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Featured - Exclusive Interview by Mística Magazine



The 7th edition of Benfica magazine 'Mística' (May 2009) obtained an exclusive interview with the club's SAD Administrator Domingo Soares de Oliveira.

Domingo Soares joined Benfica after successfully running Portuguese company Geslógica. It was sold to Cap Gemini Ernst & Young, later turning to general director and finally to president of the company, before moving to SL Benfica.

Below you can read extracts translated to English from the interview, which explains his views on all issues about SL Benfica from the early financial crisis, to player salaries and projects like Benfica TV.

The full interview [in Portuguese] is available in the magazine which can be purchased at the official website. Original text in Portuguese by Ricardo Sampaio Maia and Ricardo Soares.

What was the scenario you encountered when you arrived at Benfica?
There wasn't much of a surprise because Luis Filipe Vieira was already working as the SAD president. What did strike me was Manuel Vilarinho's (Benfica president at the time) way of commanding the club.

It's necessary that people know the catastrophic state the club was in after Vale e Azevedo left, the SAD (Sociadade Anónima Desportiva) had lost 50% of its social capital in the first year and it was technically bankrupt.

I analised that during the first years of Manuel Vilarinho there was a lack of control in which there were no basis of sustaining the club in the long run. The work we did from there was extremely difficult and only after some time we created a financial structure that would recover the club from ultimate debt.

Could you say Benfica's success in the last decade was directly linked to the financial crisis?
I don't have the documents relating to the 80's, but it's a fact Benfica lived above its weight for many years. They were penalised strongly for some decisions.

From an economical point of view, it would have been far more advantageous if Benfica began from zero rather than tackling the problems from the past. But the club is more than just its finances. The pride and history of Benfiquistas made it sure the club took the right directions and prevented it from dying altogether.

What were the steps taken to revert the financial crisis?
There are some merits to Manuel Vilarinho for this. I believe if the club was run in the old 'style' it would have disappeared. The management indentified solutions to resolve the innumerous problems it had, and in some cases it had to content with short-term findings.

An example of this was the 2001/02 television rights. Today we all know Benfica can generate a higher amount of capital than what was given. But in practice, at the time, they had to hold on to any instruments they were given so we can't be critical of that.

When Vieira intervened, first as the SAD president than club president, Benfica's structure was re-invented to create a self-sustaining environment. From 2002 until 2007, Benfica invested €300m with the help from financial partners, largely due to the credibility regained throughout those years.

These are huge investments...

Exactly. We built a new stadium, a training complex, established other branches such as Benfica TV, Benfica Health, Benfica Insurance and invested substantially in information systems. These investments are very important for the future of our institution, which can already be seen today, and no one can say this wasn't money well spent.

We could have invested even more in football directly, but this would have been the wrong move and our financial partners would not be convinced. We wanted to develop a long-term base for the club and only the museum is left to finish.

What is Benfica's liability?
In terms of what it has amassed, the liability of Grupo Benfica has oscillated between 300 to 320 million Euros since 2002, except in 2004 where it reached €375m. From those values, around €80m are not due, so in reality it is around 230 to 250 million Euros. These debts correspond to the investment made in re-building the club.

So you ask if Benfica has the capacity to run with these liabilities. In 2003/04 the figure was €375m whilst the money generated at the Luz was €70m. Now the figure stands at €320m and we generate €100m. We have been keeping our liabilities at an even rate while we continue to increase our capacity to generate more profit.

Can we lower our liabilities by selling assets like Sporting did with Alvaláxia? Of course we can and we are not short of assets with a good value. But I believe it would be a negative option, Benfica should not sell its commercial area because it is already occupied and generates important funds for the club.

So Benfica is financially profitable?
Yes. We have to analise this with past data. Benfica SAD has a liability of €125m, which was €152m in 2005/06. If we look at the cost of running the club they have been stable.

During the period of Vale e Azevedo we were churning out negative figures of €50m, and in the following 3 years between 2001 and 2004 it had reached €60m. But in the last three years we have had positive results.

If we compare it with other clubs in the SAD level, seeing as no one publicises their accounts, Benfica generated €30m in its operation, Sporting reached €23m whilst Porto were €7m in the red.

"We have to get more money in terms of TV rights"

How do we measure with other European giants?
Here the question about the market dimension is inevitable. Ours is not the same as the 5 major markets in Europe [England, Spain, Italy, Germany, France], but Benfica was in the top 20 list two years ago. The most recent Deloitte report arrived a few months back and I had time to analise it.

