Endless Summer Mercato 2016 (40 Viewers)
- Thread starter JuveJay
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Here are some historical figures (in EUR)
EBITDA = EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION
This is essentially revenue less direct costs.
FY2011 - REVENUE: 169MM EBITDA: -25.7MM
FY2012 - REVENUE: 204MM EBITDA: -0.7MM
FY2013 - REVENUE: 278MM EBITDA: 54.0MM
FY2014 - REVENUE: 307MM EBITDA: 65.7 MM
FY2015 - REVENUE: 339MM EBITDA: 80.3 MM
Last 12 Months- REVENUE: 390MM EBITDA: 110MM
This is why we can now compete with Bayern.
But just for completeness...Bayern
FY2011 - REVENUE: 314MM EBITDA: 63MM
FY2012 - REVENUE: 354MM EBITDA: 86MM
FY2013 - REVENUE: 422MM EBITDA: 95MM
FY2014 - REVENUE: 506MM EBITDA: 99MM
FY2015 - REVENUE: 507MM EBITDA: 111.3MM
Last 12 Months- NA, NOT RELEASED
EBITDA = EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION
This is essentially revenue less direct costs.
FY2011 - REVENUE: 169MM EBITDA: -25.7MM
FY2012 - REVENUE: 204MM EBITDA: -0.7MM
FY2013 - REVENUE: 278MM EBITDA: 54.0MM
FY2014 - REVENUE: 307MM EBITDA: 65.7 MM
FY2015 - REVENUE: 339MM EBITDA: 80.3 MM
Last 12 Months- REVENUE: 390MM EBITDA: 110MM
This is why we can now compete with Bayern.
But just for completeness...Bayern
FY2011 - REVENUE: 314MM EBITDA: 63MM
FY2012 - REVENUE: 354MM EBITDA: 86MM
FY2013 - REVENUE: 422MM EBITDA: 95MM
FY2014 - REVENUE: 506MM EBITDA: 99MM
FY2015 - REVENUE: 507MM EBITDA: 111.3MM
Last 12 Months- NA, NOT RELEASED
and that we also have 215m of debts which burn some finances every year to pay interests.
Meaning while Bayern can pay players in single installements for us is a lot harder to do so.
That why some good players we can afford always go elsewhere because most of teams outside Italy want all the money right after.
Meaning while Bayern can pay players in single installements for us is a lot harder to do so.
That why some good players we can afford always go elsewhere because most of teams outside Italy want all the money right after.
Honestly mate i never understood why people looks at EBITDA so much.
Because in the end "interest,taxes and depreciaton & amortization" are still there to pay.
meaning even if your EBITDA increase but you're over all gain doesn't.... nothing will change cause you won't have the free cash to spend.
Now things would be a lot different we had those money after interest,taxes and so on.
Because in the end "interest,taxes and depreciaton & amortization" are still there to pay.
meaning even if your EBITDA increase but you're over all gain doesn't.... nothing will change cause you won't have the free cash to spend.
Now things would be a lot different we had those money after interest,taxes and so on.
1) Interest for the two companies is different by ~2 million EUR. That is negligible.
2) You could also subtract CAPEX to get a better idea of how much is spent on a yearly basis. Fortunately, the main source of capital investment is players, and Juventus spends less than Bayern there. Bayern doesn't release CAPEX numbers, but their depreciation figures are 10MM larger, meaning that they spend more.
3) The net income gap has also closed significantly, with Juventus generated nearly 40 million euro profit, last twelve months.
4) There is nothing wrong with the company's debt load. The company is leveraged at a rate of less than 2.0x EBITDA. I work in credit analysis and analyze corporate bond issuing companies for a living. 2.0x EBITDA is extremely low. Other companies with <2.0x EBITDA? Well Deutsche Telekom is levered at roughly 2.5x EBITDA. Telecom Italia is around 3.9x.
5) Our interest coverage ratio is ~50x. Deutsche Telekom? 6.6x
Everyone who writes about our debt-load just needs to stop, because my professional opinion is that it is extremely healthy.
