The Financial Situation (114 Viewers)
- Thread starter ReBeL
- Start date
It's not detrimental or anything. As you said, it was for depth. That being said, it is bad compared to the Buffon deal due to the value that Buffon has added over his time here. That transfer fee is basically fully depreciated.
The economics of the deal are definitely poor though. Juve takes a nominal loss on the deal, and has to wait two years for payment.
Is it worth it? Since the value of a depth player is hard to measure, it really comes down to your assessment of Peluso's value and how much revenue he helped drive. I tend to lean towards there being better options at that price point, but that's subjective.
The economics of the deal are definitely poor though. Juve takes a nominal loss on the deal, and has to wait two years for payment.
Is it worth it? Since the value of a depth player is hard to measure, it really comes down to your assessment of Peluso's value and how much revenue he helped drive. I tend to lean towards there being better options at that price point, but that's subjective.
Almost every deal will be a bad one compared to Buffon's. The guy was brought for a hefty price back in the days and was pillar for over a decade, and he fully justified the role attributed to him, while we all knew what role Peluso was going to get. Hardly anyone expected a world beater for 5m. The important thing is that we will get the invested sum back, almost all of it and considering the depreciation, the net effect will be a positive one in our books.
False.
Actually the sale of Peluso gave us a positive exercise of 1M, as reported by juventus.com. Probably you're not good in economy, but when judging an investment, you don't have to analyse just the amount of money spent and received, but also how much the service lasted and his salary fee. We had payed Peluso 5.5M, he had a salary of 0.8M and he (barely) played for us 18 months (2 seasons then), being useful sometimes and never excelling (but we didn't buy him for it, did we?); that means that, in our books, he costed around 3.5M PER YEAR, and in this year, by selling him to a little club for 4.5M (masterpiece) gives us a profit of 1M.
And this is the same reason for whom the sale of Vucinic generated a positive exercise of 2.6M, as reported by juventus.com. Overall, in our books, he generated a profit for what he's given throughout the years. As well as the sale of Matri last year, or Giaccherini's.
And you don't see often this profits in football in a big clubs, dude. Not really often.
And yeah, Marotta is a genius.
Actually the sale of Peluso gave us a positive exercise of 1M, as reported by juventus.com. Probably you're not good in economy, but when judging an investment, you don't have to analyse just the amount of money spent and received, but also how much the service lasted and his salary fee. We had payed Peluso 5.5M, he had a salary of 0.8M and he (barely) played for us 18 months (2 seasons then), being useful sometimes and never excelling (but we didn't buy him for it, did we?); that means that, in our books, he costed around 3.5M PER YEAR, and in this year, by selling him to a little club for 4.5M (masterpiece) gives us a profit of 1M.
And this is the same reason for whom the sale of Vucinic generated a positive exercise of 2.6M, as reported by juventus.com. Overall, in our books, he generated a profit for what he's given throughout the years. As well as the sale of Matri last year, or Giaccherini's.
And you don't see often this profits in football in a big clubs, dude. Not really often.
And yeah, Marotta is a genius.
Let me repeat this. Peluso's sale for 4.5M was related to Marrone's purchase for 5M. It is really an exchange practically. We are exchanging full Peluso for 1/2 Marrone back - and we don't necessarily wanted Marrone back.
Marrone's half was sold for 4M to Sassuolo 1 year ago (while we bought Berardi's 1/2 half for 4M - the exchange). He barely played for them this season.
Now, 1 year later, after he goes to Sassuolo and barely plays for them, he's valued 10M, so we buy his half for 5M???? Of course this is a maneouvre by Marotta to increase Marrone's value AND pretend to make some profit on a mediocre player like Peluso.
The fact is: to get rid of Peluso, Marotta had to concede to get Marrone back. Something he probably didn't want to. If Marrone's value was 8M 1 year ago - how much would be 1 year later, after no playing, and when playing, not impressing at all at Sassuolo (to the point they don't want to keep him)? 5/6M I'd say.
