Juventus year net loss widens, outlook negative (3 Viewers)

[ReBeL]

MILAN, Aug 11 (Reuters) - Juventus's net loss widened in the 2005/06 fiscal year, and the troubled Italian club said on Friday it would be hurt this year by possible fallout from a match-fixing scandal.

The Turin club, which has had to sell several top players after being demoted last month, said its net loss deepened to 21 million euros ($26.8 million) in the 12 months to end-June from 3 million the previous fiscal year.

Juventus, controlled by the Agnelli family, was demoted last month from the top Serie A league and stripped of its titles from the last two seasons for seeking unfair advantage in the appointment of referees.

Its revenues rose 9.7 percent to 251.5 million euros for the year. Fourth-quarter revenues slumped by almost 23 million euros to 40.3 million euros.

Part of the loss stemmed from Juventus's failure to get its championship bonus, the club said.

Italy's sports undersecretary of state, Giovanni Lolli, said the government was considering ordering a delisting of Juventus, the Finanza & Mercati business newspaper reported on Friday.

Shareholders would be compensated with bonds, the paper said.

Reuters

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I think the delisting will be a good solution now for our club giving it back to its original owners, Agnelli family...

 

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[ReBeL]

Juventus FY net loss widens to 21.6 mln eur on losses from player disposals


Revenues rose 9.7 pct to 251 mln eur, supported by higher UEFA rights, the sale to Mediaset SpA of an option to buy 2009-2010 viewing rights, and the sale to state-broadcaster RAI of rights on its images archive, it said.

Operating costs rose 11.3 pct to 204.3 mln eur and gross operating margin reached 47.3 mln eur, against 45.7 mln a year earlier, it said.

Total write-downs rose to 13.1 mln eur from 5.4 mln, and included a 3.5 mln write-down on the sale of Lilian Thuram and one of 8.6 mln on the sale of Patrick Vieira, it said.

Net proceeds from players' management fell to 2 mln eur from 16.8 mln due to player disposals, it said.

Looking ahead, Juventus said the outcome of current judiciary proceedings remains uncertain, making it difficult to give precise forecasts on their impact, which however should be significant.

If the relegation to second division is confirmed, results will be impacted by the renegotiation of some contracts and by the loss for two seasons of UEFA Cup revenues, it said.

Net debt rose to 29.9 mln eur end-June from 2.7 mln a year earlier.

http://www.sharewatch.com/story.php?storynumber=183566

 

[AbuGadanzieri]

I think the delisting will be a good solution now for our club giving it back to its original owners, Agnelli family...

wrong

my brother told me delisting will make stock holders have bonds in the place of stocks and will raise the debt and raise the gearing ratio and lead to bad credit worthyness and higher borrowing rate and difficult access to debt financing

 

[baggio]

That's right.

 

[Paolo Sosa]

i don't think they took into consideration the player sell

 

[C4ISR]

factor in all the player sales, where r we?

 

[Jun-hide]

Annual income statement is pretty meaningless because these figures depends much on conventions. Without going into details, to explain in simple terms, the accounting problems occur because the date you record the transaction and the actual cash payment differ. And to record and value transactions one has to exert certain judgements as to the possible likely consequences in the future.
Hence these accounting figures are very flexible and in many ways it depends on the preparer of the account.
Of course, over the long run a firm that makes losses consistently will eventually run out cash (like Enron) and will have to recognize these losses in the financial statements. Nonetheless, it is pretty meaningless to frett over these annual figures on its own and one has to see this in conjunction with other events that is happening. Since most our sponsors have agreed to carry on the remainder of their contract so in my view there is no big deal over our losses. There is no doubt in my mind that survival of Juve is pretty safe now and we have overcome the worst-case scenario.
Hopefully we can get a competitive squad pretty soon so that we will be playing in CL in near time. Since I do not own a share in Juve, I don't really give a shit how much they earn or not, other than the fact that it gives us better chance of competiting in long run. .
I really do think next year will be the key. Didnt see the match yesterday but just looking at the players that participate I can't imagine that team competiting for places in CL. It is at best UEFA team. Nice to see Paro gets his chance. I have seen him eversince he was kid playing for Italian U19, and I always thought he had a sweet right foot a la D'agostino. I hope he doesnt follow the path of former Roma prodigy though.