Just for completeness though:
LTM - Interest: 5.4MM EURO
TAX (which Bayern has to pay as well) - 8.2MM EURO
D&A - That is different. Essentially when Juve buys a player, for accounting purposes the outlay is spread over the contract period. The cumulative of all these artificially spread-out charges at one time is depreciation. Bayern has a higher depreciation expense than we do by about 10MM Euro.
Juventus spent 80MM on player rights last year. Not sure what Bayern's numbers are because Bayern doesn't release a cash flow statement.
The key though is that right now JUVENTUS are generating 110MM in EBITDA less 4MM in interest and 8MM in tax. The main variable after this is working capital, which has to do primarily with delayed payment for players. After those expenditures, the remaining is free to spend on buying players.
2) You could also subtract CAPEX to get a better idea of how much is spent on a yearly basis. Fortunately, the main source of capital investment is players, and Juventus spends less than Bayern there. Bayern doesn't release CAPEX numbers, but their depreciation figures are 10MM larger, meaning that they spend more.
3) The net income gap has also closed significantly, with Juventus generated nearly 40 million euro profit, last twelve months.
4) There is nothing wrong with the company's debt load. The company is leveraged at a rate of less than 2.0x EBITDA. I work in credit analysis and analyze corporate bond issuing companies for a living. 2.0x EBITDA is extremely low. Other companies with <2.0x EBITDA? Well Deutsche Telekom is levered at roughly 2.5x EBITDA. Telecom Italia is around 3.9x.
5) Our interest coverage ratio is ~50x. Deutsche Telekom? 6.6x
Everyone who writes about our debt-load just needs to stop, because my professional opinion is that it is extremely healthy.
Just for completeness though:
LTM - Interest: 5.4MM EURO
TAX (which Bayern has to pay as well) - 8.2MM EURO
D&A - That is different. Essentially when Juve buys a player, for accounting purposes the outlay is spread over the contract period. The cumulative of all these artificially spread-out charges at one time is depreciation. Bayern has a higher depreciation expense than we do by about 10MM Euro.
Juventus spent 80MM on player rights last year. Not sure what Bayern's numbers are because Bayern doesn't release a cash flow statement.
The key though is that right now JUVENTUS are generating 110MM in EBITDA less 4MM in interest and 8MM in tax. The main variable after this is working capital, which has to do primarily with delayed payment for players. After those expenditures, the remaining is free to spend on buying players.
i'm not into economy but few simple questions.
What you say sound logical but then again even if our EBITDA is low our net income isn't great. Even with the great results we had lately we'll still close in red. Meaning a new loss which will increase our long term debt.
While Bayern in the last 20years or more every single year had money to spare from their revenue. Simply saying they're in green every year and by doing so they can put money away to use whenever they want. Without asking share holders for money to actually have a "cash flow".
So in the end what's matter is how much you get at the end of the year. Our EBITDA can be 1.0x but if our annual revenue is still -12,5m how can things inprove?
I mean unless we sell every good player we have and pick 9 youth academy players lowering our wages total and getting hundreds milion of euro sorting out our debts and increasing our revenue results how can the situation in the short-mid term get better?
If i were an investor i woudn't do so in Juventus. Because... yes we're getting better but we'll hit a limit due to the league,sponsorships and merchandise. Unless we start winning champions league year in and year out like we win Serie A we will never reach some numbers as Spanish/Bayern or BPL clubs. Because we're in Italy, because the stadium is smaller so the only way to increase our stadium revenue is increasing the price of tickets , the merchandise in Italy is impossible to raise as they sell lot of counterfeit while outside results are not good either.
So in the end if i were to invest my money i would do so in Bayern or in BPL clubs. Bayern cause every year they make profits and BPL clubs because of merchandise and tv money deal.
Sadly as i see it unless we get some super rich mecenate/sponsor our revenues won't increase that much in the future unless we'll be perm at least in semi-finals of champions league.
In my wet dreams our situation would reach the likes of Real,Barca,United or Bayern only if we get a sponsor from the likes of Bill Gates. I mean today Bill Gates reveal himself as a Juventus fan and decide to sponsor our shirt with Microsoft offering us 100m/year simply because he is the richest man on Earth and can do so and pay 30m/year to name our stadium as Microsoft Arena/stadium whatever....