There is only one club outside the 5 which makes the list this time and its Fenerbahce, the Turkish club, whose market is far larger than ours you could say. The last club on that list is Manchester City with €104m in revenue, mostly for selling their players. Benfica is on top of 3 or 4 of the clubs in that list in terms of merchandising, but the main difference lies on TV rights, which were the main points of their success. The average income from TV rights comes at 42%, whilst we our figures didn't pass the 10% mark.

I understand the television rights are poor comparing to the rest of the country, but without criticising anyone, it has to be reviewed... Benfica didn't sign these contracts with a pistol held to its head, but we have to honour these contracts whoever it was signed by when they were in charge.

The idea is to get more revenue from TV rights in the future so we can stand with the biggest in Europe.

How will the current global crisis affect us?
The football business is unique in relation to the current crisis. The passion for football continues to take people to the stadium and supporting their team. The focus of the problem lies in obtaining more credit, which obliges a reduction in investment and the power of buying better players. Now that will affect the development of clubs.

I don't think we will be prejudiced by our partners. We will have to reduce costs and investments, but I doubt it's the football side that will be mostly affected.

Let's concentrate on the football. How do you analyse the strategies in the last few years?
We can be more or less satisfied. If we look at the lack of results between 1994 and 2004, where we only won 4 trophies, it speaks for itself, not to mention the European outings. But considering the history of Benfica we all want more.

When Luis Filipe Vieira was the SAD president he constructed a team which won the Portuguese League, Cup, SuperCup and reached the Champions League quarter-finals. It was him who went out to get Nuno Gomes, Luisão and Simão to create a determined side.

After that we took some decisions which didn't go down well and produced the expected results. Note that this season we have been building a new team under a new sporting director [Rui Costa], who has the support of the whole administration. This group is on its way in becoming a team, with already having won the League Cup. I am convinced we will see better results in a short or medium term.

There has been some criticism on the investment of some players.
Season 2007/08 was significant because we invested 35% more in the acquisition of new players than the previous season. But the majority of the deals, which were made in summer 2007, took into account the full potential of the players and their value in the future.

We also heard criticism about the salaries...
Let's analise this with some facts.

In 2003/04 Benfica spent €26m salary. In 2007/08 it was €27m. We have controlled and maintained the same level even though our profits have increased. This year, for specific reasons, we increased the salary expenditure, but not to unsupportable amounts. Moreover, it was in 2005/06 where we spent the most, €31m.

We shouldn't expect the club to continue the level of investment, because we have many youngsters on the verge of turning real senior players.

How will FIFA's 6+5 rule for European games affect Benfica?
Rui Costa has been given the responsibility to scout our league for promising Portuguese players that would interest us. We already have got some this season. But we want to take the best out of our academies and it was Rui Costa who defended Miguel Vítor's passage to the senior side.

Today we discussed the situation of every talented player. This is something no one can deny and can be seen in the occasional calling of these youngsters to senior training schedules. And on the other hand, it's the best economic solution to find talent in our own academies.

How can Benfica benefit from these talented players?
For example we have Di María. After the Olympic Games we had an immediate market looking at him, likewise in the following winter. Benfica wanted to keep him and we have had enough capacity to shrug off any potential buyer.

Was building the new stadium a potential risk?
It was always a risk, but Luis Filipe Vieira revealed tremendous dedication to go against all odds. History will be written as the new era for Benfica, because clearly there is a 'before' and 'after' in relation to the stadium.

This stadium permitted us to increase our revenue, something that was not possible with the old one. We have got a commercial part to it which also helps. Estádio da Luz generates €20m in revenue, whilst the expenditure is only €5m, if we exclude the loss of value. It's a highly profitable operation and it has been for at least 3 years.

It was risky, but the people who led the project did it well and confidently.

How about the naming of the stadium?
We will maintain that possibility. About a dozen entities had been interested but we never reached a deal, nor do we have a deal ourselves if it will really benefit the club if the stadium is named. At this moment there is less interest because we aren't putting the idea forward, but we can change that anytime. We are not dependent on this idea to balance our accounts.

This stadium has a huge infrastructure for other sports...
This is our mission for the club. We want to be an organization of huge success in other sporting areas too. Benfica has a swimming pool and gyms where thousands practice their sport; we have 2 pavilions where 5 different sports are played; a new complex in Oeiras for Rugby and much more.

