The Porto “model” says goodbye to capital gains, and is worse off due to a significant deficit. The Portuguese club’s balance sheet on 30 June 2016 showed a loss of €58.4 million, a sharp fall compared to €19.9 million in 2015.
“It is not a good result”, commented the CFO Fernando Gomes, “but it is the result of a strategy defined by the club” not to weaken the team. “Porto has always had a deficit considering ordinary income and charges. What has often made up for the deficit was the extraordinary income arising from capital gains on players’ transactions – continued Gomes -. Two years ago, for example, the revenue was €117 million, with capital gains of €82.5 million. The company realized that there was no ground to continue with this policy. Last season we had offers for Danilo, André Silva and Herrera for €95 million. And now the club, since it did not reach the direct qualification for the Champions League, has decided not to sell players, because it would be a blow to the team on the field, “said the finance director.
The goal now will be to reduce costs, today over €100 million, of which only €75 million is allocated to salaries: the mission of the Portuguese team is to reduce the salary budget down to €55 million. As for the income statement, operating expenses increased by 13% (€124.4 million), primarily due to the acquisition of Porto Canal (TV channel) and the compensation for coaches Julen Lopetegui and José Peseiro. The balance concerning the players’ management is positive at €7.1 million, while the participation in the European competitions has allowed them to collect €11.6 million. The financial structure remained positive (€25.9 million), an increase in both assets (€375 million) and liabilities (€349.2 mln). Porto most likely will also be subject to a penalty from the UEFA about Financial Fair Play: the club has “definitely failed” objectives, which is why there is already a dialogue with UEFA to establish the conditions under which the Portuguese club will be penalized. A penalty that will surely involve a reduction of wages and amortization of players, with the hope of not reducing competitiveness, while also reducing the use of capital gains. “We will continue to promote players and generate capital gains, but in the future we could get to June 30 without being frustrated because of showing positive results,” concluded Gomes.
