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On December 31st, 2021, Brazilian soccer legend Ronaldo announced that he had bought Cruzeiro, the Belo Horizonte club, where he made his professional debut in May 1993 as a skinny 16-year-old with his teeth.
Even at the most superficial level, the news was intriguing and instantly made hundreds of international headlines. How many former players end up owning the club they made a name for, let alone those as famous as Ronaldo?
But if you dig a little deeper, the intrigue continues to grow. The deal tells three stories: one of the rapidly changing face of Brazilian football; another of Cruzeiro’s downfall from a dominant force to basket fall; and finally that of Ronaldo’s transformation from top footballer to successful businessman.
It also raises several questions; above all, how will Ronaldo cope with the enormous challenge of bringing Cruzeiro back to the top?
Just a few years ago, such a deal would have been completely unthinkable.
Although there are Brazilian clubs run as corporations – Red Bull Bragantino being the most prominent example – most in the county are traditionally nonprofit membership associations.
You have presidents elected by members of the sports club, people who pay to use facilities like tennis courts and swimming pools.
This results in a limited group of people, often with their own interests or loyalties, choosing amateurs to run the nation’s largest clubs. Understandably, this causes problems. Incompetent presidents in the pursuit of fame often spend more than their clubs can really afford and throw them into debt.
Cruzeiro is the best example among many. They are one of the giants of Brazilian football, two-time Copa Libertadores winners and, until recently, one of the best teams in the nation.
In 2013 and 2014, the Foxes, as the club is also known, won Brazilian championship titles in a row with a brilliant team. It was not until 2017 and 2018 that they won consecutive Brazilian cup titles.
But by the time of the latter, serious cracks began to appear. The arrears had soared and mismanagement was endemic.
Things came to a head in 2019 when Cruzeiro went down for the first time in its 100-year history and debt topped a billion reals. To make matters worse, a number of club directors have been arrested for money laundering, corruption and other crimes related to their administration of the club.
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READ: The making of O Fenomeno in Brazil: “It was like coming from the moon”
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For the past two seasons, Cruzeiro has been suspended in the second division, burdened by massive debts and police investigations. After a terrible year in 2021 in which they finished 14th in Serie B, they will stay in the second division in 2022.
But in August 2021 a window opened and a ray of light shone through. The Brazilian government has passed a new law that allows clubs to set up limited liability companies to manage their professional football operations, while the members and presidents retain power over the social club and its facilities.
Some have portrayed the change as a silver bullet for all of Brazilian football’s problems, which is over-optimistic as the new model carries many dangers. However, the law allows clubs to renegotiate certain debts through the Brazilian judicial system and most importantly, attract outside investment.
Cruzeiro was the first to act. The limited company was registered in late November, and on December 17, club members voted for a motion that would allow an investor to acquire up to 90% of the shares in this limited company.
Negotiations had apparently been going on for some time when the next day a Brazilian investment bank, XP, announced that it had brokered a deal in which Ronaldo, through his company, Tara Sports, was in 400 million Brazilian reals (around £ 53 million) Cruzeiros Football Invest will be operating “for the next few years”. In return, he will take over this 90% share.
As the Brazilian soccer financial analyst Rodrigo Capelo wrote after the announcement of the deal in O Globo, “Cruzeiro fans finally have reason to hope”.
But things don’t get easy, solutions don’t get immediate. Ronaldo is fully aware of this fact – both as someone who understands the depth of the hole Cruzeiro is in as well as the difficulties of owning a football club.
Ronaldo also has a majority stake in Spanish club Real Valladolid. In 2018, he acquired 51% of the club’s shares through Tara Sports for the first time and has since increased this to 82%.
Since then, he has paid off € 25m in debt, reformed the stadium and managed to turn young players into profits. The value of the association has increased significantly.
But it wasn’t all smooth. In 2021, Valladolid was relegated to the Segunda Division and fans protested and berated Ronaldo for not being at the stadium on the day of the relegation confirmation.
