This article analyses FC Porto finances in respect of the 2020/21 season.
Season review
FC Porto relinquished its Primeira Liga title in 2021 to Sporting Lisbon to the disappointment of the fans. Despite a trophyless season, FC Porto will be proud of its UEFA Champions League (UCL) performance. Semi-final defeats in both domestic cups meant it was a disappointing season all round domestically.
FC Porto finances were however significantly boosted by reaching the UCL quarter-finals. This, and significant player sales led to the highest ever profits recorded by the club.
FC Porto Finances – Revenue
Revenue rose from €152m to €89m (72%) as FC Porto reached the UCL quarter-finals.
Matchday
Matchday revenue fell from €8.5m to €2.0m (77%) as the season was played without fans in attendance. The return of fans in greater numbers (still restrictions) means that the majority of matchday revenue should be recovered in 2022.
Broadcast
Broadcast revenue more than doubled from €50m to €125m (152%). This was as a result of FC Porto reaching the UCL quarter-finals. FC Porto received €74m in UEFA distributions compared to just €10m in 2020.
Revenue growth was also driven by revenue from the 2019/20 Primeira Liga season being recorded in the 2021 financial year. This is due to the end of the 2019/20 season falling into July, with FC Porto’s 2020 financial year ending in June. As a result of this, €6.3m of deferred revenue was recorded.
FC Porto’s UCL performance will be key to its 2022 revenue with qualification to the knockout stages vital to avoiding a large revenue reduction.
Commercial
Commercial revenue fell from €31m to €25m (17%) due to restrictions in the 2020/21 season limiting corporate hospitality and sponsorship activation opportunities.
A new back of shirt and sleeve sponsorship deal with crypto platform Binance which will help drive commercial growth.
FC Porto Finances – Revenue summary
It was a successful financial year for the club as it achieved strong revenues in 2021 after reaching the UCL quarter-finals. This highlighted the importance of Europe to the club, driving revenue growth despite no domestic trophies. 2022 revenue will be predicated on UCL performance. Failure to qualify from the UCL group stages would see revenue drop sharply.
FC Porto Finances – Operating costs
Operating expenses rose from €144m to €149m (3%). Limited costs growth and soaring revenue resulted in its record profits.
Wages
FC Porto’s wage bill rose from €90m to €100m (11%). This was due to some performance bonuses from the 2019/20 season being paid in the 2021 financial year (€9.5m). In addition, the club paid significant bonuses to its players for performance in the UCL.
Other costs
Other operating costs dropped from €54m to €49m, predominately from costs savings due to games being behind closed doors.
FC Porto Finances – Operating costs summary
Porto managed its costs base well in 2021 which resulted in the club achieving record profits as revenue rose. Operating cost management will be vital this season if the club does not qualify for the UCL knockout rounds.
FC Porto Finances – Transfers
Porto managed to generate significant player sales despite a more cautious transfer market. In came Evanilson (€8.8m), Taremi (€4.7m), Zaidu (€4.0m), Martinez (€3.2m) and Sarr (Loan – €2.0m) for a combined €23m. Departing the Dragão were Silva (€40m), Telles (€15m), Zé Luís (€5.5m), Soares (€5.4m), Osorio (€4.1m), Pereira (Loan – €4.0m), Janko (€1.9m) and Fernandes (€0.3m) for a combined €76m. This resulted in a net transfer spend of €53m.
Amortisation
Player amortisation charges fell from €45m to €30m (34%). This was due to Aboubakar and Zé Luís impairment charges in 2020 which were not present in 2021.
Similar spending in the 2021/22 season will likely result in a similar level of player amortisation in 2022.
Profit on player sales
FC Porto recorded a profit on player sales of €75m compared to only €0.6m in 2020. This had a huge impact on FC Porto finances. Player sales so far in 2021/22 has been only €21m, which would lead to a huge drop in profit on player sales.
Transfer debtors / creditors
Porto does not outrightly disclose its transfer debtors and creditors. However, using trade receivables and payables as a proxy, it appears it is a net transfer debtor position. This means it is owed more in transfer fees from other clubs than it owes.
FC Porto Finances – Transfers summary
The 2021 finances of FC Porto highlight the importance of players sales to the business of the club. Significant sales in 2020/21 resulted in €75m of income which was not present in 2020. With player sales less than a third of 2021 levels so far this year, this could have a huge impact on finances.
FC Porto Finances – Profitability
Porto recorded its highest ever profit in 2021 as it benefitted from significant player sales and its UCL performance.
Operating profit / loss before player trading
Before player trading, FC Porto recorded an operating profit of €7m compared to a €54m loss in 2020. This was solely driven by UCL performance. Failure to qualify for the UCL knockout stages would therefore have a seismic impact on its finances.
Operating profit / loss after player trading
After player trading, FC Porto recorded an operating profit on €52m compared to an eye-watering €99m loss in 2020. This highlighted the financial importance of player sales to its finances. The drop in player sales in 2021/22 so far will hence have a sizeable impact on profitability.
Profit / loss before tax
Net finance costs of a relatively large €20m saw FC Porto recorded a profit before tax of €32m.
Porto Finances – Profitability summary
It was a great financial year for FC Porto in 2021, achieving record profits. This was however driven by UCL performance and significant player sales. Both of these income streams are uncertain at the time of writing which could result in a huge loss in 2022 if the worst happens.
FC Porto Finances – Assets / Liabilities
Despite record profits, debt levels in 2021 rose as FC Porto received external funding.
Cash flow
FC Porto’s cash reserves rose from €6.0m to €8.7m. Cash outflows from operations of €35m and capital expenditure of €0.7m were absorbed by cash inflows of €2.9m from player transfers and €35m in new financing.
Debt
As record profits were in part driven by player sales which were not yet due for payment, FC Porto took on new financing to tide the club over. The disclosures on loans are not clear, however it appears a large portion of its debt relates to factoring of transfer fees. This brings forward payments on players already sold.
FC Porto’s debt increased from €246m to €301m.
Net debt
Net debt hence increased from €240m to €292m.
FC Porto Finances – Final Remarks
The Portuguese giants had a successful season off the pitch but domestically will be disappointed with its performance. 2022 finances will be interesting with the danger of significant losses if the club do not reach the UCL knockout stages and/or achieve significant player sales in the winter transfer window. Fans will however be more concerned with regaining the league title and ending the season with trophies.
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