Pitch to the Dollars”
A minority investment in Flamengo illustrates how PE involvement in South American football, when structured responsibly, can generate substantial financial returns and long-term institutional benefits without eroding club identity.
From a PE perspective, Flamengo stands as the prime candidate for a transaction. Its immense cultural capital, dominant domestic fanbase, the introduction of SAF regulation, and a tempting global commercial footprint position the club as the continent’s benchmark for hybrid ownership models.
Financially, the projections support PE’s investment thesis. Even under conservative assumptions, a 20% minority stake in Flamengo, valued at $102.06 million, yields an IRR of roughly 21% and a 2.64× money multiple (MoIC) in the base case over five years.
- Downside scenarios remain resilient (≈14 % IRR), due to the club’s recurring revenues from broadcasting, sponsorship, and digital media.
- Upside cases (≈33 % IRR) underline the scalability of Flamengo’s global brand and its digital ecosystem (FlaTV+, FLAbet, and Adidas Tier 1 merchandising).
Equally important is the design of the investment. The use of a HoldCo isolates leverage at the investor level, preserving the club’s operational flexibility and financial health, contrary to other majority takeovers that have destabilized peers such as Vasco da Gama and Botafogo.
Operationally, the forecasts reveal a stable 10 % EBITDA margin with cost ratios held constant, proving that strong returns do not rely on aggressive cost-cutting. The model further shows that a cumulative commercial EBITDA of $134 million over five years could be reinvested directly into Flamengo’s new stadium project, reducing borrowing needs and positioning the club for long-term asset ownership.
Beyond pure financial metrics, the case study highlights a sustainable growth narrative:
- Digital and sponsorship revenues grow 10–20 % annually under PE guidance.
- Matchday and membership revenues remain deliberately conservative to protect fan accessibility.
- Governance improvements and professional oversight strengthen Flamengo’s brand value and financial transparency.
In essence, Flamengo offers a win-win proposition:
- PE gains exposure to a high-growth, undervalued market with institutional-grade returns.
- Flamengo gains the governance expertise and capital to transition from a domestic powerhouse to a global commercial brand.
If executed with restraint and alignment, such a minority investment could become a template for future SAF transactions, proving that financial innovation and football tradition can, in fact, reinforce one another.