Negative equity

wsc300 As Portugal’s debts continue to rise, Phil Town explains how the money spent on new stadiums for Euro 2004 looks like a waste

As the economic crisis deepens in Portugal so the careless spending of years gone by appears increasingly irresponsible. We are left with barely used motorways, superfluous submarines and a small herd of white elephants – most of the Euro 2004 stadiums. The championship was heralded at the time as “a way for Portugal to affirm itself” by José Socrates, who became the country’s prime minister between 2005 and 2011. While Euro 2004 was ultimately a huge success as a sporting event, the country is still counting the cost.

In an act of reckless over-enthusiasm – some would say wanton megalomania – Portugal offered ten stadiums to UEFA, nine of which were to be built from scratch. Four years later at Euro 2008, Austria and Switzerland would manage with eight between them. Three of the Portuguese stadiums were pretty safe bets in terms of subsequent viability: Benfica’s Luz, FC Porto’s Dragão and Sporting Lisbon’s Alvalade XXI. Three others belonged to, or were associated with, clubs that had what seemed reasonably healthy fanbases: Boavista’s Bessa, Vitória de Guimarães’ refurbished D Afonso Henriques, and the Braga Municipal Stadium, home of Sporting Braga.

The cost of the Bessa plunged Boavista into crippling debt. The club are now struggling in the third tier and can summon no more than a couple of thousand fans for home games. Vitória and Braga are in a better position but can still only fill half of their 30,000-capacity grounds – although they sell more for the visits of the big three.

Like Braga’s, the four remaining Euro 2004 stadiums are run by the local municipalities or public companies. Académica play at the Estádio Cidade de Coimbra, which cost €53 million (£44m), leaving the municipality with annual loan payments of €1.8m. The club foots the yearly maintenance bill of €450,000, which it struggles to cover from low gates, publicity and concerts.

The Estádio do Algarve sits isolated between the municipalities of Faro and Loulé. It has been used by lower-league sides Farense and Louletano, for the league cup final and some automobile events. But that is meagre usage for a stadium that costs the local councils €3m a year in maintenance, interest and amortisations.

The Estádio Municipal Mário Duarte in the northern town of Aveiro, home to Beira-Mar, cost €68m but hosted just two games in Euro 2004. It currently costs the local council €650,000 a year to maintain and €2.5m in bank repayments. The leader of the Social Democratic Party in Aveiro, Ulisses Manuel Pereira, said: “It would be worth seriously assessing the possibility of demolishing the structure and replacing it with another.” Instead, the council recently voted to transfer the management of the stadium to the club, in return for permission to build new training facilities alongside it.

Attendances at Portuguese games are in general notoriously low. This season’s league average in each jornada of eight matches is 85,000. Of the municipal stadiums used at Euro 2004, only Braga’s had a remotely decent average occupation of seats last season: 44 per cent. The Estádio Dr Magalhães Pessoa in Leiria, home of União, has had less than ten per cent.

The club and the local population of Leiria seem to have turned their backs on each other and one is tempted to lay some blame on the sterile atmosphere of the stadium. But now it isn’t even União’s home any more. They have decamped to the nearby town Marinha Grande for at least the next three seasons, forced out by the prohibitive rent. The local councillor for sports, António Martinho, is not sorry: “União bring no added value to the city. They provide no employment and produce no wealth. The economic and social impact of the club is negligible.” The Leiria city council is desperate to offload the stadium, which cost €83m to build and now eats up €5m annually. It was put up for public auction in October, with a reserve of €63m. There were no takers.

The six municipalities still actively involved in their respective stadiums have to come up with an annual total of €20m a year just in maintenance and loan servicing. It is a whopping sum in a country where every last cent of public money is now being pinched to make ends meet.

From WSC 300 February 2012