Also, I assume these installments are quite clever if you factor in inflation. Especially in football.
Buy on AliExpress.com
The Financial Situation (64 Viewers)
- Thread starter ReBeL
- Start date
Buy on AliExpress.com
Now, considering we usually make payments spread in 3/4 years, and also receive them like that, we can have an idea of how our budget will be in next years.
This summer is the last installment of most signings of the 11-12 year, when we made a lot of commitments.
11-12 signings (summer 2011)
- Matri: 15.5M x 4 - this year we pay the last installment of roughly 4M for Matri. This get into our 2014 books.
- Vucinic: 15M x 3 - last installment of 5M in 2013.
- Quags: 10.5M x 3 - last installment of 3.5M was in 2013..
- Pepe: 7.5M x 3 - last installment of 2.5M in 2013.
- Motta: 3.5M x 3 - last installment of 1.2M in 2013.
- Licht: 12M x 3 - last installment of 4M in 2013.
- Vidal: 10.5M x 2 - 8M in 2011 + 2.5M in 2012.
- Elia: 9M x 3 - 4.5M + 2.5M + 2.5M in 2013.
- Giaccherini: 6M x 3 - last installment of 2M in 2013.
- Padoin: 5M x 3 - last installment of roughly 1.7M in 2013.
So, from all of our signings of the mercato of 2011, only Matri's last installment was paid this year, of around 4M. The great majority was finished in 2013. That's why our mercato last year was so sober. We were still finishing to pay for 2011 signings. That year we sold Sissoko, paid upfront from PSG. No receivables today from 2011.
This summer is the last installment of most signings of the 11-12 year, when we made a lot of commitments.
11-12 signings (summer 2011)
- Matri: 15.5M x 4 - this year we pay the last installment of roughly 4M for Matri. This get into our 2014 books.
- Vucinic: 15M x 3 - last installment of 5M in 2013.
- Quags: 10.5M x 3 - last installment of 3.5M was in 2013..
- Pepe: 7.5M x 3 - last installment of 2.5M in 2013.
- Motta: 3.5M x 3 - last installment of 1.2M in 2013.
- Licht: 12M x 3 - last installment of 4M in 2013.
- Vidal: 10.5M x 2 - 8M in 2011 + 2.5M in 2012.
- Elia: 9M x 3 - 4.5M + 2.5M + 2.5M in 2013.
- Giaccherini: 6M x 3 - last installment of 2M in 2013.
- Padoin: 5M x 3 - last installment of roughly 1.7M in 2013.
So, from all of our signings of the mercato of 2011, only Matri's last installment was paid this year, of around 4M. The great majority was finished in 2013. That's why our mercato last year was so sober. We were still finishing to pay for 2011 signings. That year we sold Sissoko, paid upfront from PSG. No receivables today from 2011.
2012-13 Mercato (signings from 2012):
- Giovinco co-own finished - 11M x 3 - last installment of 3.6M paid this year, 2014.
- Asamoah co-own 9M x 3 - last installment of 3M paid this year, 2014.
- Isla co-own 9.4M x 3 - last installment of 3.1M paid this year, 2014.
- Caceres 8M - bought outright in 2012.
- Gabbiadini co-own 5.5M x 3 - last installment of 1.8M paid this year, 2014.
- Boakye co-own 4M x 2 - last installment of 2M in 2013.
- Nicola Leali co-own 3.8M x 3 - last installment of 1.2M in 2014.
- Alberto Masi co-own 1M x 2 - last installment of 0.5M in 2013.
- James Troisi co-own 2M x 3 - last installment of 0.6M in 2014.
Sales 2012-13 (2012 mercato):
- Felipe Melo 1.75M loan x 3 - last installment of 0.6M received in 2014.
- Krasic 7M x 2 - last installment of 3.5M received in 2013.
- Immobile co-own with Genoa 4M x 2 - last 2M received in 2013.
- Pasquato co-own with Udinese 1.5M x 3 - last 0.5M received in 2014.
So, from our 2012 mercato, we finished paying for some players this year, 2014. The impact in this year's budget amounts to 13.3M to pay in 2014. 1.1M to receive in 2014.
- - - Updated - - -
So, from 2011 and 2012 mercatos, we had to pay 17.3M this year in installments.
- Giovinco co-own finished - 11M x 3 - last installment of 3.6M paid this year, 2014.
- Asamoah co-own 9M x 3 - last installment of 3M paid this year, 2014.
- Isla co-own 9.4M x 3 - last installment of 3.1M paid this year, 2014.
- Caceres 8M - bought outright in 2012.
- Gabbiadini co-own 5.5M x 3 - last installment of 1.8M paid this year, 2014.
- Boakye co-own 4M x 2 - last installment of 2M in 2013.
- Nicola Leali co-own 3.8M x 3 - last installment of 1.2M in 2014.
- Alberto Masi co-own 1M x 2 - last installment of 0.5M in 2013.
