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FC Porto: The World’s most efficient club?

PORTO

FC Porto aren’t even the best-supported team in their own country, they only play in the second biggest city in Portugal, and yet their contemporary European presence alone has alluded teams with five times the population in the containing area, and many, many times the income. UEFA Champions League winners in 2004, they have been drawn over the years with Manchester United, FC Bayern Munich, Chelsea, Real Madrid CF, FC Barcelona, Arsenal, AC Milan, Internazionale and compatriots Benfica as tops seeds in the world’s primary football competition.

This year FC Porto took their place in pot one of the UEFA Champions League group stage draw for the third time in the last three seasons. They’re regulars in the Champions League last sixteen and a staple of the European football scene. So customary is their position among the European elite, it’s rare to ask how they got there in the first place – and more importantly, how they stay there. The financial situation in their native country is very poor and like many other Portuguese clubs, FC Porto are in debt. So how do they continually perform so well across the continent?

Their method is fairly simple on the surface. FC Porto have a recipe to maximise their economic circumstances for the benefit of the club, at the cost of a small section of disgruntled fans who are surely, at the very least, on the verge of being convinced by the sheer force of FC Porto’s continued sporting successes. Yes, FC Porto constantly sell their best players, but they always find new ones and their success continues. Their achievements are extraordinary.

When FC Porto sold Ricardo Carvalho to Chelsea in the summer of 2004, Pepe was brought in to replace him from CS Marítimo, and eventually when Pepe left for Real Madrid in 2007, Bruno Alves, who joined the senior side from their ‘B’ team, gained a more prominent role in the side and was just as successful. Their current centre-half Nicolás Otamendi replaced Alves when he left for Zenit Saint Petersburg in 2010. Carvalho and Pepe were both sold for €30 million, and Bruno Alves left for €22 million, whilst Otamendi remains at the club. This is a perfect example of the technique FC Porto use to make money yet remain competitive. The three sold centre-backs were acquired for just over €2 million, and left for €82 million. FC Porto are superb sellers. They offload surprisingly often in bulk too, where one club will buy more than one player from the side, sometimes as a package deal (Carvalho and Paulo Ferreira to Chelsea; Derlei, Maniche, Costinha, Nuno and Giourkas Seitaridis to Dynamo Moscow; James Rodríguez and João Moutinho to AS Monaco). FC Porto are so good on the market they got the better of tranfer window extraordinaire ‘Don’ Daniel Levy of Tottenham Hotspur over an approach for the aforementioned Moutinho, in the summer of 2012.

The policies of the club are slightly more nuanced than this, however. The club has two main methods to sustain their successes on the field, and the above model only illustrates both. FC Porto seek to earn as much money through player sales as possible on the one hand, yet have to prioritise Champions League qualification on the other by keeping the team competitive. But these two methods could never co-exist without relentless scouting and some sort of fall back plan if things don’t go to plan.

The relentless scouting is well covered, and although it is tempting to say FC Porto raid South America for talent (which they frequently do) their domestic transfer dealings are far more voluminous with smaller, less fashionable clubs like Vitória Guimarães, CS Marítimo as well as FC Paços de Ferreira and Estoril (this year in particular) frequently losing players to the Dragões. Their South American players are a lot more famous however, and as such garner huge earnings for the club in terms of transfer fees. Players like Radamel Falcao, Hulk, Anderson, Luis Fabiano, Lucho González and even Thiago Silva have all played for FC Porto.

Looking more closely at this process however, it is clear to see how FC Porto succeed in this respect. They seem to employ an art also practiced by, among others, Udinese, in hoovering large amounts of players, chiefly from Brazil and Argentina, and hoping that two or three will become the new €30-million-pound most desirable players in Europe. Radamel Falcao and Hulk prove this to be successful, but players with a lot of talent like Diego (currently at Wolfsburg) and Luis Fabiano have left the club for seemingly well below their market value, which shows how FC Porto can get it wrong too. There is also a wealth of Portuguese and South American stars who most people have never heard of, who sign for a small amount of millions, are loaned out, and are never really heard of again. Yes, Falcao and Hulk are the best examples of how FC Porto’s model can work, and work well (Udinese can point to Alexis Sanchez as their major success in the same practice), but, similar to Udinese, FC Porto simply play a cunning percentage game with their talent. They have been known to have been just as susceptible to bad transfers as anybody else, however. Their president Jorge Nuno de Lima Pinto da Costa’s close ties with super-agent Jorge Mendes also aids this whole process. The extent to which Mendes facilitates transfers for FC Porto is pure speculation. It’s hard to think of a way one of the best selling  clubs in Europe, who make even Harry Redknapp’s ‘wheeler-dealer’ credentials look shaky, suffers by this involvement with the president.

The above transfer technique would not be possible without such favourable work permit regulations in Portugal though. Unlike England, for example, there is no real work-permit issues in Portugal, and South American players can begin playing in Portugal whenever they like. This creates a path to Europe for South American players seeking fame, fortune, and football at a higher level. The excellent blogger ‘Swiss Ramble‘ makes this very clear in his piece on the team from Northern Portugal. He states, ‘even though Porto cannot afford to pay very high wages, they still have much to offer South American players. Not only is Porto itself a very successful club, their regular participation in the Champions League provides a perfect platform for emerging talents to display their wares. Moreover, players can easily obtain work permits and embark on the path towards a EU passport, which makes them a more attractive prospect to clubs in countries with more restrictive regulations [like England]. Finally, Brazilian players do not have to struggle with any language issues.’

