Would this FC Porto team be able to challenge the champions league?

Nope, not even if the chosen one coaches for Porto. It is not the money that plays a big part, it is the talent, skills and team chemistry doing it consistently and adopting their game plan. Even in Barcelona many top money players have come and gone, but their basic skills and talents and game approach, team chemistry is completely different than any other teams. They have young talent developed from grass roots - typical examples are Xavi, Ineista, Messi, Puyol, Bojan, Valdes and many more. They always have the core group with others come in and go.