- James Troisi co-own 2M x 3 - last installment of 0.6M in 2014.
Sales 2012-13 (2012 mercato):
- Felipe Melo 1.75M loan x 3 - last installment of 0.6M received in 2014.
- Krasic 7M x 2 - last installment of 3.5M received in 2013.
- Immobile co-own with Genoa 4M x 2 - last 2M received in 2013.
- Pasquato co-own with Udinese 1.5M x 3 - last 0.5M received in 2014.
So, from our 2012 mercato, we finished paying for some players this year, 2014. The impact in this year's budget amounts to 13.3M to pay in 2014. 1.1M to receive in 2014.
- - - Updated - - -
So, from 2011 and 2012 mercatos, we had to pay 17.3M this year in installments.
In the Agnelli letter in the official business rapport, he writes how Juve are slowly becoming healthy club. I believe we've had many expenses over the past years with the stadium and everything. But once the stadium is paid off and we're starting to progress and become more solid in CL we're looking at a makeover in transfer policy?
2013/14 mercato (deals made 1 year ago):
Spending:
- Ogbonna - 13M + 2M bonus (bonus spread through his contract - will consider only 13M) - 13M x 3 - 4.3M in 2014, 4.3M in 2015.
- Asamoah 2nd half co-own - 9M x 3 - 3M installment 2014, 3M installment for 2015.
- Peluso 4.8M x 2 - last installment of 2.4M paid in 2014.
- Tevez 9M + 6M (I'll consider 15M) - 3 installments - 5M in 2014, 5M 2015.
- Zaza co-own 3.5M x 3 - 1.2M installment in 2014, 1.2M in 2015.
- Berardi co-own 4.5M x 5 - 0.9M per year till 2017.
- Rugani co-own 1M x 2 - 0.5M to be paid in 2014.
- Kabashi 0,8M x 2 - 0.4M to be paid in 2014.
Money receiveing:
- Masi - co-own with Ternana - Juve to receive 2M x 3 - 0.6M in 2014, 0.6M in 2015.
- Giaccherini 7.5M x 3 - Juve to receive 2.5M in 2014, 2.5M in 2015.
- Melo 3.75M upfront - entirely received in 2013.
- Matri 11M x 4 - 2.75M to receive in 2014, 2015, 2016.
- Marrone co-own Sassuolo - 4.5M x 2 - 4.5M to receive in 2014.
- Chibsah co-own resolved for Parma - 1M x 2 - 0.5M to receive in 2014.
Other relevant deals:
- Gabbiadini transfers co-own to Sampdoria - zero cost/profit
- Immobile co-own transfer to Torino - zero cost/profit (he cost 2.75M to Torino)
- exchange of 1/2 Schiavone for 1/2 Buchel with Siena (we still kept Schiavone 1/2)
- exchange of 1/2 Boniperti for 1/2 Alberto Gallinetta with Parma (we still kept Boniperti 1/2)
- exchange of 1/2 Branescu for 1/2 Mame Thiam with Lanciano (we still keep Branescu 1/2)
Spending:
- Ogbonna - 13M + 2M bonus (bonus spread through his contract - will consider only 13M) - 13M x 3 - 4.3M in 2014, 4.3M in 2015.
- Asamoah 2nd half co-own - 9M x 3 - 3M installment 2014, 3M installment for 2015.
- Peluso 4.8M x 2 - last installment of 2.4M paid in 2014.
- Tevez 9M + 6M (I'll consider 15M) - 3 installments - 5M in 2014, 5M 2015.
- Zaza co-own 3.5M x 3 - 1.2M installment in 2014, 1.2M in 2015.
- Berardi co-own 4.5M x 5 - 0.9M per year till 2017.
- Rugani co-own 1M x 2 - 0.5M to be paid in 2014.
- Kabashi 0,8M x 2 - 0.4M to be paid in 2014.
Money receiveing:
- Masi - co-own with Ternana - Juve to receive 2M x 3 - 0.6M in 2014, 0.6M in 2015.
- Giaccherini 7.5M x 3 - Juve to receive 2.5M in 2014, 2.5M in 2015.
- Melo 3.75M upfront - entirely received in 2013.
- Matri 11M x 4 - 2.75M to receive in 2014, 2015, 2016.
- Marrone co-own Sassuolo - 4.5M x 2 - 4.5M to receive in 2014.
- Chibsah co-own resolved for Parma - 1M x 2 - 0.5M to receive in 2014.
