I said a while back I would make a post covering Juventus' finances when the annual report comes out, but that won't be for some time and I felt with all the talk of not 1 but 2 stars coming to Turin this summer I looked into the financial projections of Juventus but most importantly the projected capital expenditure because it will be wages/investments/taxes/running costs that decide what the transfer budget is, and how possible it is to bring in high earning players such as Higuain etc.
There has been a lot of talk about what Juventus will do this summer and I'll admit even I have started to dream of the glory days once again, and with articles such as this one discussing how Juventus' revenue will increase massively(I do have some question marks over the accuracy) I took some time to look into the plans of the club going forward and how those plans will effect the transfer budget not just this season but for years to come.
By far the project with the biggest impact on Juventus finances this summer will be the Continassa redevelopment, now this was the project to redevelop the area surrounding Juventus stadium and move the Juventus HQ and training facilities to this location, but that is not all it will include the construction of spa/housing/Cinema/Hotel and a medical centre. The agreement in place with Turin's city council is that Juventus pay €1 million for a 10 year lease of the site on the grounds that no less than €60 million is invested during this time period. Now it is a massive property that Juventus are getting for next to nothing, so Turin council must be commended for their long term thinking in the age of austerity. Now the plan is of course to invest more (Quick estimate would be closer to €80million) and have the entire site work 7 days a week to bring in additional funding, as is commonly cited by Marotta Real Madrid receive €15 million per year giving stadium tours and the goal is for the site to earn at least that when finished.
How does this have a specific impact on this summer you may ask, well as you can see here the agreement was made in October of last year and the plan is to begin work as soon as possible, so one could speculate this summer. Now for obvious reasons the club will have to pay for a lot of things upfront as is often the case in construction, the biggest cost of course will be down to making the site ready for construction, as the site is basically lying unused filled with old debris, trees and garbage. How much of a budget is being assigned this summer, well its impossible to know until Juve make an announcement but it would appear as if it will be a substantial amount given the considerable debate between Conte and the management of the club over what finances can be made available this summer.
Picture of the planned development
The reason this is of such importance as some would think, why not get a loan? well Juventus have stated on numerous occasions that they do not wish to seek further financing(There is already bank debt of over €100million that only extends to 2023), and the plan for the short term is to only use available cash to cover costs. Now long run this is of huge benefit to the club and will ensure stability but short term it means that barring Juventus making money through selling of players, there may not be much more than €30 million available to spend, and Marotta is unlikely to spend it all on one player, and given his horrible track record on the sale of players I am not overly confident of his ability to sell players for enough money to finance a Higuain type signing and the increased depth Conte wants, and has always been the case depth will take precedence, and this could be the reason that rumored targets have moved from Sanchez etc to Diamanti
So basically as Juventus will be fronting most of the cash needed for this development and the plan is to finish construction as quickly as possible in order to be able to quickly generate additional revenue the entire €60-80 million may be spent over the next 2 years, meaning that the transfer budget will be taking a hit by that much over the next 3 seasons. So creates a situation financially that will take immense cunning to resolve, if we are looking to make purchases and split the cost over 2-3 years it creates a very tight squeeze on the development budget and wage costs and adds to an already massive player amortization bill, which is not an ideal situation, and should we decide to purchase players in a single upfront installment it means we have a lot less money than predicted to spend. And personally I think this is the reasoning behind the share price taking a hit over the past month.
So not entirely sure if anyone really has an interest in this kind of post, but financial analysis is my job and I was looking through the plans and I figured posting it here would add diversity to the current flood of transfer rumor posts.
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and Juve €13.1; we are stuck to it till 2016. Not to mention the mearge €12m that Jeep pays us till 2015
The Bayern model is the way forward.