This leads nicely to FC Porto’s second method of success, outlined above. They need to qualify for the Champions League, and they do. But even if they sell their best players as well they can only start to balance the books, such is their financial situation. During summers where either one or the other hasn’t happened, FC Porto have made a large loss. This is where it is hard to criticise the policy of Pinta da Costa as president in selling the club’s best players. Small sections of FC Porto’s fans lampoon the individual, simply for trying to keep FC Porto in business. It does not take long when looking into the club to see exactly why this policy is necessary. Any fans upset with losing the likes of Deco, Pepe and Hulk should look at the club’s annual reports published each year and available through the club’s official website. They would see that the president is doing a fantastic job, and behaving in the best interests of the club in both the long and the short term.

Getting back on track, Champions League qualification is just as essential to FC Porto’s survival as their transfer policy. Swiss Ramble continues, ‘the Champions League money has been so important to Porto’s finances over the last few years. This is most evident in 2004, the year when they won the tournament and received €25 million, which was almost 40% of their turnover that year, but even this year when the revenue was down to €12 million, that was still worth 20% of their income – and that excludes gate receipts and sponsorship increments.‘ Tom Kundert of Portugoal.net in his article on the team adds that, ‘the Dragons have also earned a whopping 111.5 million euros in prize money from the competition since its format was changed.

Put simply, if FC Porto do not qualify for the Champions League, they really struggle. They are so reliant on it for a myriad of interlocking reasons – and it remains the club’s keystone. We have to go even further into FC Porto’s financial game plan to see what they do when they do not enter the tournament. In this situation, they generally engage in the practice often seen as suspicious to many Premier League fans to make up the loses. They sell percentages of their players and embrace third-party ownership.

FC Porto do this even when they do qualify for the Champions League, but it is more common when they miss out on the ultimate test for a European side to sell part of their player’s economic rights to private companies to raise some capital and keep the player at the club. For teams in such financial dire straits, this lifeline is often scoffed at by the relatively super-rich Premier League clubs but it provides welcome breathing room for teams who often feel the heavy hand of creditors resting upon their shoulders. Swiss Ramble summarises the results of the practice in eloquent terms, by mentioning: ‘In April 2005, Porto bought 50% of the sporting rights of Lisandro Lopez (from Racing Club) and Lucho Gonzalez (from River Plate) with the remaining 50% only acquired in season 2007/08. Clearly, this type of deal is a double-edged sword, as it means that any future profits are shared proportionally with the agency, but it does reduce Porto’s initial outlay and de-risks their activities in the transfer market.’

FC Porto do have an additional problem to contend with at the same time. Although FC Porto’s target market is the ‘nouveau riche’ oligarchs and oil rich clubs who often pay handsomely for their players, the club do have to also sell to teams that cannot afford the transfer straight away, and although the player in question has the privilege of being perhaps the marquee signing of that side, it means FC Porto do not get the full amount straight away. This fact rarely makes it into the media. Inter Milan are continually a thorn in the side of FC Porto and although the Milanese club like FC Porto’s players, they often take their time in paying for his economic rights after the deal has been concluded. Álvaro Pereira and Ricardo Quaresma are good examples of this.

With third-party ownership and the above paragraph considered, it starts to chip away at the belief that FC Porto rake in hundreds of millions of pounds for selling their star players. The situation is subtly different. The talent has always been there though, and the sheer size of many deals concluded means FC Porto do see their fair share of the profit, but the massive figure implied by calculating purely transfer incomings and outgoings is just wrong.

And so, the future looks interesting for FC Porto’s transfer model. Whilst perennial Champions League qualification is virtually guaranteed, the current Portuguese champions could see Financial Fair Play (FFP) reduce the amount of Hulk-sized deals that the club can complete with wealthy ‘sugar-daddy’ clubs. As FFP beds in, it will be interesting to see how FC Porto cope. It will be interesting to see how ‘sugar-daddy’ clubs cope too, for that matter.

Without question, FC Porto have many players in their current roster who you can imagine will leave for the kind of money the club have customarily fetched. Eliaquim Mangala, Juan Quintero, Jackson Martinez, Alex Sandro and Danilo are all young, technically gifted, and should fetch a high resale value when sold. Juan Quintero, bought this summer, is a particular talent. He is a player who fits the vogue criteria of being young, ‘diminutive’, and being an excellent passer of the ball in the play-maker role. The current FC Porto number 10 is certainly a star on the rise.

Quintero will leave FC Porto, and the club will ask themselves the two questions that characterise them as a whole when the bid is received – how much money will we actually get from him, and can we still qualify for the Champions League when he goes? One thing is for sure, at FC Porto, every player has a price.

What do you think about Porto’s policy? Let us know by dropping a comment below. Make sure you follow us on Twitter @OOTB_football and like us on Facebook. We’re on Google+ and Tumblr as well for those interested.

Jack Coles

Jack Coles

Jack Coles likes watching any game of football, but with a particular fondness for the Serie 'A' and Pep Guardiola. He is also interested in the data analysis side of the sport, and how data is used in the game to study opponents, buy players and review performance. An aspiring coach, Jack also works in youth football.
Jack Coles

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