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Rui Abreu from Paços de Ferreira about the Pandemic, Revenue Streams and the Gap to the big Three

Rui Abreu is Communication and Marketing Manager at FC Paços de Ferreira, one of the smallest teams in the Portuguese League. He speaks about the challenges cause by the Covid-19 pandemic, about the ownership structure of the club, digitalisation and how they earn money.

You played a great season, finished fifth, the best result since 2013 when you finished third. How was the commercial performance?
We cannot complain. Of course, It would be better if we could have supporters in the stadium. But considering that we had the shop closed for several months, people could not watch games in the stadium, etc., I must say that our commercial results were acceptable.

How hard did the pandemic hit Pacos de Ferreira?
Hard! At a certain point we were the town in Portugal with most cases per 100k habitants. It was a nightmare. Everyone was afraid of what was going on. At the club we have created a “safety bubble” around the first team and cancelled all the practices and games of our youth teams and other sports.

How were you able to survive? Did you get support from the state?
No. We did not get any support from the state. Thanks to the way we manage the club over the years, we were able to survive this period (so far). I always say that we are like the Lannister’s of Game of Thrones – we always pay our debts. And we pay it because we try not to contract much debt. We live according to our possibilities, and we are not easily deceived. We grow more slowly than others, but we grow sustainably. And that is why our club is recognized as one of the most serious organizations in Portuguese football. So, it was a very hard period for us but due to the commitment of everyone, we can say that we do not have back wages or major debts out of control, and the future of the club isn’t compromised.

Are there any projects you were not able to implement because of the pandemic?
Yes. We had some ideas (like improving some facilities, tune some processes, have more staff, etc.) that we had to postpone for a better time.

How big is Pacos de Ferreira, how many people are working in the non-sports area?
Paços is a very small club, even for the Portuguese reality. We have one of the smaller (if not the smallest) budget of the 1st division. We’re talking about something around €4M. Compared to other clubs in Europe our budget is “ridiculous”. For example, we have a partnership with Stade Reims and the budget they have for the youth teams, is bigger than ours for the whole club...

What is a typical annual revenue for you and how are you doing compared to the other clubs in the league?
Quite frankly that depends on how the season goes as we have several variables (the league position and correspondent prize, how good our players preform and if we are able to sell them, if ex-players of Paços from whom we keep a percentage are sold or not, how good is the team preforming impacts sales in tickets, shop,etc.). I think we’re doing good compared to similar clubs. But in Portugal we have a huge gap between the top teams and rest. Unfortunately, usually the Portuguese fans support one of three teams (Porto, Benfica or Sporting). So, they get bigger revenues (bigger sponsorship contracts, sell more tickets, more merchandising, etc.). It’s very hard to even try to reduce this gap.

 

We fight the idea that in Portugal everyone has to support Porto, Benfica or Sporting

 

Can you give us insights into where the revenue comes from – TV rights, sponsoring, etc.?
TV rights are big percentage for a club like ours. But like all the other clubs, we get money from selling players, sponsorships, season tickets, etc. The only difference compared to other clubs in Portugal is that we don’t have an investor giving us money to pursue our objectives.

How important is it for you to regularly sell players – is that a relevant revenue stream?
Fundamental. These extra revenues that comes from selling players is what allow us to do some investments to improve the club. Most of the clubs get an investor to pay for a new stand in stadium or a new gym. We do not have that here. I’ll give you an example. When we qualified for the champions league playoff, we used the money to build a new stand. When we sold Diogo Jota we created new infrastructures for the first team to work. Other way, it would have been impossible for a club like ours to have what we have today.

How does the ownership of the club look like? Is the club fan-owned or is there an investor behind it?
The board is elected by the fans for a 2-year mandate. We have aprox. 4000 affiliates that vote on the person they want to be the president. In Portugal we have 2 types of ownership: SADs and SDUQs. SADs are clubs that are not 100% detained by the club. Some have 1 investor, some have several. Most professional clubs in Portugal are SADs. Few, like Paços, are SDUQs. SDUQ is a club 100% owned by the fans. In modern football is very hard to be a SDUQ. It’s very hard to compete with the “easy” money that our rivals get to improve the staff, the facilities, the processes… But we are proud to be a SDUQ and we want to keep that way. It’s harder, but that’s our identity, and we want to preserve it. We are not for sale.

What role does digital transformation play for Pacos de Ferreira?
Honestly, our digital transformation is going very slowly. Like I said, we count every cent of our money, and we only invest when we get the right opportunity and capacity to do it. Some things have already been done, but we are very far from where we want to be.

Is it possible for a relatively small club to focus on digitalisation – especially despite the problems caused by the pandemic?
Yes. But only with the right partner. Only with a partner that understands the specifics of a small club like ours. I’ve lost count of the companies that contacted us trying to sell apps, leds around the stadium, AI solutions… But you need to understand who are your fans. I would love to have a cashless stadium, but a big part of our fans struggle to use a QR code reader. Some of them don’t know how to operate a smartphone. Some of them don’t care about a flashy app to buy the annual seat because they only trust the guy that is selling them the same place for decades now… We need tailor made solutions and a digital partner from us needs to understand that we may be a good option to try some ideas, but they won’t get rich by working with us. And most of the companies that approach us think we have a money pool somewhere in the stadium…

Do you have a strategic plan in the commercial and marketing area for the next years? Is there a certain goal you want to reach?
Yes. We are working on a long-term project to fight the idea that in Portugal everyone has to support Porto, Benfica or Sporting. We are working to represent our region and get the most people there to be our fans. It’s hard to work this on older people so we are focusing on younger generations. We want to increase home games attendance, number of affiliates and revenues directly dependent on fans.


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