Law 14,193/21, which regulates the Soccer Corporation (SAF) - also known as the SAF Law - was enacted in October of 2021. Since then, some clubs, such as Botafogo, Cruzeiro, Vasco da Gama, América-MG, and, more recently, Clube Atlético Mineiro, have joined this institute.

But, after all, what is SAF?

This is the migration of soccer clubs from a non-profit civil association to specific corporations, governed according to the characteristics and principles of the SAF Law, in the club-company model.

The corporate structure of these companies gives clubs the means to restructure their debts, professionalize their management, and raise new sources of revenue, including by issuing financial instruments or even bringing in future investors (shareholders).

SAF also has a differentiated tax system, structured to accommodate the operational and administrative particularities that involve the sports business.

Ways to form an SAF

Article 2 of the SAF Law provides that a Soccer Corporation may be formed:

  • by transformation - in which the nature of the club is changed from a non-profit association to an SAF. In this case, all members become shareholders in a company;
  • by spin-off - which is a transaction in which a legal entity - in this case, the club - separates part of its assets and transfers them to one or more companies, either incorporated or already existing. In this case, at least a part of the members also become a shareholder of the company; and
  • at the initiative of an individual or legal entity or an investment fund - in this case, a new company is formed, which will operate in the soccer business, and there is not necessarily a relationship between this new company (the SAF) and the soccer club from which it originates.

In addition to these three forms, the law establishes, separately in its article 3, that an SAF may be formed by means of a drop down. This form of organization, the most used, is also supported by article 27, paragraph 2, of Law 9,615/98 (Pelé Law).

The drop down has been the form of organization most used by clubs. In this case, the club will be the shareholder of an SAF and will show the subscribed shares on its balance sheet, which will be posted against the write-off, that is, the contribution of the equity transferred to the SAF. There is, in principle, no loss, reduction, or increase in equity. There is only an exchange of positions to reflect the substitution of various assets for shares.

The most appropriate way to form an SAF will depend, fundamentally, on a review of the current structure of each club and the structure that is desired.

Is authorization of the players necessary?

In article 2, the SAF Law regulates the rules for the types of SAF formation. It provides - in particular in paragraph 1 - that the SAF will succeed the club in the following cases:

  • in all relations with governing bodies (Fifa, federations, etc.) and with soccer professionals; and
  • in the sports rights and status that the club has at the time the SAF is formed, provided that the formation takes place in the form of a transformation (subsection I) or a spin-off (subsection II).

The SAF Law, on this second point, may give rise to a small regulatory inconsistency. In a literal interpretation, if not formed by transformation or spin-off of the club (but formed by asset drop down, for example), an SAF would have to "start over" in soccer, losing the club's original sporting status. In addition, to be able to perform, it would need to seek the express authorization of the players and other professionals of the club, as consideration for their respective employment contracts.

In the context of a transformation, however, nothing is changed regarding the contractual situation of players and other sports professionals. After all, a simple change in the status of the legal entity with which the respective professional maintains an employment relationship is not a sufficient element to legitimize any opposition - if, of course, the other applicable contractual conditions remain unchanged. The contractual relationship remains strictly the same.

The SAF Law, therefore, in paragraph 1 of article 2, only follows the essential corporate principles of Brazilian private law. In this manner, all contracts signed with the players will be maintained when the club is transformed into an SAF.

In the case of incorporation through spin-off of the club (followed by the formation of an SAF from the spun-off assets), there is no need for authorization from the players; transfer of the employment contracts to the SAF is mandatory. This is due to the corporate logic of the spin-off, besides, of course, the express provision in paragraph 1 of article 2 of the SAF Law.

When setting up an SAF by drop down, there will be a new registration of the players with the CBF and a new CNPJ of the employer. Therefore, a new contract will be made. Consequently, the players' signatures will be required.

This, however, should not be seen as requiring players' authorization for the assignment of contracts, but merely as a legal and documentary formality. It would even be possible to find abuse of rights by the professionals who oppose, without just and concrete reasons, assignment of their contracts to the SAFs of the clubs to which they are linked.

