May 25 (Bloomberg) -- FC Porto's advance to tomorrow's final of European soccer's Champions League is luring investors to a fund that owns part of the contracts of 10 Porto players.
Porto said the fund, a joint venture of First Portuguese Group SA and Banco Espirito Santo SA, may raise as much as 6.2 million euros ($7.3 million) by the end of the month. A similar fund based on Sporting Lisbon players has swelled 85 percent in value over two years, helped by the sale of footballers to clubs including Manchester United. Lisbon's PSI-20 index declined 2 percent in the same period.
Investors will get as much as 25 percent of a transaction should a Porto player, such as 26-year-old midfielder Deco Souza, be traded to another club. Porto's appearance in the final of Europe's most lucrative club competition may attract teams looking to buy new talent, boosting returns for the fund, said the club's business comptroller Urgel Martins.
``There's a lot of interest in the fund because Porto's performance on the field has been terrific,'' Martins said in a telephone interview. ``We may sell players during the transfer window in July and August.''
Even with the player trade market at a 10-year low in some of Europe, First Portuguese and Banco Espirito are planning their third fund that gives the public the chance to make money from soccer in Portugal. The league was rated only the eighth-best in Europe last year by ruling body UEFA.
To drum up investor enthusiasm, the banks started holding investor presentations at Porto's Estadio das Antas in January. Videos highlighted former players such as international striker Paulo Futre, who helped Porto win its last elite European title in 1987 before being sold to Atletico Madrid.
Two Windows
``It's revolutionary for European soccer,'' Martins said. ``For the investors, the transfer window is a big opportunity.''
European teams may only trade players twice a year, in July and August, and January.
For publicly traded Porto, which has accumulated net losses of 57.7 million euros over the past three years, the investors' cash goes straight into its accounts. Porto has 22.5 million euros in television revenue and prize money from its run in the Champions League and will get another 2.5 million euros should it defeat Monaco tomorrow in Gelsenkirchen, Germany.
Lisbon-based First Portuguese next plans a fund involving Benfica, which won its first trophy in eight years this season by lifting the Taca de Portugal. It proposed setting up funds with Dutch teams Ajax, PSV Eindhoven and Feyenoord and is trying to find partners in France, Chief Executive Duarte D'Orey said. It wouldn't consider a fund tied to one of Europe's richer teams.
Not for Real
``Teams developing and selling talent, that's where we make our money,'' D'Orey, 33 said in an interview. ``We wouldn't do a deal with Real Madrid, for example.''
Argentina's Boca Juniors in 1997 set up the first soccer fund linked to transfer rights. The Boca Fund was closed after its four-year term ended in 2001, posting a 32 percent return. That compared with a 55 percent drop in Argentina's benchmark Merval Index.
The value of the Sporting Lisbon fund rose because it got a third of the 18.1 million-euro sale of Cristiano Ronaldo to Manchester United last year. It got a chunk of the sales of Hugo Viana to Newcastle and Ricardo Quaresma to Barcelona, which together netted Sporting some 20 million euros.
Soccer funds aren't all thriving. One with Boavista declined 2.5 percent in the year through February after the team's form waned following its 2001 championship win and because of the slump in the transfer market, D'Orey said.
Risky Business
In the U.K., Singer and Friedlander Group Plc changed its Football Fund, which bought shares in publicly traded clubs, to an ordinary stock fund in 2002 after the portfolio's market value slid to 7.4 million pounds from 33 million in 1997. The Bloomberg Eurokick index of European soccer stocks has halved in 3 1/2 years.
``Investing in soccer is risky, investing in players is riskier still,'' said Henk Potts, who helps manage $40 billion at Barclays Private Clients in London and owns shares in publicly traded soccer clubs. ``Their fortunes can change in five seconds: they can get injured or dropped.''
Under 41-year-old coach Jose Mourinho, Porto is trying to become the first team from Portugal to win Europe's top prize since its 1987 triumph. It won Europe's second-tier UEFA Cup last season.
``This will go down as one of the best teams of all time in Portuguese soccer,'' Mourinho said.
According to a report in the U.K.'s Daily Express newspaper, London's Chelsea will pay 50 million euros before next season for three Porto players -- playmaker Deco, winger Costinha and defender Paulo Ferreira -- in addition to hiring Mourinho. Chelsea has spent more than $250 million since Russian oil billionaire Roman Abramovich bought the team in July.