If Marrone's value is 5M, and his half is equal Peluso's value, so Peluso was actually "sold" by 2.5M. Actually for 2M, since Marchisio's half was 0.5M more expensive.
So we really "sold" Peluso for 2M. That's his value. Don't see no profit here. The "positive exercise" is just Marotta playing with numbers.
Marrone's half was sold for 4M to Sassuolo 1 year ago (while we bought Berardi's 1/2 half for 4M - the exchange). He barely played for them this season.
Now, 1 year later, after he goes to Sassuolo and barely plays for them, he's valued 10M, so we buy his half for 5M???? Of course this is a maneouvre by Marotta to increase Marrone's value AND pretend to make some profit on a mediocre player like Peluso.
The fact is: to get rid of Peluso, Marotta had to concede to get Marrone back. Something he probably didn't want to. If Marrone's value was 8M 1 year ago - how much would be 1 year later, after no playing, and when playing, not impressing at all at Sassuolo (to the point they don't want to keep him)? 5/6M I'd say.
If Marrone's value is 5M, and his half is equal Peluso's value, so Peluso was actually "sold" by 2.5M. Actually for 2M, since Marchisio's half was 0.5M more expensive.
So we really "sold" Peluso for 2M. That's his value. Don't see no profit here. The "positive exercise" is just Marotta playing with numbers.
I did not talk at all about the Marrone stuff. Peluso was valued 4.5M.
If you want me to talk about Marrone, I'll tell you that probably the price was already decided last year, given the good relationships between Juve and Sassuolo, especially with Marotta.
That's what also Berardi, Zaza, Chibsah, and Ziegler affairs were all about. Trust and making a favour to a little-team ally.
That's we reason we did not treat at all with the price. The agreement probably was "You valorize Marrone for this year, playing him as a starter, and next year we rebuy it for this amount", and that happened.
Unfortunately Marrone season was conditioned by injuries, but a word is a word and you can't lose a useful trusted team for a tiny amount of money, I guess.
If you want me to talk about Marrone, I'll tell you that probably the price was already decided last year, given the good relationships between Juve and Sassuolo, especially with Marotta.
That's what also Berardi, Zaza, Chibsah, and Ziegler affairs were all about. Trust and making a favour to a little-team ally.
That's we reason we did not treat at all with the price. The agreement probably was "You valorize Marrone for this year, playing him as a starter, and next year we rebuy it for this amount", and that happened.
Unfortunately Marrone season was conditioned by injuries, but a word is a word and you can't lose a useful trusted team for a tiny amount of money, I guess.
Yeah you're mistaken. That one million profit is the gain over the carrying value (book value - accumulated amortization.) That is how gains and losses are calculated in financial statements . That being said, Accounting is limited and isn't the best way of measuring true profit (but that's a whole other story). As is obvious, Juventus takes an absolute dollar loss on the players rights, while paying a salary for the year he was under juventus ownership. Accounting rules simply spread the cost of the rights over the life of the contract, reducing the accounting value over the life of the contract as time passes. When he is sold to sassuolo the price received over the cost less accumulated amortization is recognized as a gain on the income statement. Wages have ABSOLUTELY no bearing on the profit reported in the financial statements. Wages and player rights are entirely separate. Wages are expensed as incurred.
As for being good in 'economy', I'd say I'm functional since I am professionally employed and paid by an investment company as an analyst whose sole responsibility is to analyze financial statements and identify investment opportunities. I also have a university degree in finance. But yeah, not financially literate at all...
As for your calculation of the 1 million dollar gain, It is not remotely correct.
For proof of my point see below because frankly I don't want to read anymore condescending rhetoric without substance:
This is from Juventus' 1/2 year report and shows the calculation of gains and losses:
-The first price column is the nominal price that Juventus will receive.
-The "discounted price" column is the price adjusted for the time of payment (ie: discounted by an interest rate for x years).