The same logic of incorporation by spin-off should therefore be followed without difficulty in the case of incorporation of an SAF by drop down, despite the lack of legal clarity. There is no reason to impose different requirements for the transfer of employment contracts to SAFs based solely on the legal form chosen to organize them.

What is the difference between a club forming its SAF from the spin-off of its soccer assets and another club choosing to form an SAF via contribution of assets - including player contracts?

Is there anything to justify not requiring the players' consent in the first situation, but requiring it in the second?

Clarifying a few facts can help answer these questions.

Initially, it is important to understand how the term "spin-off" should be understood in the legal text analyzed. In our view, the SAF Law employed the broad (not the technical corporate) sense of the word, in order to encompass both the corporate split itself and the separation of assets - to subsequently assign the assets to the SAF (drop down).

It makes no sense to create any kind of sporting distinction between SAFs and clubs just because of the legal format chosen for their organization, especially when all the club's creditor rights are preserved - as occurs in drop down transactions - and when the other options for organization may lead to incorrect or even undesired results - such as making, in the case of transformation or spin-off, the club members (and not the club itself) members of the SAF.

It can, therefore, be interpreted that the legislator, when expressly establishing the forms of organization of an SAF in article 2 and listing the spin-off in subsection II, also considered drop downs. If this understanding prevails, it is easy to conclude that there would be no need for the players' authorization to transfer their contracts if the SAF is set up by means of a drop down.

Guaranteeing this formal right to players could prevent clubs from formatting the most appropriate legal structure to organize their SAFs. In addition, it would make possible actions aimed at taking undue advantage of the club during this process.

In the original wording of the SAF Law (when it was still a draft bill), the structure provided for in subsection II of article 2 was precisely a drop down. Only then was the drop down moved to the article 3, which opened space for inclusion of spin-offs in subsection II (which, it is worth emphasizing, was not contemplated in the original bill).

After this change in the text, however, the wording was not updated in paragraph 1 of article 2. Thus, the express reference to article 3 is no longer made.

In the original wording of the law, therefore, in its paragraph 1, the same consequences now clearly placed on transformation and spin-off were also reserved for drop downs.

It is difficult to know the reasons why the text of the SAF Law failed to make express reference to drop downs when it imposed automatic transfer of club employment contracts to SAFs. It seems clear, however, that the legislator's idea has always been to equate the concepts for this specific purpose.

Many of those directly involved with the legislative process of the SAF Law recognize that the provisions for spin-offs (paragraphs 1 and 2 of article 2) should also be applied, even if by analogy, to drop downs, there being no technical or legal reasons to do otherwise,[1] a position with which we agree.

Thus far, we have no evidence of cases of players and sports professionals who refused to assign their contracts to SAFs.

The topic is current, and it is important that an analysis be done of each transaction. Despite the general position advocated here, specific situations may call for a different approach, especially in simulation cases where establishment of the SAF serves illegitimately to transfer players between sports institutions.

By observing the best practices and complying with the criteria and requirements of the legislation, with personalized evaluation of the impacts, it is possible to ensure greater legal security for all the parties involved.

Machado Meyer Advogados will continue to monitor the evolution of the matter and its potential developments. Keep up with our publications by subscribing to our newsletter.


[1] See MONTEIRO DE CASTRO, Rodrigo R. (Coord.). Comentários à Lei da Sociedade Anônima do Futebol [“Comments on the Soccer Corporations Law”]. Law No. 14,193/2021. São Paulo: Quartier Latin, 2021. Pg. 96: "Paragraph 2 is composed of 7 subsections that regulate situations related to spin-offs. Although silent, all of them should be extended, by analogy, to the modality consisting of the organization, by the club, of the SAF (drop down). The application is necessary because this manner of organization is inserted, expressly, in the system created by Law 14,193/21 and cannot be considered as a foreign element divorced from its content. The integration occurs because of the structural approximation between the organization of the SAF and the spin-off - in both cases there will be a transfer of the club's assets to another person - while this will not occur in transformation or in organization at the initiative of an individual or legal entity or investment fund."