Other relevant deals:
- Gabbiadini transfers co-own to Sampdoria - zero cost/profit
- Immobile co-own transfer to Torino - zero cost/profit (he cost 2.75M to Torino)
- exchange of 1/2 Schiavone for 1/2 Buchel with Siena (we still kept Schiavone 1/2)
- exchange of 1/2 Boniperti for 1/2 Alberto Gallinetta with Parma (we still kept Boniperti 1/2)
- exchange of 1/2 Branescu for 1/2 Mame Thiam with Lanciano (we still keep Branescu 1/2)
Now, trying to sum it up the cash flow of players fees in 2014:
Signings - money spent:
2014:
- Morata 6.6M (20x3)
- Pereyra 1.5M (+ 4.8x3 + 1.5M bonus till 2020)
- Marrone 1.5M (4.5M x 3)
- Isla 2.2M (4.5M x 2)
- Pasquato 0.75M (1.5M x 2)
- Sturaro 1.8M (5.5M x 3 + future bonus)
- Sorensen 0.75M (1.5M x 2) - my assumption
- Coman 0
- Evra 0.75M (1.5M x 2)
- Romulo 1M (+ 7M in installments)
2013:
- Ogbonna - 4.3M in 2014
- Asamoah 2nd half co-own - 3M installment 2014
- Peluso 4.8M x 2 -2.4M paid in 2014.
- Tevez 9M + 6M (I'll consider 15M) - 5M in 2014
- Zaza co-own 3.5M x 3 - 1.2M installment in 2014
- Berardi co-own 4.5M x 5 - 0.9M installment
- Rugani co-own 1M x 2 - 0.5M to be paid in 2014.
- Kabashi 0,8M x 2 - 0.4M to be paid in 2014.
2012:
- Giovinco - 3.6M paid this year
- Asamoah co-own - 3M paid this year, 2014.
- Isla co-own - 3.1M paid this year, 2014.
- Gabbiadini co-own - 1.8M paid this year, 2014.
- Nicola Leali co-own - 1.2M in 2014.
- James Troisi co-own - 0.6M in 2014.
2011: Matri - 4M (last installment)
Total cash spent in transfer fees in 2014, considering this mercato and the last 3: 51M.
Players sold - money in:
From 2014 deals - 24M
- Immobile 8M (we got the payment upfront);
- Vucinic 6.5M (payment upfront by the arabs)
- Zaza 2.5M (7.5M x 3 installments)
- Peluso 1.6M (5M x 3)
- Quagliarella 1.2M (3.5M x 3)
- Isla 4M (8M x 2 ) - Isla is my assumption, given the interest from EPL teams who can pay more cash upfront
From 2013 deals: roughly 11M.
- Masi - co-own with Ternana - Juve to receive 2M x 3 - 0.6M in 2014
- Giaccherini 7.5M x 3 - Juve to receive 2.5M in 2014
- Matri 11M x 4 - 2.75M to receive in 2014
- Marrone co-own Sassuolo - 4.5M x 2 - 4.5M to receive in 2014.
- Chibsah co-own resolved for Parma - 1M x 2 - 0.5M to receive in 2014.
From 2012 deals - 1.1M
- 0.6M Felipe Melo loan
- Pasquato 0.5M co-own
From 2011 deals: nothing.
Total money to receive in 2014 from all player sales of the last 4 years: around 36M (24M from this year's business + 12M from last 2 years).
So actually in the 2014-15 season we are having a loss of 15M in cash flow for players. Doesn't look like so much.
Later I'll project the commitments for 2015 and 2016.
Signings - money spent:
2014:
- Morata 6.6M (20x3)
- Pereyra 1.5M (+ 4.8x3 + 1.5M bonus till 2020)
- Marrone 1.5M (4.5M x 3)
- Isla 2.2M (4.5M x 2)
- Pasquato 0.75M (1.5M x 2)
- Sturaro 1.8M (5.5M x 3 + future bonus)
- Sorensen 0.75M (1.5M x 2) - my assumption
- Coman 0
- Evra 0.75M (1.5M x 2)
- Romulo 1M (+ 7M in installments)
2013:
- Ogbonna - 4.3M in 2014
- Asamoah 2nd half co-own - 3M installment 2014
- Peluso 4.8M x 2 -2.4M paid in 2014.
- Tevez 9M + 6M (I'll consider 15M) - 5M in 2014
- Zaza co-own 3.5M x 3 - 1.2M installment in 2014
- Berardi co-own 4.5M x 5 - 0.9M installment
- Rugani co-own 1M x 2 - 0.5M to be paid in 2014.
- Kabashi 0,8M x 2 - 0.4M to be paid in 2014.
2012:
- Giovinco - 3.6M paid this year
- Asamoah co-own - 3M paid this year, 2014.
- Isla co-own - 3.1M paid this year, 2014.
- Gabbiadini co-own - 1.8M paid this year, 2014.
- Nicola Leali co-own - 1.2M in 2014.
- James Troisi co-own - 0.6M in 2014.
2011: Matri - 4M (last installment)
Total cash spent in transfer fees in 2014, considering this mercato and the last 3: 51M.