 

[Jun-hide]

i don't think they took into consideration the player sell

I am almost certain they have done that as well. When players gets transfered to certain teams, the cost of their transfer is not written off immediately (this probably prohibited by convention because teams will use transfer to dodge tax payments). Suppose that Thuram moved to Juve for 24m sterling pounds, then Juve will allocate the cost of transfer over the years, because the value the transfer brings to the club does not occur in the year transfer occured but throughout the time players stay with the team. This is called the matching principle, whereby you allocate cost to the period where benefit of transaction occurs. The exact method of allocation though depends on the preparer of account. In the case of Thuram's sale, Juve paid unrealistic ammount of transfer fee over the years, using valuation model which extrapolated unsustainable growth in revenues during the late 90s to later periods, hence I presume we had to write-off significant amount of cash.
As for Viera, we received nearly 7m lower than the amount we paid for so we also have to recognize these losses.

 

[- vOnAm -]

All are sales are not cash anyways....most if not all of our transfers are paid through a three year period.

 

[white_rabbit]

wrong

my brother told me delisting will make stock holders have bonds in the place of stocks and will raise the debt and raise the gearing ratio and lead to bad credit worthyness and higher borrowing rate and difficult access to debt financing

totaly agree

i think the net loss calculated before Zlatan's sell so it should change dramatically as his wages wernt low and his selling profit is quite good almost 10m euros.

so the number should go down to somewere around 10-12m

 

[serfaraaz]

JUVENTUS REVEAL FURTHER LOSSES
Juventus have published their end-of-year results, which show an overall operating loss of 21.6million euros (£14.5million).

That comes on the back of a loss of three million euros (£2million) at the end of the previous financial year.

Despite an increase of 9.7% in revenues, the club - who were recently relegated to Serie B for their part in a match-fixing scandal - were unable to balance the books, with an 11.3% increase in operating expenses in the year ending June 30, 2006.

Several players have left the club, including Zlatan Ibrahimovic, Emerson, Fabio Cannavaro, Lilian Thuram, Patrick Vieira and Gianluca Zambrotta, and those departures will boost the next set of financial figures.

However, the lack of Champions League football will certainly have an adverse impact as last season the club earned 22million euros (£14million) for reaching the quarter-finals.

The continuing decline in fans coming to the stadium will also dig further into the reserves.

The latest figures reveal a drop in gate revenue of 6.164million euros (£4.13million) in comparison with the previous financial year.

It remains to be seen whether the club will this year be able to move from their unpopular 60,000-capacity Stadio delle Alpi to the 24,000-seat Olympic Stadium as previously planned.

Despite the financial restrictions, the club will continue to invest in new training facilities in Vinovo.

http://www.sportinglife.com/footbal...OCCER_Ita-Juventus_Finances.html&TEAMHD=italy

 

[AbuGadanzieri]

My brother told me in financial terms you not only look at the profit & loss statement or the income statement to decide if we are at a disadvantage or not.

Believe it or not sports clubs are some of the few entities in the entertainment and services sector that report their human capital in their financial statements because unlike manufacturing or trading companies, they don't have stocks or inventories. they report the human capital in their balance sheets under the assets section titled "Players Registration Rights". The one thing you need to know about accrual accounting is that when it comes to non-current assets the recording process is not on the basis of market value or realizable value as in the case of current assets but rather on the historical value or book value and although they review their players registration rights periodically and either add appreciation or charge amortisation to keep the book value in line with the market value still their is difference between those two.

In light of the above, I will give you a theoretical example.

Let’s say that the registration rights of Cannavaro before his sale was stated in Juve's books at 10 million and his market value (his transfer price) was actually at 5 million. Many reasons can be behind the difference between both values. Either Juve esteem Cannavaro highly for his leadership capabilities or for his strategic value to the club or simply the did a bad job negotiating his transfer price.

The accounting entry when he is sold should be something like this:

Debit: Cash and/or Accounts Receivable & Debtors 5,000,000 (depending on the nature of the sale-mostly a down payment and the rest are on credit)

Debit: Capital loss on the sale of “Player Registration Rights” 5,000,000

Credit: Asset: Player Registration Rights 10,000,000

You can notice from the above entry that the difference between the amount we were keeping in our books and the amount that we sold Cannavaro for (5 M) is recorded as Capital Loss and it reflects on our Income Statement, thus lowering our bottom line in this case negative 21m.