If we had not invested in these infrastructures we would have saved millions and millions, but we would have also disregarded the club's objectives and ethics.

It has to be difficult to invest in all areas at Benfica.
We have pushed our imaginations wide to attract more sponsors for our other sports due to the fact we are not at the highest level in terms of attendance. Benfica does take some revenue from the memberships to other sporting areas, but it isn't enough. We need to attract sponsors which are not easy when these sports aren't followed like they could be. Benfica TV helps this process though.

When will we host a Champions League final?
Every year there is a process undertaken by UEFA where a club can put itself forward to host the final, and Benfica has been interested. It's normal that it won't be chosen right away because of the Euro 2004 final we hosted. But I believe in a few years it will be a stage for the biggest event.

Are games in the afternoon still a far-fetched idea?
It's possible but only if all parties win. We are aware we got an extra 15 thousand in the afternoon match against Belenenses. The conditions are there to do it again in the future but we have to take deals we made with TV channels into account. There has to be a balance.

At to what point do results on the pitch affect the club professionals?
We feel that daily. When we start work on a Monday after a defeat you can notice the difference. The input is the same but with less enthusiasm.

The result of a match signifies the state of all Benfiquistas, but whoever works at the club knows the finance and economics matter too. When we are winning there are an extra ten thousand present at the stadium, and even though some our functions at the club are not directly linked with the result, the fans' views will always be influenced by the results on the pitch. If Benfica win, we are doing a great job. If we are not... We try to make sure our hard work is not conditioned by the sport results.

"Our projects are of the highest level"

There are people who accuse the directors not fully focusing on football.
Yes there are those who do say exactly that. But they don't understand our work is channeled to football and in part, other sports too. Let it be the communications department, Benfica TV, the construction of the stadium, the training complex, increasing the amount of members, Benfica Lab, the information systems, whatever is developed at Benfica, it all has a fundamental end: to create the conditions so the sport, in particular football, can develop and prosper.

We don't want to be champions just once, but as many times as possible. Our core business is football and I can only guarantee the results will appear. There is no one in Portugal that is as innovate as we are. All the projects we have taken forward are at the highest level of top European clubs.

Projects that base the Benfica brand...
It's a very strong brand, and it is our partners that say so. What we have to look for at every moment is to maximise the potential of this brand to give advantages to our fans and make them proud.

For example 'Benfica Faz Bem' (Benfica Does Good) works with children up to 8 years of age. And it will be these youngsters who are at the stadium in 10 or 15 years supporting the glorious Benfica. There is no comparison with our club in any front. Imagine our rivals trying to fill a stadium outside their vicinity, like we did at Boavista in a friendly match weeks ago... it would not be possible.

Even if you compare it with some European giants, we are there somewhere. Most of them have fans throughout the world but they are casual fans. If Cristiano Ronaldo moved to Chelsea they will change clubs. Benfica is followed in PALOP (Portuguese speaking countries) with immense loyalty and affection. There is no comparison.

"This project is completely different to other channels"

What are your views on Benfica TV?
It was beyond our expectations, we were ready for more problems to arise. This project is different from the other 15 already launched by other clubs.

First, it's balanced in financial terms because there is no TV project which is launched Internationally that doesn't make losses. Second, it has an extensive amount of programmes. We have a deal with ERC to have at least 6 hours of new content per day, and we are already looking to extend that to 12. Thirdly, the coverage we give to other sports is second to none, maybe except Barcelona. And like Real Madrid, the only club channel not to be premium.

We have been able to show live coverage of football games and other sports too. The transmissions went really well, were innovative in many ways and we showed people we can give you football in an alternative way. But to be honest if Benfica decides to show all games this way there would be a great loss on TV revenue. This could only happen if the channel was made exclusively on pay basis.

When will this project break-even and what's its future?
I hope the first year of this project will reach the break-even point.

We are in advanced negotiations with the North American market. We also had strong interest from South Africa and some parts in Europe. Although each case would have to be analised independently should we move in that direction.

Are there more challenges ahead?
There will always be challenges ahead, and the day I realise we have none left, I will not be here. We always have to think how we can reinvent Benfica. We have many projects going on at this time and just launched one recently, Benfica TV. We will see an improvement and new innovation this summer in merchandising too.

It is our obligation to create conditions so Benfica can have success. But we have to remind ourselves these are means to an end, which is to win championships.



Read the full interview in May 2009's edition of Revista Mística.




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