Winter Mercato 2015 (21 Viewers)

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Vlad

In Allegri We Trust
May 23, 2011
24,064
Yeah so...we need to buy some players...good players, particularly ones that will prevent us from leaving UCL dollars on the table because if we miss that this year, that is a serious opportunity cost over the last 2 years. Juventus earns ~60 million Euro in EBITDA. We're currently leveraged around 3.00x EBITDA...Most businesses in this rates environment can sustain leverage ratios ranging from 4-4.5x. So currently, EBITDA is ~65 million euro, which means crudely we have ~100 million in debt capacity. In addition, we have whatever players we can sell and get off the book (*cough* Llorente and his 4.5 million euro net salary).

Next summer the target should be quality. Take advantage of cheap financing and turn the club around. Sell overpaid pylons and start to buy established players...You can't bargain hunt forever. You have to eventually pay up for quality. Ultimately, if this is the long term strategy, the brand will erode and you'll permanently lose revenue.

Morata was idiocy. Morata belongs on a team like Porto...
I agree that we'll need to break the bank next summer and start bringing more established players, players that will allow us to change the system, those that will be worth of changing it in the first place, but we need to keep an eye on young talents that might become WC within a few years. Morata certainly enters the category of insanely talented youngsters.

As for the revenues unless we miss CL those aren't likely to plummet since we have long term contracts that guarantee us hefty sums per year. TV rights most notably and these constitute roughly 50% of our yearly income. In the next few years we'll earn even more in this area, CL + Serie A TV deals will guarantee us close to 200m per year. No matter how crappy Italian clubs perform in the CL, market pool is determined by domestic demand and subsequently domestic televisions willingness and resources to pay for the broadcastic rights for that specific market.
 

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JCK

Biased
JCK
May 11, 2004
125,395
There's always next summer :lol2:

And those who predicted we will get shit loads of money because we proceed to the CL playoffs and Roma crashes out are up to an unpleasant surprise where Roma are the ones who will get that shit load of money.
 

Fr3sh

Senior Member
Jul 12, 2011
37,260
There's always next summer :lol2:

And those who predicted we will get shit loads of money because we proceed to the CL playoffs and Roma crashes out are up to an unpleasant surprise where Roma are the ones who will get that shit load of money.
:lol::cry::lol:
Don't even know how to feel if this happens.
 
Mar 3, 2014
3,866
He has a punchable face, and I strongly dislike him :D

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Yet he was one of the few, if not the only bright spot against Olympiakos last night.


We're supposed to be the "strongest" team in Italy - 3 scudettos in a row. Even if he was ok yesterday, frankly the money spent on paying Llorente, and some of the mediocre players on the rosters (and some) should be used to actually buy marquee players. The balance sheet can support it and frankly, by purchasing question marks, ultimately the brand is being risked.

The team has to actually spend on a true star. Those players sell jerseys, attract television ratings, fill stadiums and give the league leverage when negotiating television contracts. The issue truly is a microcosm of Italy though...

Right now, how is Italy going to have any negotiating power when :
-Juventus is more likely to miss the knockout stage than make it at this point.
-Roma gets annihilated by Bayern.
-Napoli loses in knockouts and loses in Europa league against Young Boys.
-Inter draws Saint Etienne at home.

The one thing though is, unlike all the people parading around Roma losing, I'm very upset they lost. I'm also upset Napoli lost. Even if Juventus gets a bit more UCL revenues this year, in the long run its harmful - its going to shrink the league and drive more teams into bankruptcy. Right now you have obscene salary inflation, but Serie A has no leverage (unlike the EPL) in increasing its TV rights. That's a huge disadvantage. It also doesn't help that no one other than us owns its own stadium. I actually have to applaud Roma, they are actually investing for the future. That team is going to be losing money for a long time, but if the owners' strategy works, the brand will grow and the revenues will increase permanently. More Serie A teams need to do this. These crucial things that need to happen:
1) All clubs need to own a stadium, in particular one that is not in shambles like Stadio San Paolo.
2) All major clubs need to invest in players to make Serie A as a whole more competitive. This also requires intelligent strategy though. You need to build a team intelligently. Serie A has some powerful, albeit deteriorating brands. Stop the decline and bring in stars. Heck, if 1/4 the team is filled with academy players or average players, and the remainder actually has international stars, you'll attract more viewership - which brings me to the next...
3) Invest in the academies and develop Italian talent. Italy has no excuse, it's the 23rd largest country by population, and 10th in GDP. That combined with its football culture means that it should be breeding talent. If you half a group of stars that are home grown and the remainder are bought (but are actually marquee players), you'll gain international traction.
4) Stop being a farm system for Spain. Napoli makes me sick and I want to punch Benitez in the face. He has literally turned Napoli into little Spain. He has openly bashed Italian football, and has used the transfer funds moronically. That's another reason why I don't like the Morata purchase. Keep Immobile. For one, he was cheaper and you already co-own him, and secondly he is Italian. I honestly doubt Benitez' Napoli speaks Italian on the field.

