Cash boost required to save Juventus
July 17, 2006
ROME (Ticker) - Juventus is heading for "financial meltdown" unless it receives a huge cash injection from private investors over the next two or three years, according to a soccer finance expert.
The Turin club on Friday was ordered by a sports court in Rome to play in Serie B next season, after being exposed as having a central involvement in arguably the biggest corruption case in Italian soccer history.
It is questionable whether Juventus - which also has been stripped of its league titles in 2005 and this year - will escape another relegation at the end of next season, as it will kick off the new campaign with a 30-point deduction.
Fiorentina and Lazio also have been relegated to Serie B and will start next season with 12- and seven-point deficits, respectively.
AC Milan will start the 2006-07 campaign in Serie A with a 15-point deficit and has had 44 points deducted from its total last season - meaning it won't compete in the lucrative Champions League.
Of the four clubs, Juventus certainly has been hit the hardest, and relegation will take a severe toll on the club's finances.
"Around 80 percent of Juventus' revenue is from sponsorship and television rights deals, and I would expect the vast majority of that to disappear," Stuart Whitwell, a joint managing director of brand consultancy Intangible Business, told PA Sport's Football Insider.
"There is a triple hit, really. Juventus can expect a loss of at least 50 percent of its income overnight. Under the circumstances sponsors could drop out, and I expect many to do so. There will also be a major loss of players, and thirdly the image of the club is tarnished."
Whitwell believes there is a decent chance the club may go bankrupt.
"Unless there is private investment from the Agnelli family (who own the club) or another source, Juventus will go out of business. They could suffer financial meltdown," he said. "I think Juventus will need private investments of around 125 million euros ($158 million) a year for perhaps the next two or three years to keep going. Juventus' ticket revenue is incredibly small for a club of its size and many sponsors will not want to be associated with the club. With the loss of income, Juventus will not be able to command a premium.
"I do think the Juve image will recover over time, because of the history of the club. Juve does have a bit of magic about it, and I expect that to help carry it through, but it will take years."
It remains to be seen whether Libyan company Tamoil will pull out of its current partnership with Juventus, which is reportedly worth around 21 million euros ($26.5 million) per year. The agreement represents the most lucrative shirt sponsorship deal in world soccer.
Although Juventus has around 15 million fans in Italy alone, the club's local support has dwindled in recent years as supporters have become reluctant to visit the unpopular Stadio Delle Alpi.
Juve attracted average crowds of just 26,390 to its 67,000-capacity home last season, and plans to move to a new ground will be put on hold until the club's finances are stabilized.
Despite the lack of substantial gate revenue, the Agnelli family, which also owns car manufacturer Fiat, has been able to establish Juventus as one of the most financially stable clubs in Italy for several years.
The value and status of the club also has been supported by the presence of top internationals in the squad, but following the announcement the likes of goalkeeper Gianluigi Buffon, midfielders Pavel Nedved and Patrick Vieira and striker Zlatan Ibrahimovic all could leave.
"They have been kings but now they are going to be paupers for a while," Whitwell added. "Many of the players will not want to play in the lower divisions, and will ask to leave, and even if players want to stay, the club might not be able to afford to keep them on their contracts.
"The club is not going to be able to afford to keep the high-earning players, so there will be some cut-price deals on the transfer market. It's difficult to say what sort of decrease in player value we are talking about, but it could be 50 percent and it could be as much as 75 percent."
All four clubs will appeal, but the hearings will have to take place before July 25 - UEFA's deadline for receiving the list of teams ready to participate in its competitions next season.
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