Juventus: the peril of soaring ambitions and shallow pockets
The Italian football club’s finances look ropey even without disputed accounting
Football is great fun for star players and fans. Perhaps less so for investors in the sport. Given a flurry of high-profile deals in the sector, Juventus’s troubles provide a timely reminder.
The board of the Italian football club — majority owned by Exor, the Agnelli family’s listed vehicle — has resigned after an investigation into its accounting for players’ salaries and transfers. That, combined with financial losses, have reduced the market value to €700mn, down 35 per cent in the past year.
The investigation is still at a preliminary stage. Prosecutors allege that Juventus swapped players with other clubs at inflated values, producing fat capital gains with little or no money changing hands. Juventus is also alleged to have agreed to pay players back for most of their pandemic-related salary reductions without accounting for this to regulators’ satisfaction.
The club denies wrongdoing and has said it will amend accounts for 2022.
Juventus’s finances look ropey even without disputed accounting. The club has lost money in each of the past five years, for a total of €612mn. It has raised €700mn of fresh equity since 2019. This reflects the vicious spending cycle many European football clubs find themselves in.
To perform well, clubs must wrest star players from wealthy rivals. Juventus, for instance, acquired Cristiano Ronaldo from Real Madrid for a transfer fee of €100mn in 2018, paying him tens of millions annually on top.
Revenues, meanwhile reflect the popularity of the team’s home league. Italy’s Serie A teams make less than half the revenues of the Premier League, according to Deloitte. Worse, these Italian clubs, where Deloitte reckons players take home more than 80 per cent of the revenues, have collectively lost money in eight of the past 10 years.
This begs the question of whether public markets are the best home for football assets. Exor minority shareholders — saddled with an Agnelli family heirloom that looks increasingly like an albatross — might well agree.