Honestly this week in UCL has just confirmed the obvious - Italian teams need to get their **** together.

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I agree that we'll need to break the bank next summer and start bringing more established players, players that will allow us to change the system, those that will be worth of changing it in the first place, but we need to keep an eye on young talents that might become WC within a few years. Morata certainly enters the category of insanely talented youngsters.

As for the revenues unless we miss CL those aren't likely to plummet since we have long term contracts that guarantee us hefty sums per year. TV rights most notably and these constitute roughly 50% of our yearly income. In the next few years we'll earn even more in this area, CL + Serie A TV deals will guarantee us close to 200m per year. No matter how crappy Italian clubs perform in the CL, market pool is determined by domestic demand and subsequently domestic televisions willingness and resources to pay for the broadcastic rights for that specific market.
You're right - revenue isn't the issue. Revenue will stay stable, but it certainly won't grow materially - the Italian economy is stagnant (and the population is aging, meaning you may eventually end up with declines in population, and unless labour force productivity complete soars, Italy is in trouble). Serie A has absolutely failed internationally. Unfortunately, if the brand does erode and revenue stays static, we'll increasingly become less competitive. Leagues like the EPL are supported by comparatively robust economies, extremely lucrative international interest (tv contracts AND merch sales), and absolute crammed domestic stadiums. As these teams compete for players with each other and the football cartel in Spain (Barca/RM), you're getting massive salary/transfer fee inflation. We've already seen it. If this continues, and the Italian teams don't begin to invest and focus internationally, the players we can afford will become more and more pedestrian, while talent like Verratti, Immobile, and Cerci (less so) will increasingly move to other leagues.

Some data points...These are compound average growth rates for a few major clubs in comparable periods...~2006-2014
JUVE: 3.9%
ROMA: -0.74%
REAL MADRID: 9.15%
MANCHESTER UNITED: 10.87%
BAYERN: 11.5%
DORTMUND: 14.34%

Now personnel expense:
JUVE: 3.48% : We have maintained financial discipline.
ROMA: 5.83% : That why its burning cash...
DORTMUND: 14.35%
MANCHESTER UNITED: 12.89%

You'll notice none of these teams are very profitable, but unlike other leagues, the Italian teams have had to pace spending increases with stale revenue growth.
 

Bjerknes

"Top Economist"
Mar 16, 2004
116,241
We're supposed to be the "strongest" team in Italy - 3 scudettos in a row. Even if he was ok yesterday, frankly the money spent on paying Llorente, and some of the mediocre players on the rosters (and some) should be used to actually buy marquee players. The balance sheet can support it and frankly, by purchasing question marks, ultimately the brand is being risked.

The team has to actually spend on a true star. Those players sell jerseys, attract television ratings, fill stadiums and give the league leverage when negotiating television contracts. The issue truly is a microcosm of Italy though...
Thank you, I agree. But people here have continuously stated we cannot afford a world class player because it "doesn't fit our wage structure" even though the club is still paying the wages of several mediocre players. But needless to say, these folks don't understand discount rates and NPV.

Does Italy have something similar to a corporate tax shield through interest payments from borrowing, as in the WACC approach?
 
Mar 3, 2014
3,866
Thank you, I agree. But people here have continuously stated we cannot afford a world class player because it "doesn't fit our wage structure" even though the club is still paying the wages of several mediocre players. But needless to say, these folks don't understand discount rates and NPV.

Does Italy have something similar to a corporate tax shield through interest payments from borrowing, as in the WACC approach?
From a quick scan, it looks like the corporate tax rate is 27.5%, but there is a limit on interest that can be deducted, which is 30% of EBITDA.

So I guess as an illustration (assuming hypothetical numbers)
Assuming:
-50MM EUR in EBITDA
-4x EBITDA in Debt = 400MM EUR
= 5% rate = 20MM in interest =~20/50=40% of EBITDA
30%=15MM, which is 15MM/400MM = 3.75%...so if my maths correct, After-tax cost of debt should be ~[1.25%*1]+[3.75%*(1-27.5%)]= ~4% vs. ~3.65% if there were no limit.

That's my quick understanding, but that was only in 10 mins haha - looks like a rule that is designed to discourage the use of leverage...
 

PedroFlu

Senior Member
Sep 20, 2011
7,166
GDM linking us to Everton Ribeiro. @PedroFlu
I like him.

He's a very quick lefty AM. Quick feet, quick thinking. I think eventually he can also play as a winger or SS but he is a classic AM.

He's not a world beater, but he's been one of the best in the country for a while now and he has characteristics we don't find in the current squad. But I doubt he'd ever be a starter.

Cruzeiro will ask for stg like 15M and maybe sell for at least 12M. I really doubt Juve would be willing to pay so much for a guy based in Brazil.

Unless his contract is expiring, I don't see this happening.
 
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