Economic gain from Web Summit less than expected for Portugal

The economic impact of the Web Summit for Portugal has been considerably less than originally anticipated, according to recently-compiled figures.

An assessment carried out by the Gabinete de Estratégia e Estudos on behalf of the Portuguese finance ministry shows revenue and job gains were both lower than predicted.

The study, which was first reported on by Portuguese publication Jornal de Negócios, found that between 2016 and 2019 the summit generated €77.5 million less in revenue for the state and €196 million less in value-added tax than forecast. In addition, 2,673 fewer jobs were created than anticipated.

Over the period under review, it is estimated that Web Summit led to an extra €115 million in revenue for the state, and €252 million in value-added tax. Some 6,895 jobs are believed to have been created as a result of the event being held in Lisbon.

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The Web Summit moved to Lisbon from Dublin in 2016 under controversial circumstances. Relocation of the tech conference enabled the company to significantly grow its flagship event,with the number of registered attendees rising from fewer than 30,000 in Dublin in 2015 to 50,000 a year later. It has since expanded to accommodate more than 70,000 attendees.

In late 2018, Web Summit agreed a deal to remain in Lisbon until at least 2028 under a €110 million deal with the government. That deal sees the event organiser receiving €11 million in cash each year plus about €9 million in additional benefits.

The annual €11 million payment was made to Web Summit last year despite no physical event being held in Lisbon due to the coronavirus pandemic. The news caused significant disquiet in Portugal, a country where citizens have largely been in favour of the annual event.

Last year’s virtual Web Summit secured an audience of about 104,000 people. The latest in-person event took place earlier this month with more than 40,000 in attendance, in line with government capacity restrictions.

Although relocation to Lisbon may have been of less benefit to Portugal than anticipated, it has certainly boosted revenue for the company behind Web Summit. Manders Terrace, which also operates a number of sister conferences, recorded revenue of €47.9 million in 2019, up from €35 million a year earlier. Earnings before interest, taxes, depreciation and amortisation (ebitda) totalled €9.3 million.

Informed sources who spoke to The Irish Times estimate that more than 50 per cent of the event company's revenue for 2020 came from government sources, as well as via the European Commission and industrial development boards.

Dispute

The success achieved by the Web Summit and its sister events has been overshadowed lately by a dispute between co-founders Patrick Cosgrave, David Kelly and Daire Hickey, which has resulted in a number of legal cases.

Mr Hickey, who has a 7 per cent stake in Web Summit through Lasvisax Ltd, this week followed Mr Kelly in initiating proceedings against Mr Cosgrave, his entity Proto Roto Ltd and Web Summit holding company Manders Terrace Ltd. A spokeswoman for Web Summit said this week that Mr Hickey's claims were "baseless".

Separately, counsel for Mr Cosgrave, Manders Terrace and Proto Roto told the High Court earlier this month they would “vigorously defend the proceedings” being bought by Mr Kelly.

Manders Terrace alleged in separate legal proceedings, taken in Ireland and the United States earlier this year, that Mr Kelly had breached his duty to the company by attempting to secretly use Web Summit's resources to set up an investment fund with Patrick Murphy for his own personal gain. Mr Kelly denies the claims.