Else i don't see a future where we can be on the level of the teams i quoted above.
Merchandise is the zone more unexplored in our revenue. Saying we're doing crap with it.
What you say sound logical but then again even if our EBITDA is low our net income isn't great. Even with the great results we had lately we'll still close in red. Meaning a new loss which will increase our long term debt.
While Bayern in the last 20years or more every single year had money to spare from their revenue. Simply saying they're in green every year and by doing so they can put money away to use whenever they want. Without asking share holders for money to actually have a "cash flow".
So in the end what's matter is how much you get at the end of the year. Our EBITDA can be 1.0x but if our annual revenue is still -12,5m how can things inprove?
I mean unless we sell every good player we have and pick 9 youth academy players lowering our wages total and getting hundreds milion of euro sorting out our debts and increasing our revenue results how can the situation in the short-mid term get better?
If i were an investor i woudn't do so in Juventus. Because... yes we're getting better but we'll hit a limit due to the league,sponsorships and merchandise. Unless we start winning champions league year in and year out like we win Serie A we will never reach some numbers as Spanish/Bayern or BPL clubs. Because we're in Italy, because the stadium is smaller so the only way to increase our stadium revenue is increasing the price of tickets , the merchandise in Italy is impossible to raise as they sell lot of counterfeit while outside results are not good either.
So in the end if i were to invest my money i would do so in Bayern or in BPL clubs. Bayern cause every year they make profits and BPL clubs because of merchandise and tv money deal.
Sadly as i see it unless we get some super rich mecenate/sponsor our revenues won't increase that much in the future unless we'll be perm at least in semi-finals of champions league.
In my wet dreams our situation would reach the likes of Real,Barca,United or Bayern only if we get a sponsor from the likes of Bill Gates. I mean today Bill Gates reveal himself as a Juventus fan and decide to sponsor our shirt with Microsoft offering us 100m/year simply because he is the richest man on Earth and can do so and pay 30m/year to name our stadium as Microsoft Arena/stadium whatever....
Else i don't see a future where we can be on the level of the teams i quoted above.
Merchandise is the zone more unexplored in our revenue. Saying we're doing crap with it.
I know because in Italy they looked at their revenue and they earn money every year since 199x.
That's why i don't understand those economy stuff. I mean you can tell me EBITDA is greater than or our COPEX is lower than Bayern. But in the end the over all truth is that Bayen since 20years is saving up money while we don't or at best can make a plus/minus 0
So they can wake up a morning and decide they can spend 70m just like that without installements to buy 2 players without selling anyone or freeing some wages
That's why i don't understand those economy stuff. I mean you can tell me EBITDA is greater than or our COPEX is lower than Bayern. But in the end the over all truth is that Bayen since 20years is saving up money while we don't or at best can make a plus/minus 0
So they can wake up a morning and decide they can spend 70m just like that without installements to buy 2 players without selling anyone or freeing some wages
The depreciation level at Bayern is very important, cos here u can directly affect the P+L. Bayern dont operate to make as much profits as possible, but a principle is to make a profit every single year. Ideally the profit is relatively low to not give so much money through taxes to government.
The other direct influence of P+L r the wages and the ratio turnover/wages has always been stable at the 40% mark.
Its practical to have the cash reserves lying around and to be able to be proactive in the market increasing the expenditure and influencing the P+L.
The other direct influence of P+L r the wages and the ratio turnover/wages has always been stable at the 40% mark.
Its practical to have the cash reserves lying around and to be able to be proactive in the market increasing the expenditure and influencing the P+L.
We've met him a couple of times in Berlin during the CL final, then on the matchday he wrote on WhatsApp that he managed to get a ticket, i asked for how much and he never responded. Never heard from him again. 
@Emmet @Luca @Rami
@Emmet @Luca @Rami
maybe he's still in Berlin? Wondering around Alexanderplatz looking for us
A few thing:
I would never invest in a soccer club period other than a thematic investment on the value of sports. The requirement to win and be competitive very little free cash available after player salaries and transfer fees. I would not ever expect a distribution such as a dividend.
As for your questions:
Net Income vs. EBITDA vs. Cash Flow
-LTM from December 2015, Net Income was 40 million compared to 110MM in EBITDA.