``I don't know how many players we'll sell,'' Martins said. ``We'll play the Champions League final and see what happens.''
Porto said the fund, a joint venture of First Portuguese Group SA and Banco Espirito Santo SA, may raise as much as 6.2 million euros ($7.3 million) by the end of the month. A similar fund based on Sporting Lisbon players has swelled 85 percent in value over two years, helped by the sale of footballers to clubs including Manchester United. Lisbon's PSI-20 index declined 2 percent in the same period.
Investors will get as much as 25 percent of a transaction should a Porto player, such as 26-year-old midfielder Deco Souza, be traded to another club. Porto's appearance in the final of Europe's most lucrative club competition may attract teams looking to buy new talent, boosting returns for the fund, said the club's business comptroller Urgel Martins.
``There's a lot of interest in the fund because Porto's performance on the field has been terrific,'' Martins said in a telephone interview. ``We may sell players during the transfer window in July and August.''
Even with the player trade market at a 10-year low in some of Europe, First Portuguese and Banco Espirito are planning their third fund that gives the public the chance to make money from soccer in Portugal. The league was rated only the eighth-best in Europe last year by ruling body UEFA.
To drum up investor enthusiasm, the banks started holding investor presentations at Porto's Estadio das Antas in January. Videos highlighted former players such as international striker Paulo Futre, who helped Porto win its last elite European title in 1987 before being sold to Atletico Madrid.
Two Windows
``It's revolutionary for European soccer,'' Martins said. ``For the investors, the transfer window is a big opportunity.''
European teams may only trade players twice a year, in July and August, and January.
For publicly traded Porto, which has accumulated net losses of 57.7 million euros over the past three years, the investors' cash goes straight into its accounts. Porto has 22.5 million euros in television revenue and prize money from its run in the Champions League and will get another 2.5 million euros should it defeat Monaco tomorrow in Gelsenkirchen, Germany.
Lisbon-based First Portuguese next plans a fund involving Benfica, which won its first trophy in eight years this season by lifting the Taca de Portugal. It proposed setting up funds with Dutch teams Ajax, PSV Eindhoven and Feyenoord and is trying to find partners in France, Chief Executive Duarte D'Orey said. It wouldn't consider a fund tied to one of Europe's richer teams.
Not for Real
``Teams developing and selling talent, that's where we make our money,'' D'Orey, 33 said in an interview. ``We wouldn't do a deal with Real Madrid, for example.''
Argentina's Boca Juniors in 1997 set up the first soccer fund linked to transfer rights. The Boca Fund was closed after its four-year term ended in 2001, posting a 32 percent return. That compared with a 55 percent drop in Argentina's benchmark Merval Index.
The value of the Sporting Lisbon fund rose because it got a third of the 18.1 million-euro sale of Cristiano Ronaldo to Manchester United last year. It got a chunk of the sales of Hugo Viana to Newcastle and Ricardo Quaresma to Barcelona, which together netted Sporting some 20 million euros.
Soccer funds aren't all thriving. One with Boavista declined 2.5 percent in the year through February after the team's form waned following its 2001 championship win and because of the slump in the transfer market, D'Orey said.
Risky Business
In the U.K., Singer and Friedlander Group Plc changed its Football Fund, which bought shares in publicly traded clubs, to an ordinary stock fund in 2002 after the portfolio's market value slid to 7.4 million pounds from 33 million in 1997. The Bloomberg Eurokick index of European soccer stocks has halved in 3 1/2 years.
``Investing in soccer is risky, investing in players is riskier still,'' said Henk Potts, who helps manage $40 billion at Barclays Private Clients in London and owns shares in publicly traded soccer clubs. ``Their fortunes can change in five seconds: they can get injured or dropped.''
Under 41-year-old coach Jose Mourinho, Porto is trying to become the first team from Portugal to win Europe's top prize since its 1987 triumph. It won Europe's second-tier UEFA Cup last season.
``This will go down as one of the best teams of all time in Portuguese soccer,'' Mourinho said.
According to a report in the U.K.'s Daily Express newspaper, London's Chelsea will pay 50 million euros before next season for three Porto players -- playmaker Deco, winger Costinha and defender Paulo Ferreira -- in addition to hiring Mourinho. Chelsea has spent more than $250 million since Russian oil billionaire Roman Abramovich bought the team in July.
``I don't know how many players we'll sell,'' Martins said. ``We'll play the Champions League final and see what happens.''
