Minas Gerais tribunal halts Brazil club sponsorship rescue package
A Brazilian state audit tribunal has suspended a R$32m sponsorship programme intended to replace lost betting income at three clubs, as football authorities warn that the national ban threatens commercial agreements worth R$1bn.
Minas Gerais’ state audit tribunal has suspended a R$32m sponsorship programme for Atlético-MG, Cruzeiro and América-MG, blocking a proposed source of replacement income following Brazil’s betting ban.The interim decision prevents state-owned companies from signing new agreements or making payments under existing contracts while the tribunal examines questions about commercial justification, spending criteria and the use of public resources.Governor-elect Cleitinho Azevedo, whose complaint prompted the intervention, said: “What makes a government take more than R$30m from state-owned companies such as Cemig and Codemig and sponsor these teams?“We are going through the transition and seeing the government itself saying that, from January, there may not be money to pay public employees. We are also seeing school meals running short. In other words, they themselves are saying the state is broke.”The programme, announced by governor Mateus Simões in September, allocated R$15m each to Atlético-MG and Cruzeiro and R$2m to América-MG for 2027.Cemig, Codemig, Codemge and Invest Minas were among the public companies expected to finance the agreements, with possible support for other clubs still under discussion.The tribunal’s concerns include the absence of technical studies demonstrating a return for the sponsors and objective criteria explaining the amounts allocated.The order, issued by acting councillor Licurgo Mourão, remains subject to confirmation by the tribunal’s First Chamber and does not constitute a final ruling on the programme.Simões had presented the funding as partial compensation for lost betting sponsorships, estimating that it would replace approximately one-third of the affected income.The proposed agreements included commitments to women’s football, youth development, Olympic sports and social programmes for state-school pupils.The suspension comes as clubs press their financial case against the national betting prohibition before Brazil’s Supreme Federal Court.At a November 3 hearing, Brazilian Football Confederation representative Igor Mauler Santiago said 27 of the 40 clubs in the top two divisions had betting companies as their principal sponsors.Those contracts were worth a combined R$1bn, representing 35% of the clubs’ total sponsorship revenue. Separately, the CBF projected a R$420m loss in competition naming-rights income in 2027.Santiago said: “CBF trusts that the three branches of government will be able to reach an appropriate and reasonable solution, balancing the important issues of health, legal security, and economic and sporting development.”Clubs also described exposure beyond their shirt-front agreements, including broadcasting income and pitchside advertising.Flamengo estimated potential annual losses of approximately R$430m across its principal sponsorship and broadcast revenues, while Cruzeiro said its betting agreement was equivalent to four or five payrolls.Flamengo vice-president Flávio de Araújo Willeman argued that clubs had budgeted around contracts signed under the government’s previous regulatory framework.He said: “It was on this basis that Flamengo entered into contracts with betting companies that displayed sponsorships on the jerseys. It was on this basis that Flamengo planned its financial structure for the years following the signing of the contracts.”No decision on the future of the national ban was announced at the hearing. The Minas Gerais ruling meanwhile leaves its proposed replacement funding on hold pending further examination.