-The net book value is the historical cost (price paid) less the accumulated depreciation.
-The gain is the discounted price less the net book value.
There's your accounting lesson on the recognition of capital gains and losses...
- - - Updated - - -
I agree. My comments were merely responding to the deal economics not being particularly good in relation to what they paid and the timing of the payments (payments are in three years, not exactly useful for his transfer window) and pointing out the issues with using the Buffon 'loss' as a comparable. Overall though, The total sum of money involved is not large and ultimately Juventus recouped the majority of the investment while clearing up wage capacity - it's a net positive (the initial outlay is a sunk cost). The gain presented by Juventus on it's website though is simply accounting, it really isn't an accurate depiction of the underlying economics. That's why investors look at cash flow over accounting net income when assessing the economics of a deal/investment opportunity.
As for being good in 'economy', I'd say I'm functional since I am professionally employed and paid by an investment company as an analyst whose sole responsibility is to analyze financial statements and identify investment opportunities. I also have a university degree in finance. But yeah, not financially literate at all...
As for your calculation of the 1 million dollar gain, It is not remotely correct.
For proof of my point see below because frankly I don't want to read anymore condescending rhetoric without substance:
This is from Juventus' 1/2 year report and shows the calculation of gains and losses:
-The first price column is the nominal price that Juventus will receive.
-The "discounted price" column is the price adjusted for the time of payment (ie: discounted by an interest rate for x years).
-The net book value is the historical cost (price paid) less the accumulated depreciation.
-The gain is the discounted price less the net book value.
There's your accounting lesson on the recognition of capital gains and losses...
- - - Updated - - -
I agree. My comments were merely responding to the deal economics not being particularly good in relation to what they paid and the timing of the payments (payments are in three years, not exactly useful for his transfer window) and pointing out the issues with using the Buffon 'loss' as a comparable. Overall though, The total sum of money involved is not large and ultimately Juventus recouped the majority of the investment while clearing up wage capacity - it's a net positive (the initial outlay is a sunk cost). The gain presented by Juventus on it's website though is simply accounting, it really isn't an accurate depiction of the underlying economics. That's why investors look at cash flow over accounting net income when assessing the economics of a deal/investment opportunity.
Yeah you're mistaken. That one million profit is the gain over the carrying value (book value - accumulated amortization.) That is how gains and losses are calculated in financial statements . That being said, Accounting is limited and isn't the best way of measuring true profit (but that's a whole other story). As is obvious, Juventus takes an absolute dollar loss on the players rights, while paying a salary for the year he was under juventus ownership. Accounting rules simply spread the cost of the rights over the life of the contract, reducing the accounting value over the life of the contract as time passes. When he is sold to sassuolo the price received over the cost less accumulated amortization is recognized as a gain on the income statement. Wages have ABSOLUTELY no bearing on the profit reported in the financial statements. Wages and player rights are entirely separate. Wages are expensed as incurred.
As for being good in 'economy', I'd say I'm functional since I am professionally employed and paid by an investment company as an analyst whose sole responsibility is to analyze financial statements and identify investment opportunities. I also have a university degree in finance. But yeah, not financially literate at all...
As for your calculation of the 1 million dollar gain, It is not remotely correct.
For proof of my point see below because frankly I don't want to read anymore condescending rhetoric without substance:
This is from Juventus' 1/2 year report and shows the calculation of gains and losses:
-The first price column is the nominal price that Juventus will receive.
-The "discounted price" column is the price adjusted for the time of payment (ie: discounted by an interest rate for x years).
-The net book value is the historical cost (price paid) less the accumulated depreciation.
-The gain is the discounted price less the net book value.
There's your accounting lesson on the recognition of capital gains and losses...
