FC Porto SAD has secured financing of €115 million from American investors in an operation organized by JPMorgan Chase, in an effort to ease the pressure of a debt exceeding €500 million.

As part of this operation, bonds with a 25-year maturity and an interest rate of 5.62% were issued through Dragon Notes, a financial vehicle created by FC Porto SAD to manage its stake in Porto StadCo, the entity responsible for managing the commercial rights of the Estádio do Dragão.

According to the FC Porto SAD, the debt securities are guaranteed by the revenues that Porto StadCo will generate in the coming years, including those related to the stadium’s naming rights and ticket sales.

“No real guarantees were granted to bondholders, including a mortgage on the Estádio do Dragão or player passes,” the club stated in a communiqué shared with the Lisbon stock market regulator.

“Lowering debt costs”

FC Porto’s SAD faces significant pressure from a debt totaling €520 million. Since André Villas-Boas took over in May – following the long presidency of Pinto da Costa, which lasted more than four decades – the club has been prioritizing financial restructuring.

“This operation will allow, above all, the sustainability of the club, not only in the long term but also in the short and medium terms, namely to meet its financial obligations and to lower debt costs,” Villas-Boas said in an interview on the club’s website.

“It is a loan taken out to pay off debt, but it allows us to grow operationally, commercially, and especially in sporting terms over the next 25 years. Moreover, it enables us to manage our day-to-day operations differently,” added the Porto club’s leader.

30% of stadium rights sold to Spanish investors

As part of its financial restructuring, FC Porto’s SAD agreed to sell 30% of the commercial rights associated with the Estádio do Dragão to the Spanish fund Ithaka, in a deal valued at €65 million, plus €35 million contingent on meeting certain targets.

To this end, Porto StadCo was established, which is now responsible for managing various businesses related to the stadium, including naming rights, ticket sales, the museum, and hosting events and concerts.

FC Porto then created the Dragon Notes vehicle to control 70% of Porto StadCo, through which it completed this bond issue.

€21 million loss

FC Porto’s SAD ended the previous season with a loss of €21 million and is facing a scenario of technical insolvency, with negative equity of around €115 million, though it has seen an improvement due to the increased value of the stadium.

The total liabilities amount to €520 million, with €300 million representing current liabilities.