Brazilian Soccer Investor Gets Surprise Stage for Playing Talent

A Brazilian sports marketing agency’s purchase of a Portuguese soccer team to access Europe’s $2.2 billion player trade market is reaping a surprise bonus.

Traffic Sports bought Grupo Desportivo Estoril Praia two years ago to provide a European stage for its Brazil-borne talent. The team was since promoted to Portugal’s elite division and makes its debut in the group stage of a continental club competition tomorrow when it faces Sevilla in the Europa League.

“It’s a best-case scenario,” Jochen Loesch, president of international business at Sao Paulo-based Traffic, said in a telephone interview. “We never thought we would go to the Europa League. It gives us a better platform to showcase the players so it will be even easier to sell them.”

Estoril, as the team based 15 miles (24 kilometers) west of Lisbon is known, hosts Sevilla in the first of six guaranteed games in European club soccer’s second-tier competition. Matches, typically played on Thursdays to avoid clashing with the elite Champions League, are broadcast in at least 66 countries, according to European soccer’s governing body UEFA. Estoril reached the group phase via qualifying rounds.

The 56 clubs that participated in the 2012-13 Europa League received payments worth 209 million euros ($175.5 million) from UEFA. Competition winner Chelsea received 10.7 million euros, while Israel’s Hapoel Kiryat was paid the least, getting 1.55 million euros.

Traffic’s business model means the team that takes on Sevilla will differ from the one that helped Estoril qualify for the Europa League, according to Loesch. Estoril has sold about seven players since the end of last season, he said.

Long-Term

Loesch didn’t give details on how much Traffic made from player sales. While it was profitable, it didn’t cover the purchase price of the team or infrastructure costs, he said.

“This is a long-term project,” Loesch added. “We have to sell players to open up opportunities for new players. It’s part of our business.”

About half of Estoril’s squad started off at Desportivo Brasil, a team created by Traffic in 2005 to develop players for sale. Porto Feliz-based Desportivo’s academy is one of the most-developed in South America and has formed an alliance with record 20-time English champion Manchester United.

Convincing young Brazilians to leave their home country for Portugal isn’t hard, according to Loesch.

“We don’t force anyone but with the salary increase and an opportunity of playing in Europe it’s not that difficult,” he said. “It’s totally under control and it’s proved to be a very good learning curve.”

Defender Ismaily Goncalves dos Santos is the project’s biggest success. The left-back started out at Desportivo before joining Estoril, where he was then loaned to fellow Portuguese club Sporting Braga. Ismaily joined Ukrainian team Shakhtar Donetsk in February for about 5 million euros.

Player-Trade Rights

As well as buying into teams, Traffic deals in player-trade rights, where stakes are bought in players’ so-called economic rights in the hope of profiting when they are sold on. FIFA is investigating the practice, which UEFA has said it will outlaw if the global governing body takes no action.

“It’s nicer if you are able to develop your own players,” Loesch said. “There’s more time and effort so when it works out it’s rewarding.”

Still, Traffic’s eye for spotting talent outside its clubs has proved lucrative. Vitinho, a 19-year-old striker the agency held a stake in, was sold this month by Brazil’s Botafogo to CSKA Moscow for 10 million euros in what Loesch described as a “great deal.”

While selling top players on a regular basis would typically be met with supporter opposition, things are different at Estoril, according to Loesch. He said the team attracted crowds of fewer than 500 before Traffic bought the club, and about 2,000 people now come to watch.

“Fans are happy because it’s the best performance in Estoril’s history,” he said. “They’ve never been in Europe.”

To contact the reporter on this story: Tariq Panja in Rio de Janeiro at tpanja@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net

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