- - - Updated - - -
I agree. My comments were merely responding to the deal economics not being particularly good in relation to what they paid and the timing of the payments (payments are in three years, not exactly useful for his transfer window) and pointing out the issues with using the Buffon 'loss' as a comparable. Overall though, The total sum of money involved is not large and ultimately Juventus recouped the majority of the investment while clearing up wage capacity - it's a net positive (the initial outlay is a sunk cost). The gain presented by Juventus on it's website though is simply accounting, it really isn't an accurate depiction of the underlying economics. That's why investors look at cash flow over accounting net income when assessing the economics of a deal/investment opportunity.
As for being good in 'economy', I'd say I'm functional since I am professionally employed and paid by an investment company as an analyst whose sole responsibility is to analyze financial statements and identify investment opportunities. I also have a university degree in finance. But yeah, not financially literate at all...
As for your calculation of the 1 million dollar gain, It is not remotely correct.
For proof of my point see below because frankly I don't want to read anymore condescending rhetoric without substance:
This is from Juventus' 1/2 year report and shows the calculation of gains and losses:
-The first price column is the nominal price that Juventus will receive.
-The "discounted price" column is the price adjusted for the time of payment (ie: discounted by an interest rate for x years).
-The net book value is the historical cost (price paid) less the accumulated depreciation.
-The gain is the discounted price less the net book value.
There's your accounting lesson on the recognition of capital gains and losses...
- - - Updated - - -
I agree. My comments were merely responding to the deal economics not being particularly good in relation to what they paid and the timing of the payments (payments are in three years, not exactly useful for his transfer window) and pointing out the issues with using the Buffon 'loss' as a comparable. Overall though, The total sum of money involved is not large and ultimately Juventus recouped the majority of the investment while clearing up wage capacity - it's a net positive (the initial outlay is a sunk cost). The gain presented by Juventus on it's website though is simply accounting, it really isn't an accurate depiction of the underlying economics. That's why investors look at cash flow over accounting net income when assessing the economics of a deal/investment opportunity.
What's your intake on our current situation, regarding our possible summer expenditure? I have been rather optimistic, and looking at our previous investments in personnel (from the past 3 seasons), was inclined to believe that we would have similar transfer campaign, when approximately 60-70m was invested per year; net expenditure was around 40m, after taking into account price and carrying value of disposed players.
I agree with you over the cash flow statement, as it is without a doubt the best way to see inflow and outflow of the funds, as every revenue or expense doesn't immediately mean that these will be collected within a business year; in majority of situations there is time discrepancy. Unfortunately, as you are probably aware, we have been recording negative cash flow for the past few seasons and these heavy investments into personnel at one point will have to be halted, unless we would decide to increase net debt further, like we have been doing steadily for the past few years, but our sources of income might not be sufficient for us to support further increase of debt. Quite a big gap between current assets and current liabilities pretty much explains our continuous rise of debt. Certainly wouldn't want that Juventus becomes heavily burdened with interests, like United were few years ago, when they had to settle iirc 80m of interests, on top of the original loan.
Yeah you're mistaken. That one million profit is the gain over the carrying value (book value - accumulated amortization.) That is how gains and losses are calculated in financial statements . That being said, Accounting is limited and isn't the best way of measuring true profit (but that's a whole other story). As is obvious, Juventus takes an absolute dollar loss on the players rights, while paying a salary for the year he was under juventus ownership. Accounting rules simply spread the cost of the rights over the life of the contract, reducing the accounting value over the life of the contract as time passes. When he is sold to sassuolo the price received over the cost less accumulated amortization is recognized as a gain on the income statement. Wages have ABSOLUTELY no bearing on the profit reported in the financial statements. Wages and player rights are entirely separate. Wages are expensed as incurred.
As for being good in 'economy', I'd say I'm functional since I am professionally employed and paid by an investment company as an analyst whose sole responsibility is to analyze financial statements and identify investment opportunities. I also have a university degree in finance. But yeah, not financially literate at all...
As for your calculation of the 1 million dollar gain, It is not remotely correct.
