The time of the young: how Benfica turned a bankrupt club into a successful business project

Anti-crisis strategy from the commercial director of the Portuguese “Benfica” Bernardo Carvalho

In the early twentieth century, the Lisbon “Benfica” was one of the three teams (plus “Porto” and “Sporting”), with which Portuguese football began. For a hundred years, the club has established itself as the most titled and popular in the country, but by the end of the 1990s, due to illiterate management, it was on the verge of bankruptcy. In 2017, Benfica won the Portuguese championship again (4th time in 5 years), played in the 1/8 Champions League and took 27th place in the Deloitte football ranking (experts of the consulting agency counted the club € 152.1 million income). In addition, the team completed the summer of 2017 with the best transfer rates in Europe: it sold players for € 131 million, and spent only € 9 million. How the management of Benfica managed to get the club out of the financial impasse, told the students of the Department of Game Sports »RMA Business School, commercial director of the Portuguese team, Bernardo Carvalho, and Forbes correspondent carefully outlined his workshop.

About Strategy

The owners of Benfica are fans (this form of ownership is common in Spanish and Portuguese football: fans - they are called “Socios” - pay for their membership in the club, thereby financing it, and participate in key decisions. - Forbes), who are primarily interested in having the ball fly into the opponent’s net as often as possible. Every four years they elect the club president. In 2003, he became the current head of Benfica, Luis Filipe Vieira. Then the club was in a rather difficult financial situation, in addition, the team did not win and lost fans. As a result, the development strategy was divided into three-year cycles. In the first, agreements were reached with financial organizations - this helped us close our debts and avoid bankruptcy. At the same time, we invested in an academy and a new stadium for Euro 2004. This returned the credibility of the club. Managers from non-football business areas were appointed (and not selected, as happened before) to the management. For example, I personally worked at Warner Bros. before Benfica. and came to football only in 2005.

Then, in 2005, the club won the champion title for the first time in 11 years. It was trophies that were the task of Benfica in the second development cycle (2006-2009), but failed to complete it. But we started investing in a football team, in transfers - before we did not. Plus, work began with youth, which was not developed at all in Portugal. We wanted the players to start working in the club from the age of 11. I still remember the sale of the first graduate of the Academy for € 1 million in 2012. He was 18 years old. Now we sell young players for at least € 15 million. And there are no magic secrets of our academy. In Portugal, just good football players, as in Russia.

Yes, the stadium and the Academy campus were expensive, I had to take loans. At first, this increased the debt (to € 317 million in the 2013/14 season), but gradually we are reducing this amount, and now it is equal to € 280 million.

The third cycle was associated with the restoration of historical ties between the successes of the past, present and future. As part of this task, a club museum was opened. At the same time, investments increased in football players with great potential and the development of IT technologies to improve the quality of work of all club structures.

The objective of the fourth cycle was to increase revenue in all areas. We got new sponsors, we sold the name of the stands of the new stadium and still continue to look for a sponsor for the arena itself. We independently exercised our TV rights by selling club matches to premium channels: a subscription to Benfica games cost € 10 per month. One major Portuguese sports channel refused to pay us for broadcasting games. After some time, they began to lose their audience so actively that they returned and accepted our conditions.

At this stage, we are seriously rethinking our transfer philosophy. We no longer want to sell our best graduates. They must first win the Portuguese championship with us, and then win other tournaments.

Last season, we earned more than € 250 million. If it were not for the sale of players, the amount would have been only € 128 million. Incomes of other clubs are growing faster, which forces us to sell players. Imagine if Real Madrid had to part with Ronaldo or Bale for economic reasons only. We live in such conditions and do not always have time to rebuild after sales. Hence the problems in the Champions League.

Now we are trying to keep the best graduates in the team for 2-3 years to compete with the tops. Although we earn less. To do this, we need innovation and achievement. We invest in digital technology - this is our future. Maybe I was dreaming, but it seems to me that in 10 years sports television will be completely on the Internet. Sport is perhaps the only product to be shown live. Everything else can be appreciated in the recording.

About management

In addition to the president, Benfica has an executive council of four. And numerous departments. I lead the commercial department, which is part of the marketing and commerce department. My boss knows everything about my work, every day he is interested in what we do. I do the same with the guys on my team. At the same time, the atmosphere in the office is quite free. Nevertheless, for successful work, the club needs a strong leader who understands a phased development strategy. Need constant innovation. Understanding your future for 5-10 years and reviewing your strategy every 5-10 years. So, last year we all came together - 20 leadership people - and discussed what we want for the club in 10 years. We divided our activity into 4 directions, in each of which we work.

Strategic planning is not idle chatter and graphics. These are investments, which amounted to € 276 million in Benfica over the past 10 years. In the UEFA management quality table, we are in 9th place. For example, Chelsea is below us.

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