Can we learn from Portugal's profit centres..?

[Ivo Stas]

http://www.theguardian.com/football/blog/2014/jan/20/nemanja-matic-move-portugal-profit-centre

Could Villa learn a lesson from the top Portuguese clubs? (Read the short linked article to see how Porto, for instance, have made £342m profit in player sales in the last 10 years whilst remaining competitive.) Probably not, seeing as we are not big fish in a small league (perhaps Celtic could take note though) and we aren’t a natural stepping stone for Portuguese-speaking Brazilians.

Could we fill up with Australians (like Chris Herd) and/or other Commonwealth English-speaking nations talent though? I’m guessing, they’d have less stringent work permit requirements? Likewise Americans – seeing as Eric Lichaj (since sold to Forest) was with us as a kid?

We seem to be trying the Sporting Lisbon ‘grow-your-own’ model (except we shoot ourselves in the foot when we sell our best academy player, Gary Cahill, to Bolton for £5m).

[not3bad]

"The nation's more relaxed approach to immigration"

Sounds like we need the government to take a more relaxed approach to immigration.  Shouldn't be a big deal.

[Concrete John]

The Premier League works differently in that the big fish who will throw money at your best players are within our own league, which isn't the case with Portugal.  So, we would struggle to remain competitive while acting as a conveyor belt for other clubs.

We can probably learn from their scouting model, but not their business strategy.

[Rudy Can't Fail]

What the article fails to mention is that Porto, Benfica and Sporting all have massive debt.

[LeeB]

And they haven't made anywhere near that figure because of the murky world of third, fourth and fifth party ownership.

They've just been a kind of car park for South Americans.

[Villa in Denmark]

At the risk of completing another no no by quoting myself again.....

From the Deloitte rankings thread.

How have our profits plummeted by 25 odd million in four years if crowds are only slightly below what they were (they've held up remarkably well given the team have served-up one of the worst home records in Europe to supporters since 2011), money on transfers has been curtailed and tv money is up? I'm guessing the real difference is the sale of a Milner, Young or Downing?

The numbers being quoted here are revenues, ie. cash in the door.  Profit can have very little to do with cash, as it is often based as much on value of either physical assets and intangible assets and the way these are treated in the accounts in terms of writing down their value.

For a manufacturing company, physical assets will be machinery and buildings for example, whilst intangibles will be things like patents and copyrights.

For football, the physical assets will mainly the stadium, training facilities and any land owned.
The intangibles are primarily the player's registrations. (although for a club like Man Utd the intrinsic value of the brand will also contribute.)

Depreciation is applied to physical assets and amortisation to intangibles.
The reason this can scew profit and loss in relation to cashflow, is that if you sign player X for £10M on a 4 year contract, the value of that contract will be written off (amortised) over 4 years at £2.5M per year.  If at some point player X signs a new contract the value of the player on the balance sheet increases, without there being any (or not significant, depending on signing on bonus) cash transaction.

This is what Ansell was on about all those years ago, when he said he wanted is to make a profit on transfers.  It had got nothing to do with selling for more than we'd paid, but managing the squad and contracts effectively, something we've been rather shite at under Randy, and the biggest reason why there's nothing to show for the thick end of £300M

Profit on player trading has got nothing to do with cash in and cash out for individual players, but how much they move on for relative to the remaining book (asset) value of their registration.

I'd say clubs in Portugal would have a good chance of turning a profit this criteria, as they tend not to sign players for big money at their peak, so have little chance of writing off several million pounds of either expensive gambles that didn't come off, or just writing down the value of an expensive player that runs his contract down.

On the contrary they tend to either spend moderate amounts on players that may come good on a global scale, but are pretty certain to do enough in the Portuguese league, or relatively small amounts on unknowns from South America and Africa,both with the potential of one or two huge transfers out, giving these headline figures.

It also partially explains why they can report these profits and still be up to their armpits in debt.

[hartman_1982]

The Porto examples are also very misleading. For example the face of it they made large profits on Hulk and Falcao, when it fact they were still owned by third parties until they were sold to Zenit and Monaco respectively and Porto would have made very little from such arrangements. There is also no way the PL would allow such a deal.

[Dante Lavelli]

The Portuguese have the african and south american markets seemingly sewn up due to the language similarities and the possible visa situation.  I cannot see legs in trying to poach Germany talent as the Germans are doing that already.

Therefore Villa should be looking to scandinavia and eastern Europe, possibly France too.  It's certainly worth a go although I think the big bucks arrive once a 21 year old has a few years of champions league football under their belt.