Players sold - money in:
From 2014 deals - 24M
- Immobile 8M (we got the payment upfront);
- Vucinic 6.5M (payment upfront by the arabs)
- Zaza 2.5M (7.5M x 3 installments)
- Peluso 1.6M (5M x 3)
- Quagliarella 1.2M (3.5M x 3)
- Isla 4M (8M x 2 ) - Isla is my assumption, given the interest from EPL teams who can pay more cash upfront
From 2013 deals: roughly 11M.
- Masi - co-own with Ternana - Juve to receive 2M x 3 - 0.6M in 2014
- Giaccherini 7.5M x 3 - Juve to receive 2.5M in 2014
- Matri 11M x 4 - 2.75M to receive in 2014
- Marrone co-own Sassuolo - 4.5M x 2 - 4.5M to receive in 2014.
- Chibsah co-own resolved for Parma - 1M x 2 - 0.5M to receive in 2014.
From 2012 deals - 1.1M
- 0.6M Felipe Melo loan
- Pasquato 0.5M co-own
From 2011 deals: nothing.
Total money to receive in 2014 from all player sales of the last 4 years: around 36M (24M from this year's business + 12M from last 2 years).
So actually in the 2014-15 season we are having a loss of 15M in cash flow for players. Doesn't look like so much.
Later I'll project the commitments for 2015 and 2016.
Thanks 
- - - Updated - - -
Now this just occurred to me.
We overpay some players because Marotta priorizes spreading the payment. So the price we pay for having better payment conditions is a higher overall value.
For example, Pereyra. We all know Marotta has agreed to buy him regardless. It's not a buying option, but a deal.
So the payment will be done in basically 4 years: 1.5M + 4.8M + 4.8M + 4.9M (+ 1.5M bonus spread through 2020). The overall cost is 17M, but really spread throughout the years.
If we were to pay in 3 installments, the overall cost would probably smaller, something like 14M spread through 3 years, starting now, plus bonus. So basically we pay like 2M more (my assumption) in order to spread the payment in one year more, what makes a difference in the budget. Plus if Sorensen was included, thinks would look much better, with 11M spread through 3 years.
With Morata is the same. Madrid is probably not used to dealing with payment spread for more than 2 years. They have cash and when they sell relevant players, probably they ask for money upfront or mostly spread in 2 years.
We overpayed a bit so it can be spread in 3 years. If we were to pay in 2 years, possibly his cost would have been of 18M. In 1 year, possibly 15/16M.
So I guess the overpayment is kind of justified due to better payment conditions. It's how Marotta works. He probably never spends more than 6/7M annualy with an annual installment for one single player.
In the 2014-15 season, the impact on the budget will be extremely positive. In the other hand, we made a lot of commitments to next years.
2014-15
Money in:
- Immobile 8M (we got the payment upfront);
- Vucinic 6.5M (payment upfront by the arabs)
- Zaza 2.5M (7.5M x 3 installments)
- Peluso 1.6M (5M x 3)
- Quagliarella 1.2M (3.5M x 3)
- Isla 4M (8M x 2 ) - Isla is my assumption, given the interest from EPL teams who can pay more cash upfront
Total money in 2014-15: roughly 24M.
Spent:
- Morata 6.6M (20x3)
- Pereyra 1.5M (+ 4.8x3 + 1.5M bonus till 2020)
- Marrone 1.5M (4.5M x 3)
- Isla 2.2M (4.5M x 2)
- Pasquato 0.75M (1.5M x 2)
- Sturaro 1.8M (5.5M x 3 + future bonus)
- Sorensen 0.75M (1.5M x 2) - my assumption
- Coman 0
- Evra 0.75M (1.5M x 2)
- Romulo 1M (+ 7M in installments)
Total money to be spent in 2014-15: roughly 17M.
So this specific season, so far, considering only cash movement, there's a profit of 7M.
It shows how this club is tight with money.
Let's see next year how it will be done. But we already have like 50M compromised in the future for new signings of this season and the next, to be spread in annual installments.
Obs: salaries kind of compensate themselves, considering Evra replaces Vucinic, Morata Quag's, and actually we will raise Pogba's salary.
- - - Updated - - -
Now this just occurred to me.
We overpay some players because Marotta priorizes spreading the payment. So the price we pay for having better payment conditions is a higher overall value.
For example, Pereyra. We all know Marotta has agreed to buy him regardless. It's not a buying option, but a deal.
So the payment will be done in basically 4 years: 1.5M + 4.8M + 4.8M + 4.9M (+ 1.5M bonus spread through 2020). The overall cost is 17M, but really spread throughout the years.
If we were to pay in 3 installments, the overall cost would probably smaller, something like 14M spread through 3 years, starting now, plus bonus. So basically we pay like 2M more (my assumption) in order to spread the payment in one year more, what makes a difference in the budget. Plus if Sorensen was included, thinks would look much better, with 11M spread through 3 years.
With Morata is the same. Madrid is probably not used to dealing with payment spread for more than 2 years. They have cash and when they sell relevant players, probably they ask for money upfront or mostly spread in 2 years.