-For the full year of 2015 (June), Net Income was ~2 compared to 80MM in EBITDA.
-Net income isn't a very good metric because it the result of accounting and involves a lot of spreading of costs, particularly player investment.
-Even if we had a net income shortfall, it doesn't mean our debt would increase. For example - here is a hypothetical:
A team spends 100MM over 2 year investing in players, and in the third spends 20. Depreciation in year 3 would be higher than investment. The team may lose -5MM on an accounting basis, but on a FCF basis could be generating 20MM.
-on a Free Cash Flow basis, which is most important: We generated about 20MM in 2015, and 30MM LTM, which isn't bad. Bayern doesn't release figures, but I'd be shocked if it were much higher, considering tax is the same, EBITDA is close, interest is 2MM higher at Juventus, and Bayern spends more on player transfers each year.
Why is the Debt to EBITDA figure relevant
- Well in the case of Juventus, other drains after EBITDA are negligible other than player outlays.
- Free cash is very important though and if we were investing too much in players, we'd be burning cash.
- Fortunately for Juventus, we generated 32 million in cash, last twelve months, and used 17 million to pay down debt.
Selling Academy Players
As I said, our cash flow is healthy and our debt load is fine. Debt isn't bad, it is a cheaper source of capital than equity especially in a low interest rate environment. Debt just needs to suit the company, and which at <2.0x EBITDA is more than appropriate.
Serie A vs. other Leagues
I don't disagree that EPL teams are a threat. That being said we're seeing potential Chinese investment in Milan, which could help improve those teams and make Serie A more competitive with respect to TV right increases. That being said the Bundesliga isn't much better from a international appeal perspective. It is a fine league, but it is a Bayern league, and even though the teams are generally in better shape financially, that doesn't necessarily mean more international appeal. It is something that Serie A needs to work-out.
The future of Juventus:
Our financial growth says that that we can match those teams because the team is growing its international appeal again. That being said, it would be better in the long run if Serie A got some much needed investment soon.
I would never invest in a soccer club period other than a thematic investment on the value of sports. The requirement to win and be competitive very little free cash available after player salaries and transfer fees. I would not ever expect a distribution such as a dividend.
As for your questions:
Net Income vs. EBITDA vs. Cash Flow
-LTM from December 2015, Net Income was 40 million compared to 110MM in EBITDA.
-For the full year of 2015 (June), Net Income was ~2 compared to 80MM in EBITDA.
-Net income isn't a very good metric because it the result of accounting and involves a lot of spreading of costs, particularly player investment.
-Even if we had a net income shortfall, it doesn't mean our debt would increase. For example - here is a hypothetical:
A team spends 100MM over 2 year investing in players, and in the third spends 20. Depreciation in year 3 would be higher than investment. The team may lose -5MM on an accounting basis, but on a FCF basis could be generating 20MM.
-on a Free Cash Flow basis, which is most important: We generated about 20MM in 2015, and 30MM LTM, which isn't bad. Bayern doesn't release figures, but I'd be shocked if it were much higher, considering tax is the same, EBITDA is close, interest is 2MM higher at Juventus, and Bayern spends more on player transfers each year.
Why is the Debt to EBITDA figure relevant
- Well in the case of Juventus, other drains after EBITDA are negligible other than player outlays.
- Free cash is very important though and if we were investing too much in players, we'd be burning cash.
- Fortunately for Juventus, we generated 32 million in cash, last twelve months, and used 17 million to pay down debt.
Selling Academy Players
As I said, our cash flow is healthy and our debt load is fine. Debt isn't bad, it is a cheaper source of capital than equity especially in a low interest rate environment. Debt just needs to suit the company, and which at <2.0x EBITDA is more than appropriate.
Serie A vs. other Leagues
I don't disagree that EPL teams are a threat. That being said we're seeing potential Chinese investment in Milan, which could help improve those teams and make Serie A more competitive with respect to TV right increases. That being said the Bundesliga isn't much better from a international appeal perspective. It is a fine league, but it is a Bayern league, and even though the teams are generally in better shape financially, that doesn't necessarily mean more international appeal. It is something that Serie A needs to work-out.
