The Financial Situation (39 Viewers)

[Bianco2nero]

In a few sentences, I would like to explain the current investigation and why, as an economist, I think it is nothing more than a standard attack on our beloved team. The basis of the whole investigation is, to put it in the simplest terms, that the investigating bodies believe that Juventus generated extra capital gains from the movement of certain players, thereby cosmeticising the team's true financial situation. Of interest here are several other transactions with other clubs where players were moved between them for multiples of their real value. To make this easy to understand. With player sales, the capital gain is immediate, but the cost/amortization of the newly purchased player is only over a period of years. Let's say we buy a player for 20M EUR (all costs included) with a 5 year contract. He has a book value of 16M the following year 12M and so on. If we sell him for 40M EUR, our immediate capital gain after 1 year is 40M-16M i.e. 24M EUR. Not 20M EUR. This is 40M-12M the following year. i.e. 28M EUR. This would be one side of the balance sheet, the "plusvalenza". On the other side there is the amortization. This player generates that much cost every year, in addition to his salary, based on the ratio of the purchase price to the number of years signed. Whether paid in one year or over X years. Which is why the analysis is incorrect. First argument. What determines the value of a player? Where is it fixed who represents what strata of the market? Is there a primary directive? The answer in all cases is that everyone is worth what they are paid. Second. The pursuit of capital gains is nothing more than an economic race to the bottom. It is true that Arthur has never been worth what we paid for him, but for the reasons already described above, his exorbitant purchase price is also a huge cost to the club every year. And if sold below book value, it generates a huge capital loss. As happened with CR. I note that the depreciation costs in the team are naturally increasing, which is why we are on an unsustainable economic path. This business policy is not sustainable in the long term, as I have written before, it is more of a way to postpone problems in time. As I see it, these problems have now taken root. And not the economic downturn caused by Covid. This is a net lie, don't believe it, it's not true. My 3rd argument is that Juve, as a publicly traded company, should always have its accounts audited by an auditor. This means that fictitious accounts have no chance of being included. An auditor will sign anything under criminal liability. If he does not like something, and let us note here that in our case this is a very serious company, he will not sign the accounts. Furthermore, our economic activities are constantly monitored by the lending banks. It is impossible to pass there (I note on the amortization side, you can see that these figures give us a breathing space in the short term, but in the medium term they bury us under themselves. The situation has not been solved, we have just kept passing the buck). That's one of the reasons why the 400M capital increase is needed. Let's not dream of justifications, there is no money for that. Our plusvalenza deals are not ethical, that's a fact. They may generate large capital gains immediately, but just because they are not ethical does not make them illegal. In fact, it complies with accounting laws. I note that the two Milan clubs were acquitted for similar reasons in 2008. For my part, a much more legitimate question is why historic clubs like Juve or BArca and even Inter have to live with this, while anonymous nobodies like PSG or City or any of the nouveau riche clubs behind the XY Quatar’s sponsor 100M EUR per year. And in the spirit of FFp they can do it. Football has become corrupt to no end. At the moment no club is sustainable. While the federations are pocketing billions of dollars, the biggest teams get almost nothing. While the costs are going through the roof, those who are exposed to this and generate the federation's profits get literally nothing. Makes you wonder. This is one of the reasons why I say that the Super League is nothing more than football's last cry for help.

 

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[juve123]

