The financial situation of the Club

benfica-futebol-sadIt is with a surreal feeling that I make my first contribution to this blog with such a post. I would have loved to write a fluffy text about the greatness of our squad, our manager and our president as well as our high hopes for 2014-2015, but sadly I have had to research information explaining what is currently happening to the club. One can’t call himself a true Benfiquista and not care about the alarming (even critical) situation Benfica finds itself into.

The financial situation is very complex, and it’s an eagle stretched in various directions, driven solely by monetary interests, which we are witnessing at present. There seems to be 2 major components directly responsible for our funding and therefore our debt (this works as any credit system), namely the Banco Espirito Santo and Promovalor.

Luis Filipe Vieira has decided to use short-term financial investments to fund the club, and our future lies in the renovation of those. If we do not want to encounter the same issues in the future, we must break free from this system. Banks only loan advantageously money to solid companies, and the club alone quite doesn’t cut it, therefore Luis Filipe Vieira’s holding, Promovalor, is also taken into account. The Promovalor group is in crisis and is part of a black list for investors. It is closely monitored by the Bank of Portugal because of the financial risk it presents.

One of the biggest investors in Promovalor appears to be the BES, which, along with its satellite holdings, were threatened with bankruptcy (insolvency as regards to said holdings), until they got “saved” by NovoBanco. As a result, LFV is struggling to get loans on a personal basis. To cut a long story short, in order to get new funding from the BES, he also has to invest in the GES (Grupo Espirito Santo), which had fallen into insolvency.

This very brief financial historic was necessary to understand the situation of Benfica. It transpires that the latest short-term financial investment received by the club was actually assessed by LFV personally. As this was presenting a risk for the BES, they asked for a payment guarantee. This is not all. The BES actually gave us 67 million in long-term debenture loans, through another third party investment Fund (ES Liquidez).

With all this money owed to the various financial bodies, the direction of the club had to “mortgage” the club in sporting terms, which means cashing on players and sacrificing our academies. This type of funding has totally backfired and the fate of the various disciplines, included our beloved football team, now holds between the BES, the GES and LFV’s private businesses.

Here is a brief account of what is owed to the BES for the next 10 years and how we are managing the debt this year.

What we owe:

2014 – 173.945 million

2015 – 6.872 million

2016 – 43.694 million

2017-2018-2019-2020 – no payments due

2021 – 9.293 million

2022-2023 – no payments due

2024 – 56.225 million

We can see that we are caught in a stranglehold by the BES. It does seem that the only solution to be able to pay is to sell our players, therefore explaining the seeming frenzy to sell anyone holding value within this latest window transfer. Let’s have a look at how much we cashed in so far from sold/loaned players (non- exhaustive list as there are another 3 weeks remaining unfortunately).

Players sold:

Matic – 25 million

Djavan – 1 million

Djuricic – 400.000

Rodrigo and André Gomes – 45 million

Oblak – 16 million

Markovic – 12.5 million

Garay – 2.4 million

Kardec – 4.5 million

Derlis – 3 million

Cardozo – 4 million

Mitrovic 1.8 million

Giving us a grand total of 115.600 million…and leaving us with still 58345 million to find, which will most likely come from Enzo and Gaitan. Needless to say, those who thought we will be saved by a group of core players from last season will soon be disillusioned.

Some intriguing questions were raised, which deserve more publicity:

1-      Did LFV lose his margin of manoeuvre in the financial system due to the difficulties encountered by his company, affecting therefore directly his business at a club level?

2-      Benfica’s assets and liabilities both amount to 400 million euros. How is it that we are unable to repay a 150 million short term loan (of a total value of 290M)?? For info, Sporting Lisbon manages his with assets of only 180M and liabilities amounting 450M.

3-      Is the club’s negotiation power being lowered because of LFV’s Promovalor private company, or is there even more than meets the eyes?

4-      Why the need of selling players up to a value of 200 million euros?

We need to demand transparency and honesty from the Direction. We cannot remain indifferent to what could become one of the greatest financial crisis of Benfica’s history!

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Author: Laura Da Silva

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3 Comments

  1. Great research Laura. Did you find anything on whether the 3rd party deals of the players are playing a part in this apparent fire sale? Seems that this panic goes further than just the bean counters at the Luz.

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  2. Excellent article. I’m only just recovering from my trip to the Emirates Cup where the results of all these sales was only too apparent.

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  3. This is the first time someone has explained Benfica’s extremely complex financial situation in such a clear and concise fashion. Thank you Laura for your very much appreciated contribution, This piece of information is a MUST READ for ALL Benfiquistas !

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