We overpayed a bit so it can be spread in 3 years. If we were to pay in 2 years, possibly his cost would have been of 18M. In 1 year, possibly 15/16M.
So I guess the overpayment is kind of justified due to better payment conditions. It's how Marotta works. He probably never spends more than 6/7M annualy with an annual installment for one single player.
In the 2014-15 season, the impact on the budget will be extremely positive. In the other hand, we made a lot of commitments to next years.
2014-15
Money in:
- Immobile 8M (we got the payment upfront);
- Vucinic 6.5M (payment upfront by the arabs)
- Zaza 2.5M (7.5M x 3 installments)
- Peluso 1.6M (5M x 3)
- Quagliarella 1.2M (3.5M x 3)
- Isla 4M (8M x 2 ) - Isla is my assumption, given the interest from EPL teams who can pay more cash upfront
Total money in 2014-15: roughly 24M.
Spent:
- Morata 6.6M (20x3)
- Pereyra 1.5M (+ 4.8x3 + 1.5M bonus till 2020)
- Marrone 1.5M (4.5M x 3)
- Isla 2.2M (4.5M x 2)
- Pasquato 0.75M (1.5M x 2)
- Sturaro 1.8M (5.5M x 3 + future bonus)
- Sorensen 0.75M (1.5M x 2) - my assumption
- Coman 0
- Evra 0.75M (1.5M x 2)
- Romulo 1M (+ 7M in installments)
Total money to be spent in 2014-15: roughly 17M.
So this specific season, so far, considering only cash movement, there's a profit of 7M.
It shows how this club is tight with money.
Let's see next year how it will be done. But we already have like 50M compromised in the future for new signings of this season and the next, to be spread in annual installments.
Obs: salaries kind of compensate themselves, considering Evra replaces Vucinic, Morata Quag's, and actually we will raise Pogba's salary.
Any team that is willing to take a staggered payments will want more than market value because if they got cash upfront they could invest it in their business or in other securities and get a return on it.
Beautiful job dude. 
Thanks for all your time and effort.
So the question is: with only 15mil. total expenditure this summer, why aren't we still ready for a big signing?! I mean fvckin provincial teams spend that much.
Thanks for all your time and effort.So the question is: with only 15mil. total expenditure this summer, why aren't we still ready for a big signing?! I mean fvckin provincial teams spend that much.
There's no cash it seems so no big signings. No surprise there.
You have to remember, that even though this might be the influence from the sales on our book value, it doesn't necesarrily tell the truth about our "income" from selling. If we sell Peluso for 4, and he is valued at 5 (i don't know the real numbers), he is a financial loss, but we still get the amount we sell him for in cash, thus allowing us to spend this cash somewhere else (depends on our general financial state how much of the incoming cash we allow ourselves to spend off course).. So the effect on the books doesn't tell a lot more than just the straight out salesnumbers.. We are a big club, worth a lot of money, and we can easily buy an expensive player. But a lot of our money are already tied to our existing players (who are valuable assets) so liquidity has a lot to say on this, and selling our guys, even for less than their book value, will accumulate cash for us to spend. We will just have less value from our assets, and in the long wrong continuable deals like that will hinder financial growth (doesn't seem to hold Real back though, but i guess they don't work under 'normal' circumstances)
I know that mate, but here is the thing; even if we disregard net carrying value of these players and concentrate on inflows, these 30m most journos present as cash at our disposal for this summer, while entirely disregarding that sum will be received in installments, or that we're still making payments for some of these players, therefore trying to sell nice story that we suddenly received significant boost.
@PedroFlu
+rep when I can
@PedroFlu
+rep when I can
I never said we should neglect other financial aspects, just that the numbers themselves are indicators that, when put together with other factors, will have a partial say. There is not doubt things aren't as simple as the newspapers most of the time work them out to be. There could be several reasons for that. Though i sometimes get the feeling the journalists doesn't have a lot of knowledge themselves, we have to reckon the fact that their articles should appeal wide - to all of those who doesn't know anything about how a club is structured financially, those who will be lost as soon as you mention the word net carrying value..
There is a lot of assumptions, that need to hold for their "maths" to be really useful on it's own. First of all the wage costs must be fairly constant. Selling a player and getting three for free will not free up more cash, since a lot of the cash might be used to pay wages - it all depends on how the rest of the bussiness is looking... And secondly, as you mention yourself, there is the thing about installments. You could argue though, that if both in- and outgoing transfers are always paid in installments, we wouldn't really need to give it to much attention, but the thing is they are not always. We have used installments a lot this year (both in it pure form, but also disguised as a loan + option), while getting cash op front for some of our sales, which means he have more cash at the moment than the general numbers would suggest. If we spend it all though, we would need to have a plan for how to have cash available for the next installments etc.
I'm nt saying you are wrong in any way, i just think that, even though very simple, the numbers are useful when not standing alone and when taking other factors into consideration.