Prior to Valladolid, Ronaldo was also a minority shareholder in the Fort Lauderdale Strikers, a Florida-based NASL club that went bankrupt in 2017.
What does this mean in the context of Cruzeiro? It’s hard to pinpoint, but it does mean Ronaldo doesn’t go into this blindly. He has the experience, lessons have been learned.
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READ: A Forensic Analysis of the Destruction of Boca Juniors by Teenager Ronaldo
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Even so, making the foxes amazing again will be far more of a challenge than anyone he’s met before.
While Valladolid is a historic yo-yo club with a limited fan base, Cruzeiro is a continental giant with a reported nine million fans, nine million of whom expect their team to compete for the biggest trophies on offer and not stumble in the second division.
There is also a degree of the unknown. Ronaldo does not buy a club in the usual sense as in other countries, he does not pay a previous owner who can take the money and invest it elsewhere. Ronaldo is the first owner of Cruzeiro and is breaking new ground.
For his 400 million reals – which, as I said, will be invested over several years – he gets the enormous potential of Cruzeiro, but the public company that he now owns 90% is responsible for repaying the gigantic debts that belong to him old federation and the ingrained administrative problems that make up Brazilian football as a whole are not going to magically resolve now.
As of now, some of Ronaldo’s money will settle the debt that cannot be renegotiated. A lot will also be invested in strengthening the team for a boost to promotion in 2022.
Ronaldo has already moved to calm expectations. In the Instagram post announcing the deal, he wrote of his affection for Cruzeiro from his teenage years there, before concluding, “The time has come to return. “Not as a hero. Not using super powers to change reality [of the club] alone. But with great responsibility. With intelligent and sustainable management for long-term growth …
“Now we are opening a new chapter in the club’s history. I am returning because I believe in Cruzeiro’s return! I am returning to be part of the change in Brazilian football. “
However, where he is going from here and what exactly he wants to achieve is still unknown.
Did he really buy Cruzeiro out of great affection for the club? It seems unlikely.
The Brazilian journalist Paulo Galvao told us earlier this year: “[Ronaldo] never really cared about where it was or who he was playing for. It was important to him whether he would play and earn money. “
On the Brazilian broadcaster SporTV after the deal, the presenter and former investigative reporter Andre Rizek said in a similar way: “I don’t think Ronaldo is with Cruzeiro out of love for the club that started his career. Ronaldo acts as a businessman. In his life he has talked little about Cruzeiro. “
In fact, Ronaldo made more money in his post-football career than he did as a player. In addition to his own clubs, he runs a marketing agency, represents players and invests in esports, production of audiovisual content and data collection.
ONE @Gabifernandesv compôs uma música para homenagear o @Ronaldo! Be happy when you do craque quando ela falou do Cruzeiro! 😆💙
Ronaldo television pic.twitter.com/KDbxiBaFgi
– Cruzeiro 🦊 (@Cruzeiro) December 20, 2021
It seems like there are two options for Cruzeiro from a business standpoint.
First, he was able to invest enough to bring Cruzeiro back to the major league, pay off some of the debt and turn the club around for a profit. Alternatively, Roanldo could see it as a long-term part of a plan to create a group of clubs, including Cruzeiro and Real Valladolid and perhaps others, in the form of the City Group or Red Bull’s international football project.
In an interview with FourFourTwo in October, he spoke about the possibility of buying a club in England and said he was tempted to invest in both Charlton and Brentford before settling on Valladolid.
That is speculation, of course. But the opportunities that Ronaldo and Cruzeiro will offer are certainly fascinating. The challenge is gigantic, but so does Ronaldo’s appetite for the challenge.
Ronaldo has already paid a lot of attention to the club. Even Pele talked about it and tweeted: “Congratulations and good luck on this new trip, my friend.”
The man known as “o Fenomeno” has also given Cruzeiro fans cause for joy after a painful period.
But we have to wait and see what he will deliver in the long term.
By Joshua Law
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