For proof of my point see below because frankly I don't want to read anymore condescending rhetoric without substance:
This is from Juventus' 1/2 year report and shows the calculation of gains and losses:
-The first price column is the nominal price that Juventus will receive.
-The "discounted price" column is the price adjusted for the time of payment (ie: discounted by an interest rate for x years).
-The net book value is the historical cost (price paid) less the accumulated depreciation.
-The gain is the discounted price less the net book value.
There's your accounting lesson on the recognition of capital gains and losses...
As for being good in 'economy', I'd say I'm functional since I am professionally employed and paid by an investment company as an analyst whose sole responsibility is to analyze financial statements and identify investment opportunities. I also have a university degree in finance. But yeah, not financially literate at all...
As for your calculation of the 1 million dollar gain, It is not remotely correct.
For proof of my point see below because frankly I don't want to read anymore condescending rhetoric without substance:
This is from Juventus' 1/2 year report and shows the calculation of gains and losses:
-The first price column is the nominal price that Juventus will receive.
-The "discounted price" column is the price adjusted for the time of payment (ie: discounted by an interest rate for x years).
-The net book value is the historical cost (price paid) less the accumulated depreciation.
-The gain is the discounted price less the net book value.
There's your accounting lesson on the recognition of capital gains and losses...
Dear "employed that has a degree in finance" (and probably soon I'm having a degree too in ecnonomy and commerce, but this hardly interests you, as your story didn't interest me at all), I didn't mean to offend you at all, it saddens me that you have to took it so seriously, I was just joking while making a point.But you'll have to notice that the bolded part is what I was talking about, and the rest of things you said or 1) don't matter at all
or 2) I didn't even think about. You say we have a loss on the players rights (no shit? 5>4.5) but does it matter at all? You criticize me on the wages story, but I put them just to make it clear that also them have a weight in the money you spend in a year, counted or not, and it's a good way to understand if you've had a good bargain, cause I didn't think you were the "employee with a degree", and bla bla bla.
Then you say "my" calculation (but it's not mine, it's Juventus
, I just reported it) of 1M for Peluso is "wrong" by some way and you put a tabel of last year sales that has nothing to do with him. Some stuff you put just to show you're a well-informed guy that know economics, just cause you felt touched I "doubted" it as a joke.Probably Juventus should hire you as a new accountant. Until now, for years, they've had someone who can't do his work. But with whom, I don't know how... On a normal thing that isn't exactly rocket science, we both agree, and you're arguing with me over the two faces of a different point, just to show you can do your good work. Ah, at this point, congratulations for the degree. I'm too young for that shit.
Dear "employed that has a degree in finance" (and probably soon I'm having a degree too in ecnonomy and commerce, but this hardly interests you, as your story didn't interest me at all), I didn't mean to offend you at all, it saddens me that you have to took it so seriously, I was just joking while making a point.But you'll have to notice that the bolded part is what I was talking about, and the rest of things you said or 1) don't matter at all
or 2) I didn't even think about. You say we have a loss on the players rights (no $#@!? 5>4.5) but does it matter at all? You criticize me on the wages story, but I put them just to make it clear that also them have a weight in the money you spend in a year, counted or not, and it's a good way to understand if you've had a good bargain, cause I didn't think you were the "employee with a degree", and bla bla bla.
Then you say "my" calculation (but it's not mine, it's Juventus
, I just reported it) of 1M for Peluso is "wrong" by some way and you put a tabel of last year sales that has nothing to do with him. Some stuff you put just to show you're a well-informed guy that know economics, just cause you felt touched I "doubted" it as a joke.Probably Juventus should hire you as a new accountant. Until now, for years, they've had someone who can't do his work. But with whom, I don't know how... On a normal thing that isn't exactly rocket science, we both agree, and you're arguing with me over the two faces of a different point, just to show you can do your good work. Ah, at this point, congratulations for the degree. I'm too young for that $#@!.
