Featured image credit: FC Porto
Portuguese Primeira Liga football club FC Porto has announced the significant restructuring of a deal with Spanish investment company Ithaka which is designed to aid redevelopment work and enhance the operation of its Estádio do Dragão.
Porto in February said it had agreed an investment partnership with a “reputable international company”, with its identity ultimately being disclosed in a statement to the Portuguese Securities Market Commission (CMVM) on April 18.
Porto said at the time that the contract with Madrid-headquartered Ithaka had been signed with a view to “increasing the use and economic profitability” of Estádio do Dragão.
Ithaka was due to have the right, during the next 25 years, to hold 30% of the economic rights of a new company, Porto Stadco, to be incorporated into Grupo FC Porto, which will dedicate itself to increasing the commercial potential of the Dragão, specifically focusing on corporate hospitality, sponsorship, ticketing, naming rights for the stadium, the Museu do Futebol Clube do Porto, visits to the Estádio do Dragão, the organisation of non-sporting events and concerts, as well as other income, present or future, related to the facility.
Under the original terms, Ithaka was set to invest €65m (£55.2m/$70.3m) in FC Porto, of which around €30m was to be fully reinvested in Estádio do Dragão during the first years of the partnership, with the remainder intended to increase the club’s competitiveness. After the 25-year period of the partnership elapsed, FC Porto was due to recover full control of the economic rights of Estádio do Dragão, which it owns and operates.
However, April’s agreement was announced just days before presidential elections at the club. Jorge Nuno de Lima Pinto da Costa, who had controlled Porto since 1982, was challenged and ultimately defeated for the presidency for the four-year period spanning 2024 to 2028 by the team’s former coach, André Villas-Boas.
With a new regime now at the helm of the club, Porto yesterday (Thursday) detailed substantial revisions to the original Ithaka pact.
In an addendum to the initial contract, the new management has maintained the 70% stake it holds in Porto Stadco, while increasing the amount to be received by up to €35m, which could reach €100m if certain EBITDA metrics are met in the 2025-26 and 2026-27 financial years. The initial cash injection from Ithaka will increase from €40m to €50m immediately.
Furthermore, the addendum also includes an option to repurchase the shareholding transferred to Ithaka at the end of the 10th and 15th years of the contract, with FC Porto being able to recover all of Porto Stadco’s economic rights at these two times.
Porto said the partnership is expected to begin at the start of the 2024-25 season, with improvements to the Dragão’s corporate boxes and hospitality areas to be visible within one or two years.
José Pedro Pereira da Costa, member of the Executive Committee of FC Porto, told the club’s Porto Canal: “We have reached the end of a long negotiation process with Ithaka and, as a preliminary point, it is important to mention that the agreement signed by the previous administration did not allow any type of revocation without costs.
“The costs were high and, in this context, we sought the best possible solution for FC Porto, together with our partner who demonstrated the necessary flexibility to review the terms and provide the basic conditions for this deal to be fully completed.”
Porto’s Ithaka pact comes on top of news back in November that saw global premium experiences company Legends enter into a 15-year strategic partnership focused on transforming the fan experience.
Da Costa said: “With this new deal, we will have a significant financial return, and that is perhaps the main aspect.
“The fact that we are bringing in a partner with proven experience in the commercial business of Estádio do Dragão, because, in addition to Ithaka, we will also be working with Legends, an American company specialising in the management of this type of infrastructure, which will bring us some know-how and expertise.
“The main objective is to better manage the stadium’s commercial business and provide better conditions for members. As a result of this financial return, there will be a significant investment in improving the stadium and we will seek to have a better food and beverage offer, not only in the boxes but also in the general stands.”
Da Costa also stressed that the Ithaka deal will aid the club’s general financial position. In May, Porto was hit with a €1.5m fine and threatened with a one-season ban from European competition after breaches of UEFA’s Club Licensing and Financial Sustainability Regulations.
Porto said the sanction was the result of “reckless and ineffective management acts which are the sole responsibility” of the previous regime. Da Costa added yesterday: “There will be an upgrade of the offer, seeking to bring FC Porto members and fans into the stadium earlier, providing them with the best conditions to enjoy the entire spectacle, not only during the 90 minutes but also before and after the game.
“We will have several new features that are made possible thanks to the financial return, which will leave us in a much stronger position to face the challenges we have to meet in the short term. All issues of compliance with UEFA’s Financial Fair Play rules will be much easier with the two operations we are announcing today: the Ithaka agreement, with substantially improved terms, and the financing operation we are designing based on the commercial operation of the stadium.”
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