The future of Juventus:
Our financial growth says that that we can match those teams because the team is growing its international appeal again. That being said, it would be better in the long run if Serie A got some much needed investment soon.
That's the big different.
Let's say Bayern want Pjanic and Juventus too. Both goes to Roma for the player but while Bayern can pay whatever they want you to while we have to makes installements or count the cents to see if we can afford or not.
While Bayern management can simply tell 38m? ok there. Miralem wanna join us for 5m net income/year? yes? fine deal done. Over ! Time taken? 10mins. For the same thing would require a month or 2. Since we have to deal with banks.
Like Nainggolan before he joined Roma in that winter... the deal was already done for Juventus but we missed bank guarantees while Roma at that time was owned by Unicredit (a bank ndr) and even though everything was done with Cagliari and Nainggolan himself we lost the player.
Let's say Bayern want Pjanic and Juventus too. Both goes to Roma for the player but while Bayern can pay whatever they want you to while we have to makes installements or count the cents to see if we can afford or not.
While Bayern management can simply tell 38m? ok there. Miralem wanna join us for 5m net income/year? yes? fine deal done. Over ! Time taken? 10mins. For the same thing would require a month or 2. Since we have to deal with banks.
Like Nainggolan before he joined Roma in that winter... the deal was already done for Juventus but we missed bank guarantees while Roma at that time was owned by Unicredit (a bank ndr) and even though everything was done with Cagliari and Nainggolan himself we lost the player.
This is one thing that Bayern do have - even though net income isn't massive (it's highest level since 2010 was 23.8 million, which Juventus actually surpassed in the last 12 months trailing period. ), Bayern has nearly 100 million in cash on the balance sheet, which makes it easier to beat some teams in bidding through being able to offer a payment at once because of the liquidity. That being said - teams with healthy credit profiles (like Juventus) can tap their credit facilities if they really need it.
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That is somewhat true, but in practice if Juventus really wanted to win a bidding war, they could use credit facilities. Given Juventus' low cost of debt, and reasonable debt load, that would be an option. In this case, assuming it was Bayern vs. Juventus going head to head, both could make it work, it would just be a little bit more burdensome for Juventus. That being said, neither team would pull a Manchester City or PSG, so it would ultimately come down to the will of the player.
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That is somewhat true, but in practice if Juventus really wanted to win a bidding war, they could use credit facilities. Given Juventus' low cost of debt, and reasonable debt load, that would be an option. In this case, assuming it was Bayern vs. Juventus going head to head, both could make it work, it would just be a little bit more burdensome for Juventus. That being said, neither team would pull a Manchester City or PSG, so it would ultimately come down to the will of the player.
thanks for the detailed reply but still what concern me is that hardly we'll ever reach in terms of revenue the likes of Real,Bayern,Barca and so on.
I would invest in sport if Europe has a system like America with wages cap.
What i find incredible is the 80m given yearly to Milan by Infront. Which is fake.
I would invest in sport if Europe has a system like America with wages cap.
What i find incredible is the 80m given yearly to Milan by Infront. Which is fake.
Barcelona & Real are a much different animal. We can close the gap with Bayern. Real and Barcelona take an unbalanced amount of league revenue, and because of the dominance of those teams year in and year out, drive TV deal growth.
It also helps that there is support from every Spanish speaking company, similar to how North America supports the EPL. Neither the Bundesliga or Serie A have that advantage.
You go to Colombia, or Argentina, and the majority of kits with be Real and Barcelona.
And you're totally right - the most financially attractive leagues are those which save owners from themselves and impose a wage cap. That is why MLSE - the group that owns the Leafs, Raptors and TFC in Toronto is more profitable than Real Madrid.
It also helps that there is support from every Spanish speaking company, similar to how North America supports the EPL. Neither the Bundesliga or Serie A have that advantage.
You go to Colombia, or Argentina, and the majority of kits with be Real and Barcelona.
And you're totally right - the most financially attractive leagues are those which save owners from themselves and impose a wage cap. That is why MLSE - the group that owns the Leafs, Raptors and TFC in Toronto is more profitable than Real Madrid.
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