There is a lot of assumptions, that need to hold for their "maths" to be really useful on it's own. First of all the wage costs must be fairly constant. Selling a player and getting three for free will not free up more cash, since a lot of the cash might be used to pay wages - it all depends on how the rest of the bussiness is looking... And secondly, as you mention yourself, there is the thing about installments. You could argue though, that if both in- and outgoing transfers are always paid in installments, we wouldn't really need to give it to much attention, but the thing is they are not always. We have used installments a lot this year (both in it pure form, but also disguised as a loan + option), while getting cash op front for some of our sales, which means he have more cash at the moment than the general numbers would suggest. If we spend it all though, we would need to have a plan for how to have cash available for the next installments etc.
I'm nt saying you are wrong in any way, i just think that, even though very simple, the numbers are useful when not standing alone and when taking other factors into consideration.
88 Miles Per Hour: A Statement on The Financial Side of Juventus
By David Tenenbaum @DTenenbaum · On July 28, 2014
This post is a guest post by Ennio Longo, an investment adviser and lifelong Juventino. As happens every mercato, the debate of the actions and intentions of management has collided with the
economic reality that Juventus exists in, Ennio is here to clear some concepts up. You can follow him on Twitter: @Juveennio
In 2008 a friend of mine lost $750,000 in a Ponzi scheme, an irony which is not lost on me as I am an investment advisor. When he asked me what guarantees I could offer his portfolio I told him
that I could not because I cannot guarantee something which I nor anyone else could control. However, the other “guy” offered him a 12% rate of return on his money, guaranteed. So I didn’t
get to manage his account and now he is $750,000 poorer. He also didn’t tell me he was the victim of a scam artist, I just read about it in the local paper and so did millions of others. When I
was discussing it with another of our friends, he said, “Well he has enough money to make these mistakes.” In football, there are a few teams which can afford to error financially and they are as
follows; Real Madrid, Manchester United, Barcelona, Bayern Munich, Arsenal, Chelsea, and Liverpool. To a certain extent we shall include PSG and Manchester City in there but as recent events
have shown, they are not immune to the rulings of financial fair play. I was reminded of this story when reading comments about Juventus. “Agnelli doesn’t care”. “Elkann doesn’t care”. “Why
don’t they use FIAT money?” “Marotta doesn’t know what he is doing etc.”
So much of this has been brought to the forefront by a few events, Conte leaving, Iturbe being purchased by Roma and Roma spending more money than Juventus. So let’s address all these
issues and more.
First off my personal opinion, you can admire what Sabatini is doing at Roma but calling Marotta incompetent is not justified, he only assembled a team which has won three consecutive titles.
Sure Conte was the manager, but I doubt he could have accomplished what he had with Secco’s teams. I don’t think anyone should ever apologize for being successful.
First off let’s address what a team can spend. It’s only what they take in, Elkann and FIAT cannot give money to Juventus like Gianni used to in the old days. Also, if I am a FIAT shareholder, I
want growth in my shares and a dividend in my pocket, do you think I care about a football team? Why do you think the Qataris set up the Qatari tourism board to try and funnel 200 million Euros
a year to PSG only to then be leveled with Financial Fair Play sanctions? So forget about dipping into your own pockets anymore, Roman can’t do that with Chelsea either. So now we can leave
John Elkann and FIAT and EXOR for that matter out of this.
What about the issue of Juventus “not wanting to spend money”. Frankly that’s absurd. You are welcome to go on their website and examine their latest audited annual financial statements from
June of 2013. You will find that Net Income (net income is what you keep after your expenses) has been in the loss column for the past few fiscal years. They had losses of 48.7 million Euros in
2011/2012 and losses of 15.9 million Euros in 2012/2013. So, there is not as much money in the team as people tend to think. You cannot look at revenues alone, you must also examine
expenses.
The next argument is that Roma is outspending Juventus and they don’t have a shirt sponsor and they don’t have a technical sponsor and Juventus earned more than they did. All that is 100%
true. The main sources of revenue are TV, domestic and Champions’ League, marketing, gate revenue and player sales. So this is why Roma has more funds to spend. First off, Roma has sold
more than Juventus has in the past few years especially last year with Borini, Lamela and Osavldo. Therefore they have cash from that source. Second, Juve has more legacy costs than Roma
does, that means when the current management assumed control of the team they had to deal with huge money spent on failed transfers and large player salaries which were still on the books,
still an expense to them yet they were not getting anything from these players. Thirdly, if you purchase a player you also have to pay that player.
You don’t win championships just spending big on transfers, you win championships paying the players who play for you. Seeing as Roma brought in 3 or 4 excellent players last year in Benatia,
Pjanic, Gervinho and this year Iturbe, they are still on low wages, however, if Roma wins, then the players will want salary increases. As it is they probably do want them now. Building a team is
one thing, keeping that team together is another thing. Essentially Roma’s revenues were lower than Juve’s but their expenses were also significantly lower. You must examine BOTH sides of the
income statement and BOTH sides of the balance sheet as well when looking into those items. In essence, Roma had more net income.