In a few sentences, I would like to explain the current investigation and why, as an economist, I think it is nothing more than a standard attack on our beloved team. The basis of the whole investigation is, to put it in the simplest terms, that the investigating bodies believe that Juventus generated extra capital gains from the movement of certain players, thereby cosmeticising the team's true financial situation. Of interest here are several other transactions with other clubs where players were moved between them for multiples of their real value. To make this easy to understand. With player sales, the capital gain is immediate, but the cost/amortization of the newly purchased player is only over a period of years. Let's say we buy a player for 20M EUR (all costs included) with a 5 year contract. He has a book value of 16M the following year 12M and so on. If we sell him for 40M EUR, our immediate capital gain after 1 year is 40M-16M i.e. 24M EUR. Not 20M EUR. This is 40M-12M the following year. i.e. 28M EUR. This would be one side of the balance sheet, the "plusvalenza". On the other side there is the amortization. This player generates that much cost every year, in addition to his salary, based on the ratio of the purchase price to the number of years signed. Whether paid in one year or over X years. Which is why the analysis is incorrect. First argument. What determines the value of a player? Where is it fixed who represents what strata of the market? Is there a primary directive? The answer in all cases is that everyone is worth what they are paid. Second. The pursuit of capital gains is nothing more than an economic race to the bottom. It is true that Arthur has never been worth what we paid for him, but for the reasons already described above, his exorbitant purchase price is also a huge cost to the club every year. And if sold below book value, it generates a huge capital loss. As happened with CR. I note that the depreciation costs in the team are naturally increasing, which is why we are on an unsustainable economic path. This business policy is not sustainable in the long term, as I have written before, it is more of a way to postpone problems in time. As I see it, these problems have now taken root. And not the economic downturn caused by Covid. This is a net lie, don't believe it, it's not true. My 3rd argument is that Juve, as a publicly traded company, should always have its accounts audited by an auditor. This means that fictitious accounts have no chance of being included. An auditor will sign anything under criminal liability. If he does not like something, and let us note here that in our case this is a very serious company, he will not sign the accounts. Furthermore, our economic activities are constantly monitored by the lending banks. It is impossible to pass there (I note on the amortization side, you can see that these figures give us a breathing space in the short term, but in the medium term they bury us under themselves. The situation has not been solved, we have just kept passing the buck). That's one of the reasons why the 400M capital increase is needed. Let's not dream of justifications, there is no money for that. Our plusvalenza deals are not ethical, that's a fact. They may generate large capital gains immediately, but just because they are not ethical does not make them illegal. In fact, it complies with accounting laws. I note that the two Milan clubs were acquitted for similar reasons in 2008. For my part, a much more legitimate question is why historic clubs like Juve or BArca and even Inter have to live with this, while anonymous nobodies like PSG or City or any of the nouveau riche clubs behind the XY Quatar’s sponsor 100M EUR per year. And in the spirit of FFp they can do it. Football has become corrupt to no end. At the moment no club is sustainable. While the federations are pocketing billions of dollars, the biggest teams get almost nothing. While the costs are going through the roof, those who are exposed to this and generate the federation's profits get literally nothing. Makes you wonder. This is one of the reasons why I say that the Super League is nothing more than football's last cry for help.

Do you see false accounting as a crime

 

[kappa96]

Do you see false accounting as a crime

I don't think false accounting is the right word here. False accounting based on what?
Player values? Who decides what value a player has? There is no 3rd party notebook that says Arthur's value is 25 million so a prosecutor can say Juve false accounted 50 million in a 75 million deal.

False accounting and tax evasion is when you buy Arthur for 25 million on the books, but you pay an extra 25 million to barca under the table, without declaring it.
Or you sell demiral to Atalanta for 30 million, but you only declare in the books that you got 15, while getting the other 15 under the table.

I still say that nothing will come of it., except if there are wiretaps involved. But even then the most we can get is a fine and point deduction.

 

[IliveForJuve]

it was already going south when Marotta was handing out stupid contracts to khedira, costa and matuidi, spending a bucket load on Higuain and bringing back bonucci, only really saw the effects of his actions after he left.

If only we had players like Higuaín now.

 

[Badass J Elkann]

If only we had players like Higuaín now.

not 90 mill for a 28 year old on massive wages.

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thing that makes me laugh is how we're being investigated for discussing player values in transfer negotiations, isn't this normal? it is as if player values should reflect transfermarkt or some bullshit website.

 

[s4tch]

thing that makes me laugh is how we're being investigated for discussing player values in transfer negotiations, isn't this normal? it is as if player values should reflect transfermarkt or some bullshit website.

that's the biggest issue with the whole investigation. there's no handbook to calculate player prices, it's simply not objective, so it's very hard to assess, and equally hard to prove bad intent.

unless one or more of our (ex) managers talked some rubbish that has been recorded, that is.

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...With player sales, the capital gain is immediate, but the cost/amortization of the newly purchased player is only over a period of years...

@Strickland

completely honest question buddy, do you fully (and i mean 100%) understand what our man just wrote, especially the quoted part? it would partly explain why you don't see the full picture when it comes to swap deals and their financial consequences.

 

[Badass J Elkann]

that's the biggest issue with the whole investigation. there's no handbook to calculate player prices, it's simply not objective, so it's very hard to assess, and equally hard to prove bad intent.

unless one or more of our (ex) managers talked some rubbish that has been recorded, that is.

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@Strickland

completely honest question buddy, do you fully (and i mean 100%) understand what our man just wrote, especially the quoted part? it would partly explain why you don't see the full picture when it comes to swap deals and their financial consequences.