I'm not arguing with you that the 1 million euro figure you cited is incorrect. As you can see I cited it numerous times. My point is the way you calculated it was incorrect:
You stated that 1 million profit was the 4.5 million price received less (5.5 million/2 yrs + annual wages of 0.8 = ~3.5 cost per year). That's wrong. The way that I illustrated the calculation (as per the "irrelevant table") is correct. The gain reported is on the player rights, not the wages. It's also not an annual figure, it's a gain on an asset.
I also agree that wages are important to consider and I never said they weren't. It does need to be used correctly though. For the Peluso sale, on an accounting profit basis, the deal will lead to a capital gain of 1 million euro for FY2014, which ends June 30/2014. Wages have been paid up to essentially the end of the financial year so the saved wages will not have a material effect on this years financial statement. Next Fiscal Year however, wage expense will be lower by 0.8 million euro all thing being equal.
I don't know why you're ostracizing me for wanting to be financially accurate on the "Financial Situation" thread.
What's your intake on our current situation, regarding our possible summer expenditure? I have been rather optimistic, and looking at our previous investments in personnel (from the past 3 seasons), was inclined to believe that we would have similar transfer campaign, when approximately 60-70m was invested per year; net expenditure was around 40m, after taking into account price and carrying value of disposed players.
I agree with you over the cash flow statement, as it is without a doubt the best way to see inflow and outflow of the funds, as every revenue or expense doesn't immediately mean that these will be collected within a business year; in majority of situations there is time discrepancy. Unfortunately, as you are probably aware, we have been recording negative cash flow for the past few seasons and these heavy investments into personnel at one point will have to be halted, unless we would decide to increase net debt further, like we have been doing steadily for the past few years, but our sources of income might not be sufficient for us to support further increase of debt. Quite a big gap between current assets and current liabilities pretty much explains our continuous rise of debt. Certainly wouldn't want that Juventus becomes heavily burdened with interests, like United were few years ago, when they had to settle iirc 80m of interests, on top of the original loan.
It's pretty clear that Juventus are in a tough financial spot as is most of Serie A. As far as I'm concerned these teams aren't profitable enough to operate with any financial leverage. These businesses are not profitable at all due to irrational competition (every owner wants to win, regardless of whether profitable). This is a big difference from North American sports which implement salary caps and don't have transfer fees. I own the shares of the Madison Square Garden company because the business just prints money but I would never own Juventus shares or even Manchester United shares for that matter because wages account for 60% of revenues or worse. Then again it could be worse... FC Porto pays out 72% of its revenue in wages
The financial prudent thing would be to not spend any money on transfer fees and use the proceeds to pay down debt, but I think we all know that won't happen. This is a crude calculation I put together.
That revenue figure using last 12 month wage structure and last 12 month revenue, so adjust it for any sponsorship agreement changes/ wage increases.
Using those assumptions, they could easily make up that 16 million internally through a few player sales and even better if they go further in the champions league/grow revenues through global expansion. Also, given their interest coverage ratio of ~4.0x, they can technically support more debt. I wouldn't recommend it though. We don't have any money for transfers currently. :sob:, but they'll find a way for sure. Not getting to knockouts for UCL hurt badly for JUVE. I didn't include Sturaro or Peluso in those calculations of because they aren't due for 3 years. Also it is likely that the 40 million outflow due is partially offset by other early payments from customers and delayed payments from Juve to suppliers. That would take a massive deep dive though haha and since I'd never invest in Juve stock its not worth it haha. But as someone who looks at financial statements daily, Juve's are a mess. The earnings quality is awful because of all the accruals. To truly understand it it would take 2-3 weeks of work.
Marotta has done a great job deferring payments for player rights, turning them into in loans, but unfortunately, because the rest of Serie A is struggling, we're allowing other teams to have the same delays. Marotta's best move would be dealing with teams that can settle in cash because as I showed before for Peluso, he managed to delay payment for 2 years when buying from Atalanta only to accept a 3 year delay from Sassuolo lol.