A new law allowing soccer clubs in Brazil to seek outside investment is attracting hundreds of millions of dollars to a country renowned as football's biggest source of talent, a change that could see Brazilian teams rival Europe's top tier.

The surge of fresh, mostly foreign, cash coincides with an agreement last May by Brazil's largest clubs to create a league modeled on Britain's Premier League that will centralize talks to sell transmission rights and marketing contracts.

Together, the recent developments have spawned a funding bonanza for the Brazilian teams, which have long been fan-owned operations closed to outside investors.

That may allow Brazil - the world's largest exporter of footballers - to keep its best players in the country longer and charge higher fees for talent that does move overseas.

The biggest deal in the works is for a 51% stake in Brazilian league champion Atletico Mineiro, according to two people with knowledge of the matter, who said the club had met with dozens of investors. The deal could fetch 1 billion reais ($200 million), one of the people said.

The people requested anonymity to disclose private discussions. The club did not respond to a request for comment.

Guilherme Avila, sports investment banking partner at XP, a Brazilian broker, predicted that at least 10 fan-owned Brazilian soccer clubs will become investor-owned companies over the next two years.

In December, the sale of second-division club Cruzeiro to retired Real Madrid and Brazil striker Ronaldo became the first deal to take advantage of the law, approved roughly a year ago.

Deal for Rio de Janeiro's cash-strapped Botafogo followed earlier this year. Its crosstown rival Vasco da Gama was sold this month.

Next in line is second-division Esporte Clube Bahia's possible sale to City Football Group, an Abu Dhabi company with investments in Manchester City and 10 other football clubs.

Bahia's ongoing negotiations with City Football Group were first announced by the Brazilian club's president, Guilherme Bellintani, earlier this year. Bellintani told Brazilian media the deal's value is 650 million reais ($126.4 million).

City Football Group declined to comment on the Bahia deal. Bahia did not respond to a request for comment on the matter.

TV RIGHTS WINDFALL

As for lucrative TV rights, talks are expected to start next year about 2025 and beyond.

Brazilian network TV Globo bought exclusivity from the clubs through 2024 for the national soccer championship and many regional tournaments. But going forward, the league will divide the rights - as the leagues in England, Italy, Spain and Germany do - into packages for which different groups may bid, including Globo but also other local and international media companies that show interest.

Last year, clubs in Brazil's first division received 3.5 billion reais ($687 million) in transmission rights, mainly from Globo, with a part from Amazon Prime.

By contrast, England's Premier League, which has the world's top soccer transmission rights revenues, got $3.9 billion in the 2021 from broadcasters including Sky Sports, BT Sport and Amazon.com Inc's Prime Video.

In a glimmer of things to come, the rights for the regional championship in Sao Paulo, long held exclusively by Globo, was last year split for the first time between local broadcaster Record and also YouTube, with a slice of pay-per-vew games going to HBO Max/TNT Sports as well as Globo. The new model raised revenues by 30%.

ATLETICO LOOKS OVERSEAS

Atletico Mineiro is being advised by investment bank BTG Pactual. The club reached out to City Football as a potential suitor, but the group was not interested in the deal, one of the sources said.

Rafael Menin, scion of the family that controls Brazilian homebuilder MRV and one of four businessmen who have lent the team some 500 million reais in recent years, told Reuters the club prefers an international investor "with experience or ownership of a large European soccer club". He declined to comment on the potential price.

Rio de Janeiro's 120-year-old Fluminense has also hired BTG to help it look for investors, but three people with knowledge of the matter that spoke with Reuters expect the club to fetch less than Atletico given its weaker finances. Fluminense did not respond to a request for comment.

Three bankers said the largest clubs, including Corinthians and Palmeiras, may be candidates for initial public offerings. Some clubs with healthy balance sheets may be against selling their control to one investor and would prefer a more diverse shareholder base, according to the bankers.

"Depending on the financials, listing may make more sense than a private deal", said BTG head of M&A Bruno Amaral.

Corinthians and Palmeiras did not immediately respond to requests for comment on their potential for an IPO.

Soccer club listings elsewhere have had a mixed history, with the world's largest listed club Manchester United having chronically underperformed the S&P index. United made headlines last week when billionaire Elon Musk said in jest that he was buying the famed team, sparking takeover speculation.

NEW SOCCER LEAGUE

Libra, as the new Brazilian league is known, has 13 clubs including Flamengo, Corinthians, Palmeiras, Sao Paulo and Santos. A second group, comprised of 25 teams, is in public talks to join Libra.

"A professional league may completely change Brazilian soccer" said Alessandro Farkuh, sports and media banker at BTG, which is advising the new league. A professional negotiation of rights may drastically increase revenues for clubs, he said.

Brazilian clubs get just 1% of their revenues from international transmission rights, whereas the Premier League gets 48% and Spain's La Liga gets 44%.

XP analysts, in a June report about the soccer business, forecast that Brazilian clubs could reap 200 million reais ($39 million) from international rights in the first year, still amounting to less than 5% of their total revenues.

The new scenario may lead Brazilian soccer to $5 billion annual revenue, said KPMG sports and media leader, Francisco Clemente, up from $1.3 billion last year. The firm is advising Atletico and Corinthians, Brazil's second-largest club by number of fans.

"If Brazilian soccer gets the same GDP share as Spanish and British soccer, annual revenues could quadruple", he said.

This could also reverse the recent trend of Brazilian players being sold to European clubs before they reach peak potential, analysts say. The average transfer value in Brazil fell to 12.9 million euros last year from 19.2 million euros in 2018, according to XP.

The average Brazilian transaction is just a third of the 35.7 million euros average Spanish transfer deal.

With larger revenues, Brazilian clubs may afford to take time for the development of exceptional players, instead of using transfers as recurring revenue, XP's Avila said. This could result in larger average transfer values in the future.

"With higher revenues, Brazilian clubs will be able to keep the top talent playing longer in the country", Avila said.