I just find this whole investigation baffling, fucking wish these investigators worked in the prem, the shit clubs buys for stupid money is beyond the realms of any recent Juve deals

 

[Leendiz]

Everyone over prices players its part of today's game. Is Neymar worth €222 ? Not even close . If this whole thing is about inflating prices for capital gains I don't see how we can be found guilty of doing the same thing every club in Europe does

 

[mondo1]

I don't think false accounting is the right word here. False accounting based on what?
Player values? Who decides what value a player has? There is no 3rd party notebook that says Arthur's value is 25 million so a prosecutor can say Juve false accounted 50 million in a 75 million deal.

False accounting and tax evasion is when you buy Arthur for 25 million on the books, but you pay an extra 25 million to barca under the table, without declaring it.
Or you sell demiral to Atalanta for 30 million, but you only declare in the books that you got 15, while getting the other 15 under the table.

I still say that nothing will come of it., except if there are wiretaps involved. But even then the most we can get is a fine and point deduction.

As an Auditor i can tell you that this is also false accounting especially if you consider the fraud risk which will create the biggest problems for us if they find some wiretapes relating to it.

False accounting on overstateing your asset side to give a wrong impression of your financial status is still false accounting
Also the auditor is not in question if found it was due to fraud.

Im more into banking audit so not an expert for industry especially when It comes to football clubs. But it doesn’t matter as it’s false accounting anyway. They will find it extremely difficult to prove it ( as player values are agreed by both clubs). It pretty much depends on the wiretapes

For example look at the wirecard scandal here in Germany. They also created imaginary book value with trust asset that did not exist. It’s a bit different because they never had these accounts but they did it for the same reason we do it. To overstate the asset side and give a wrong impression about your balance sheet

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[Scottish]

that's the biggest issue with the whole investigation. there's no handbook to calculate player prices, it's simply not objective, so it's very hard to assess, and equally hard to prove bad intent.

unless one or more of our (ex) managers talked some rubbish that has been recorded, that is.

I'm curious what could be considered damning evidence on a wiretap, especially if this process is technically legal if immoral as per Bianco2nero above.

Surely it would have to be something blatant like 'Here's the deal, we are going to do this transfer at double the player's actual value, because that way we can milk it hard for capital gains - and there's nothing the authorities can do about it unless they ever hear me say these words'.
Anything shy of that wouldn't be grounds for a criminal prosecution, right? Or is the scope wider?

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As an Auditor i can tell you that this is also false accounting especially if you consider the fraud risk which will create the biggest problems for us if they find some wiretapes relating to it.

False accounting on overstateing your asset side to give a wrong impression of your financial status is still false accounting
Also the auditor is not in question if found it was due to fraud.

Im more into banking audit so not an expert for industry especially when It comes to football clubs. But it doesn’t matter as it’s false accounting anyway. They will find it extremely difficult to prove it ( as player values are agreed by both clubs). It pretty much depends on the wiretapes


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What kind of discussion could constitute a damning wiretap?

 

[mondo1]

I'm curious what could be considered damning evidence on a wiretap, especially if this process is technically legal if immoral as per Bianco2nero above.

Surely it would have to be something blatant like 'Here's the deal, we are going to do this transfer at double the player's actual value, because that way we can milk it hard for capital gains - and there's nothing the authorities can do about it unless they ever hear me say these words'.
Anything shy of that wouldn't be grounds for a criminal prosecution, right? Or is the scope wider?

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What kind of discussion could constitute a damning wiretap?

If they call Barca and ask for Artur and pjanic swap with Sky high values to get plusvalenza

I did the cum ex scandal in Germany and you wouldn’t believe how much stuff they tell on a phone


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[Strickland]

@Strickland

completely honest question buddy, do you fully (and i mean 100%) understand what our man just wrote, especially the quoted part? it would partly explain why you don't see the full picture when it comes to swap deals and their financial consequences.

I think I do understand it. In terms of bookkeeping, the Arthur-Pjanic deal generated more than 40m positive economic effect for Juve in the summer of the swap.

In terms of cash flow, we pay Barca 18m for Arthur every year for 4 years and they pay us 15m for Pjanic, also every year for 4 years. So basically it's Pjanic-Arthur swap, + we pay them 12m over 4 years, no? Excluding the 10m and 5m bonuses, which may or may not have been activated.