I am very sensitive to managing risk as it is part of my job to do so. One of the biggest dangers is not being able to meet salary demands. Here is where looking at non-Champions’ League
revenue is vital. You cannot build a sustainable model and include variable revenue because if you don’t have the variable revenue one year, the model falls apart. Then you are forced to
liquidate your players much in the same way the club did during Calciopoli. Overall it’s a similar economic impact. The Adidas sponsorship, the new shirt sponsor and La Continassa project will all
assist with these. If you examine Manchester United’s revenue they were able to spend large this transfer window because they have hundreds of millions in non-CL revenue. They can afford to
make these errors, Juventus cannot.
So the next criticism levied by fans is “Why isn’t Juventus earning these same revenues as United?” Why is Adidas paying Juventus 30 million and United 100 million? Is that a management failure?
That is square upon the league itself. Any Serie A team has a marketing ceiling as long as the league is run the way it is. Let me illustrate. I live in Toronto, a city of about 5 million people. Our
Canadian Football Team is the Toronto Argonauts. In the United States there is a team in the National Football League called the Green Bay Packers from Green Bay Wisconsin with a population
of just over 100,000. Now the city of Toronto has more people, more money, more revenue, more income, however, The Green Bay Packers probably have a market value in and around $1 billion
but the Argos have a value of $20 million. Why? It’s the league. The NFL is the richest sports league in the world, largest TV contract, huge marketing exposure. A team can only do so much
before it hits the glass ceiling imposed on it by its league. If you built a mansion in a middle class neighbourhood would it have the same value as if would if you built it in the richest part of town?
I can appreciate the frustration, I really can. But just because I and others see it differently doesn’t mean that I accept “mediocrity” or that I “don’t care for the team” or that I “don’t want to
win” or that people like me are “responsible for the downfall of the team” (this last one being my personal favorite). Success is not necessarily immediate. You can’t just hit the refresh button
and everything will be as it was. Long term sustainable success has to be built over time. This is not Juventus in 1994 nor is it Juventus in 2004 because this is not the Serie A of 10 or 20 years
ago. There are certain realities which must be accepted and addressed regardless of how hardcore of a fan you are. You might really want a Ferrari but cannot afford one, does that make you
less of a Ferrari fan? Perhaps you have taken steps to one day afford it.
I see team building as a multi-year process. This doesn’t mean that I or that management doesn’t want to win Champions’ League, they just realize that it cannot be done in Italy the same way
it was done 10 or 20 years ago. In order, you must consider Constraints, Fact and then Objectives. Looking at Objectives without examining what the Constraints and Facts are just makes it a
wish. If that is what you expect then it’s not so much help from FIAT that is required but from Doc Brown’s Delorean.
By David Tenenbaum @DTenenbaum · On July 28, 2014
This post is a guest post by Ennio Longo, an investment adviser and lifelong Juventino. As happens every mercato, the debate of the actions and intentions of management has collided with the
economic reality that Juventus exists in, Ennio is here to clear some concepts up. You can follow him on Twitter: @Juveennio
In 2008 a friend of mine lost $750,000 in a Ponzi scheme, an irony which is not lost on me as I am an investment advisor. When he asked me what guarantees I could offer his portfolio I told him
that I could not because I cannot guarantee something which I nor anyone else could control. However, the other “guy” offered him a 12% rate of return on his money, guaranteed. So I didn’t
get to manage his account and now he is $750,000 poorer. He also didn’t tell me he was the victim of a scam artist, I just read about it in the local paper and so did millions of others. When I
was discussing it with another of our friends, he said, “Well he has enough money to make these mistakes.” In football, there are a few teams which can afford to error financially and they are as
follows; Real Madrid, Manchester United, Barcelona, Bayern Munich, Arsenal, Chelsea, and Liverpool. To a certain extent we shall include PSG and Manchester City in there but as recent events
have shown, they are not immune to the rulings of financial fair play. I was reminded of this story when reading comments about Juventus. “Agnelli doesn’t care”. “Elkann doesn’t care”. “Why
don’t they use FIAT money?” “Marotta doesn’t know what he is doing etc.”
So much of this has been brought to the forefront by a few events, Conte leaving, Iturbe being purchased by Roma and Roma spending more money than Juventus. So let’s address all these
issues and more.
First off my personal opinion, you can admire what Sabatini is doing at Roma but calling Marotta incompetent is not justified, he only assembled a team which has won three consecutive titles.
Sure Conte was the manager, but I doubt he could have accomplished what he had with Secco’s teams. I don’t think anyone should ever apologize for being successful.