All in all, in this case the loss doesn’t represent Juve’s real profitability because we were engaged in an abnormal practice through selling many of our capital assets that were by default not depreciated like any normal fixed assets and causing us to charge to our income statement a lot of the expenses we have accumulating over the years in our balance sheet as capital expenditure and eventually charging a loss that was accumulated through out the years and was supposed to be expensed in a phased manner over many years over one period causing us to have a hideous looking bottom line. All of that doesn’t mean that we have lost that amount of cash in the current period and in also doesn’t affect our ability to generate free cash flow. On the contrary, actually some companies resort to a similar technique called the “big bath smoothing” where they know that they will have a bad so they say we might as well charge expenses relating to future periods in the current period because they are having a bad year anyways and end up with better results in the coming periods. What I am saying is that Juve have already charged many of the expenses stuck in their balance sheet to their income statement and they will end up with fewer assets to write off in the coming periods, thus fewer expenses.

There is also another point that might have contributed to our negative bottom line but this one I am not sure of its validity. I will run it by you anyways, we had our whole board of directors resigning and I am sure that we had to compensate some of them with end of service payment (I am not sure of the Italian labour law, but we also might have paid our departing players a similar amount too). As you know, we wont be experiencing this type of exodus in a given period frequently and I would categorize this item as a one off.

Anyways this is the opinion that I share with my brother and I wanted to let you in on that.

What you think

Please discuss

 

[sateeh]

daaaam i hated the accounting classes

anyway wat i think is that on a financial point of view we will be alrite for years to come and although that we will have a loss for a while, but we will be alrite on the long run.Most of the management r personnel from the business world and thats great for our position.

Dont worry abt the statements and the stocks, we will be ok imo.We still have our sponsorships and this is a big push for us. Day by day we will have better luck and am thinking we will get some injections by making some tours for the US or even mybe Australia.

Trust me guys we will be alrite

 

[AbuGadanzieri]

Juve will be ok

 

[Jun-hide]

Good post Abu,

Pretty much spot on everything you said. As you have mentioned accounting figures are prepared on the basis of matching and accruals principle because the receipt of cash differs from the normal business operating cycle of the firm.
And many of the book value of companies due to not represent true profitability of the firm because of accountants exercising "due caution" in preparing these accounts.

In financial valuation terms, what matter is the cash flow of the business entity, discounted at an appropriate risk. And these accounting profit/loss figure doesnt really matter too much. Obviously, in the long-run, companies cannot consistently loose money and hence there will be covergence between the accounting figure and the actual profitability of the firm, but as you have mentioned correctly in short run at least there are considerable deviations because companies like to smooth their income figures.
Hence, there are certain metrics such as EVA that tries to decode some of these accounting figures and try to represent true profitability of the firm (For those interested Stewart et alearned hundreds millions for their effort ).

I personally feel, now that our contractors decided to continue business relationship, in the long run, the trial may not be that harmful at al. I certainly have been impressed by the new management's effort towards presenting this club to be fan-friendly and more open. There is no doubt that the profitablity of sporting venture depends critically on its success in the field but in order to maximize our club's brand image and value I always believed we needed to be more open towards the public than where Giraudo, Moggi was taking us.
Moreover, as a fan I wanted the club to have that mystique back which went missing last couple of years.
Juve wasnt even in top 3 in Italia when I start supporting the team, but I felt that there was something special in our shirt with some of the most graceful talents on the pitch. Milan did all the winning but Juve was always the most entertaining team to watch.
Anyway I certainly hope that nonsense stadium rebuilding plan is scrapped now.
There is no doubt in my mind Giraudo wanted Juve to become a "luxury special club" with the new stadium where only the rich could afford the put their ass in the seats. I am no poor, but I always felt that soccer was a sport for everyday men, and hence it should be open to them.

 

[ZAF3000]

I heard that after Zlatan moved to Inter for 24.8m euro Juve managed to fix most of the financial damages.. Is that true?

 

[Paolo Sosa]

wow guys im amazed to be honest

 

[mephiztopheles]

damn, i cant understand shit of what guys have written, y did i have to choose anthropolgy????


P.d: In english what u guys have written, what does it mean?

 

[Anverch]

so where are we guys now, i think by the end of next season when we are back in CL will fix all teh loss.

 

[swag]

so where are we guys now, i think by the end of next season when we are back in CL will fix all teh loss.

Just how are we going to qualify in the top 4 of Serie A this season while in Serie B? :confused2