 

[s4tch]

I think I do understand it. In terms of bookkeeping, the Arthur-Pjanic deal generated more than 40m positive economic effect for Juve in the summer of the swap.

In terms of cash flow, we pay Barca 18m for Arthur every year for 4 years and they pay us 15m for Pjanic, also every year for 4 years. So basically it's Pjanic-Arthur swap, + we pay them 12m over 4 years, no? Excluding the 10m and 5m bonuses, which may or may not have been activated.

yes, that's the cash flow part.

now think about the effect on the books, because balance sheet, cash flow and income statement are 3 diff statements.

 

[Strickland]

yes, that's the cash flow part.

now think about the effect on the books, because balance sheet, cash flow and income statement are 3 diff statements.

Well when I say we got Arthur for 12m+Mire I obviously mean the cash flow part. If I wanted to talk about books, Id mention ammortization and crap like that.

 

[s4tch]

Well when I say we got Arthur for 12m+Mire I obviously mean the cash flow part. If I wanted to talk about books, Id mention ammortization and crap like that.

but it only gives you a very small part of the picture. you can't ignore the books, that's why the whole "12m + mire" notion makes no sense at all when you consider the cost of a player, especially arthur. you can't refer to the cash flow and ignore the book values and amortization because you just don't feel like it fits an agenda. let that sink in pls. that's why i asked whether you understood that post and especially the quoted part. arthur is fucking expensive, that's the point i made, and i backed it by facts. yet you keep insisting with the cash flow which only tells half of the story - and the rather irrelevant part of it.

3m per year of net cash flow wouldn't hurt juventus. nobody cares about it. 22m of yearly cost, especially for a player that can barely run for 50 minutes is a different story, one you simply can't ignore.

 

[Fab Fragment]

If they call Barca and ask for Artur and pjanic swap with Sky high values to get plusvalenza

I did the cum ex scandal in Germany and you wouldn’t believe how much stuff they tell on a phone


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So can we be found guilty based on wiretaps?

 

[s4tch]

I'm curious what could be considered damning evidence on a wiretap, especially if this process is technically legal if immoral as per Bianco2nero above.

Surely it would have to be something blatant like 'Here's the deal, we are going to do this transfer at double the player's actual value, because that way we can milk it hard for capital gains - and there's nothing the authorities can do about it unless they ever hear me say these words'.
Anything shy of that wouldn't be grounds for a criminal prosecution, right? Or is the scope wider?

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What kind of discussion could constitute a damning wiretap?

there were some articles about this short leak from the wiretaps the other day:
https://www.calcioefinanza.it/2021/11/27/juventus-intercettazioni-plusvalenze/

i also read some speculations stating that our books and our invoices weren't in sync. that's a very serious allegation, and you don't need wiretaps to prove the falsification of books in that case. i'd be surprised if a publicly traded company would be this stupid. in that case, heads should roll asap.

 

[mondo1]

So can we be found guilty based on wiretaps?

In the Italian legal system I‘d say yes.
I guess if you have the full picture of gains in the book and the related wiretaps; we could be in trouble. But that’s from a legal point of view, which could end in heavy fines and bans/ sentences for Angelli and co.

Not sure how they will handle it in the sporting justice system.

If I remember correct it was between 2007-2009 when inter, ac, Lazio, Roma, chievo and some other clubs have been fined for it. And they only had to pay a small fine plus in Chievos case they have done so to get a Serie a license otherwise they would be playing in Serie b.

When it comes to juve though I wouldn’t be surprised if they hit us hard


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[Strickland]

but it only gives you a very small part of the picture. you can't ignore the books, that's why the whole "12m + mire" notion makes no sense at all when you consider the cost of a player, especially arthur. you can't refer to the cash flow and ignore the book values and amortization because you just don't feel like it fits an agenda. let that sink in pls. that's why i asked whether you understood that post and especially the quoted part. arthur is fucking expensive, that's the point i made, and i backed it by facts. yet you keep insisting with the cash flow which only tells half of the story - and the rather irrelevant part of it.

3m per year of net cash flow wouldn't hurt juventus. nobody cares about it. 22m of yearly cost, especially for a player that can barely run for 50 minutes is a different story, one you simply can't ignore.

Its not Arthur who is expensive (although Pjanič back then probably was worth something, so its not peanuts either) its the shady bookkeeping plusvalenza deal itself. We didnt invest 70m in the midfield there, we invested in balancing the books in 2020 at the expense of future years.

 

[s4tch]

i give up