First off let’s address what a team can spend. It’s only what they take in, Elkann and FIAT cannot give money to Juventus like Gianni used to in the old days. Also, if I am a FIAT shareholder, I
want growth in my shares and a dividend in my pocket, do you think I care about a football team? Why do you think the Qataris set up the Qatari tourism board to try and funnel 200 million Euros
a year to PSG only to then be leveled with Financial Fair Play sanctions? So forget about dipping into your own pockets anymore, Roman can’t do that with Chelsea either. So now we can leave
John Elkann and FIAT and EXOR for that matter out of this.
What about the issue of Juventus “not wanting to spend money”. Frankly that’s absurd. You are welcome to go on their website and examine their latest audited annual financial statements from
June of 2013. You will find that Net Income (net income is what you keep after your expenses) has been in the loss column for the past few fiscal years. They had losses of 48.7 million Euros in
2011/2012 and losses of 15.9 million Euros in 2012/2013. So, there is not as much money in the team as people tend to think. You cannot look at revenues alone, you must also examine
expenses.
The next argument is that Roma is outspending Juventus and they don’t have a shirt sponsor and they don’t have a technical sponsor and Juventus earned more than they did. All that is 100%
true. The main sources of revenue are TV, domestic and Champions’ League, marketing, gate revenue and player sales. So this is why Roma has more funds to spend. First off, Roma has sold
more than Juventus has in the past few years especially last year with Borini, Lamela and Osavldo. Therefore they have cash from that source. Second, Juve has more legacy costs than Roma
does, that means when the current management assumed control of the team they had to deal with huge money spent on failed transfers and large player salaries which were still on the books,
still an expense to them yet they were not getting anything from these players. Thirdly, if you purchase a player you also have to pay that player.
You don’t win championships just spending big on transfers, you win championships paying the players who play for you. Seeing as Roma brought in 3 or 4 excellent players last year in Benatia,
Pjanic, Gervinho and this year Iturbe, they are still on low wages, however, if Roma wins, then the players will want salary increases. As it is they probably do want them now. Building a team is
one thing, keeping that team together is another thing. Essentially Roma’s revenues were lower than Juve’s but their expenses were also significantly lower. You must examine BOTH sides of the
income statement and BOTH sides of the balance sheet as well when looking into those items. In essence, Roma had more net income.
I am very sensitive to managing risk as it is part of my job to do so. One of the biggest dangers is not being able to meet salary demands. Here is where looking at non-Champions’ League
revenue is vital. You cannot build a sustainable model and include variable revenue because if you don’t have the variable revenue one year, the model falls apart. Then you are forced to
liquidate your players much in the same way the club did during Calciopoli. Overall it’s a similar economic impact. The Adidas sponsorship, the new shirt sponsor and La Continassa project will all
assist with these. If you examine Manchester United’s revenue they were able to spend large this transfer window because they have hundreds of millions in non-CL revenue. They can afford to
make these errors, Juventus cannot.
So the next criticism levied by fans is “Why isn’t Juventus earning these same revenues as United?” Why is Adidas paying Juventus 30 million and United 100 million? Is that a management failure?
That is square upon the league itself. Any Serie A team has a marketing ceiling as long as the league is run the way it is. Let me illustrate. I live in Toronto, a city of about 5 million people. Our
Canadian Football Team is the Toronto Argonauts. In the United States there is a team in the National Football League called the Green Bay Packers from Green Bay Wisconsin with a population
of just over 100,000. Now the city of Toronto has more people, more money, more revenue, more income, however, The Green Bay Packers probably have a market value in and around $1 billion
but the Argos have a value of $20 million. Why? It’s the league. The NFL is the richest sports league in the world, largest TV contract, huge marketing exposure. A team can only do so much
before it hits the glass ceiling imposed on it by its league. If you built a mansion in a middle class neighbourhood would it have the same value as if would if you built it in the richest part of town?
I can appreciate the frustration, I really can. But just because I and others see it differently doesn’t mean that I accept “mediocrity” or that I “don’t care for the team” or that I “don’t want to
win” or that people like me are “responsible for the downfall of the team” (this last one being my personal favorite). Success is not necessarily immediate. You can’t just hit the refresh button
and everything will be as it was. Long term sustainable success has to be built over time. This is not Juventus in 1994 nor is it Juventus in 2004 because this is not the Serie A of 10 or 20 years
ago. There are certain realities which must be accepted and addressed regardless of how hardcore of a fan you are. You might really want a Ferrari but cannot afford one, does that make you
less of a Ferrari fan? Perhaps you have taken steps to one day afford it.
I see team building as a multi-year process. This doesn’t mean that I or that management doesn’t want to win Champions’ League, they just realize that it cannot be done in Italy the same way
it was done 10 or 20 years ago. In order, you must consider Constraints, Fact and then Objectives. Looking at Objectives without examining what the Constraints and Facts are just makes it a
wish. If that is what you expect then it’s not so much help from FIAT that is required but from Doc Brown’s Delorean.