Portuguese football investment platform set to expand internationally and boost tourism within clubs

The Portuguese company Brands Capital Sports, which specialises in the buying and selling of football clubs, is developing sports tourism and fan loyalty programmes to help smaller clubs increase their revenue and become more attractive to domestic and foreign investors.

The plan, which is due to be presented by the end of May, includes initiatives such as summer camps, similar to those run by the ‘big three’ (Benfica, FC Porto and Sporting CP) or SC Braga, reveals Brands Capital Sports CEO Sérgio Duarte to ECO. He is responsible for developing a digital platform that functions as an M&A directory for football, where business opportunities in the Portuguese market can be explored.

For the new project to revitalise the regions where the clubs are based, Brands Capital Sports is in the process of registering its own brands, the details of which it says will be revealed “soon”. “These are brands supporting the clubs with various programmes to generate revenue and encourage them to change their management style, even before investors come in. In a club with 400 kids, there are another 400 parents, and often grandparents and uncles and aunts too… It’s a huge potential that clubs often don’t know how to tap into”, explains Sérgio Duarte.

“The potential for each supporter, in their own right, to bring added value to the club is enormous. It’s not just the cost of their annual membership fee, because they’ll then buy the shirt, take part in the club’s events… That’s the angle we’re going to explore: a bespoke solution for the club”, adds the north-based businessman.

The company, recently set up by the founder and former owner of Cerveja Quinas, launched a website late last year where visitors feel like a sort of Roman Abramovich on a smaller scale. If you’re behind a club, you can use the system to let people know you’re open to external investment; if you’re an investor, you can browse the available opportunities.

“Football isn’t professionalised when it comes to buying and selling clubs. I realised there was a lack of a professional link between investors and clubs, one that made sense and had evaluation criteria. Sometimes, the figures asked for by clubs create some conflict. Then they are contacted by one, two or three investors, and every time they are contacted, the asking prices go up”, says Sérgio Duarte, who leads and holds a 51% stake in Brands Capital Sports.

For the time being, this online platform uses an artificial intelligence (AI)-based algorithm – which takes into account criteria such as the number of supporters or media coverage – to automatically assign a valuation to football clubs. “The valuation is based on the same criteria for all clubs. The algorithm does not change depending on whether it is FC Porto, SL Benfica or União da Madeira. If the club’s board believes that the valuation provided by the platform is correct and considers it to be well-founded, they request a mandate from us”, he points out.

Sérgio Duarte believes that the evaluation of football clubs in Portugal lacks professionalism and digitalisation. “Often, someone who knows the market is asked for their opinion, or the club president is consulted to gauge the club’s worth, and then a value is assigned without any criteria. There are good projects that have never gone ahead because they weren’t properly assessed”, he criticises.

Brands Capital scrutinises the debts

There is a downside to the transactions: Brands Capital Sports retains exclusive rights to broker the deal and charges around 10% for acting as a matchmaker between the investor and the club. When asked about the need for an exclusive mandate in this process, Sérgio Duarte explained that the aim “is to ensure there is no more than one person marketing the club”, but admitted that it is “difficult” because there is “resistance” to the fact that it is a start-up.

And what guarantees can they offer these investors? “The fact that the negotiations are not starting from scratch, that the vetting has been done, the guarantee that the club owes nothing to Social Security or the Tax Authority, that it has submitted its accounts for the last three years, whether or not it has been investigated on various financial fronts, and the minutes – approved at the General Meeting – authorising the entry of an investor”, he replied. To this end, it also has a partner in the legal field, Machado, Sarmento – Sociedade de Advogados, whose role is to provide legal advice.

First international partner comes from Uruguay

At the same time, Brands Capital Sports is working to internationalise the platform so that international investors can gain greater insight into the opportunities available in the Portuguese market, and vice versa. Recently, Sérgio Duarte welcomed a delegation from Uruguay to Porto to sign a strategic partnership.

Under this agreement, Brands Capital Sports selects the Portuguese clubs that best match the profile they are seeking, regardless of whether they are in the first, second or third division of the Portuguese league or the district leagues. “In the future”, the model will be extended to other regions, namely Switzerland, Belgium and Luxembourg.

There are currently 15 clubs on this “marketplace”, including the Azorean club Vitória Clube do Pico da Pedra. Sérgio Duarte’s next project will be to create an “OLX” for companies through another company (Brands Capital Investments) and in partnership with Deloitte Legal Telles. This will be followed by Brands e Go, which will focus on the buying and selling of brands.