Construction mogul Joseph Portelli is close to acquiring the Victor Tedesco stadium for Ħamrun Spartans with a 95 per cent state discount on its lease, with plans to develop part of the complex into a commercial centre.
Ħamrun Spartans, the football club which Portelli leads as president, confirmed the plans in a statement on Friday.
But the club insists neither Portelli nor his real estate company will ever make a profit off the project. Commercial areas in the complex will only be used to generate enough income to ensure the club's long-term sustainability, it said.
The Shift News first reported the story on Thursday.
It said the construction magnate was set to acquire the public land from the government for Ħamrun Spartans for 45 years, during which the club would pay a lease with a 95 per cent discount - meaning it would only pay €3,000 a year in annual ground rent, instead of €55,000.
Moreover, word on the street is that Portelli intends to transform part of the complex into a commercial hub, the news website said.
Club: 95% discount is stipulated at law
In a statement issued on Friday and signed by CEO Marcel Bonnici, the Ħamrun Spartans Football Club confirmed the massive discount and the plans for commercial development of the premises, but said that The Shift article deliberately misleads readers into thinking that Joseph Portelli was being given some "special deal" to make money off the club.
The lease discount is stipulated in the law, the statement said, and commercial development is also legitimate, "so much so that there is a 95% discount rate for Sports Areas/Facilities and 75% discount rate for Commercial Areas/Facilities".
"Whilst we can objectively take criticism and also at times understand comments on the personality of Joseph Portelli as the “Construction Magnate”, we consider it not only unjust and unfair, completely false and without any basis of truth; but surely a complete distortion of facts and reality. This is clearly an attempt to mislead and a strategy to instill doubt in Mr. Portelli’s involvement in Sports," the statement said.
"The money that is being invested in the club together with the debts incurred by the same club has all been entirely paid by Mr. Portelli in line with his genuine commitment as President of Ħamrun Spartans."
Portelli took over Ħamrun Spartans last year and he plans to reconstruct the Victor Tedesco Stadium with new facilities. The stadium stretches over 13,400 square metres of public land.
Commercial activity 'to make club sustainable'
Contacted by Times of Malta, a spokesperson for the club said that developing a commercial aspect is the only way any football club in the world can sustain itself.
Football clubs only make money if they qualify for European competitions, through sponsorships and if they find an owner who is willing to continuously pump funds into them, he said.
But all three are very unstable sources of income to keep a club running. If the owner decides to stop pumping money into the club, the team cannot invest in players, does not win championships, does not make it through to international competitions, and very few sponsors will be willing to put their brand next to its name.
"The only way for a club to become sustainable is to generate a steady stream of income from some commercial activity," he said.
"Once the project's initial costs are recovered, all profits from the complex will be used to employ people and run the premises and be reinvested in the club, in talent and sporting activities."
Club: Project 'does not make business sense for Portelli'
Joseph Portelli and Portelli Projects will not make a profit off the venture, the spokesperson insisted.
Furthermore, the project would not be in the hands of Ħamrun Spartans, but would be run by an executive board of directors which would include the mayor of Ħamrun or a representative of the local council, a representative of the club and representatives from other main stakeholders in the Ħamrun community.
"We want to do something different in the way we manage a football club, special in its exposure and promotion, and enduring - meaning it would be able to survive through the years," he said.
Not only will Joseph Portelli not make profits off the deal, but so far he has only incurred costs, he said.
"If we had to look at this project from a purely investment and business perspective, it would never happen because it doesn't make business sense," he said.
"The revenue expected from ticket sales to sporting events and from commercial enterprises in that location is very minimal compared to other areas in Malta. That area with that type of commercial activity has a very poor return on investment."