Juventus financial performance – the bubble starts to deflate
Posted on September 24, 2020
WHEN a club of Juventus’ size has financial issues, then we should all be concerned about the future of top level professional football. The dominant force in Italy, regular Champions League participants, the most popular and visible club in their home country and a team of big-name players. How does a club like Juventus get into such a mess?
Covid-19 has played its part. Predictably, Juve’s revenues were down in the financial year ended June 30 2020, but the most worrying sign for fans of the club is that they have been releasing players to ease the burden on their balance sheet. Gonzalo Higuain and Blaise Matuidi had their contracts terminated and the club is desperate to let others go, such as Sami Khedira, who has refused to leave. Little wonder the club’s president, Andrea Agnelli, in his role at the European Club Association, told the media major European clubs would lose around € 3.6 billion in revenues due to the crisis.
Juventus revised their year-end figures after letting Higuain and Matuidi go for nothing. The departure of Higuain to Inter Miami had a negative impact on the financial result to the tune of € 19 million. Four years ago, Juve paid € 90 million for the Argentinian striker.
Juventus made a record loss for the year of € 89.7 million, their third consecutive annual deficit and 125% higher than their loss of € 39.9 in 2018-19. Their operating loss was € 67.1 million, more than three times higher than a year earlier. The club has effectively used shareholder capital to cover its losses.
Juve’s total revenues, including € 172 million from players’ registration rights, amounted to € 573.4 million, approximately € 48 million (8%) lower than 2018-19.
Understandably, given the pandemic, Juve’s matchday income declined by more than € 21 million to € 49.2 million. Broadcasting saw the biggest hit, though, falling from € 206.6 million to € 166.4 million. Commercial income was more or less unchanged at € 186 million.
The media has been talking about Juve’s problems for some time. Tuttosport, for example, said they were desperately keen to relieve pressure on the payroll while it was reported that Italian investment bank Banca IMI had forecast a loss as high as US$ 122 million. The club has already reduced its wage bill, taking it from € 327.7 million to € 284. 3 million – and that is with Cristiano Ronaldo still on their books. Even after the reduction, the wage bill still represents 70% of income – a very high and unsustainable figure. Other media reports suggested the club was keen to sell Ronaldo to the Premier League for € 70 million to cash-in while his value was still high and not eroded by the crisis. Ronaldo, who waived four months’ wages earlier this year, earns € 570,000 per week at Juventus (€ 30 million per year).
In the circumstances, a major concern has to be the club’s level of indebtedness. Net financial debt, while 17% lower than 12 months earlier, is still high at € 385.2 million.
Juventus won their ninth consecutive scudetto in 2020 but they were pushed all the way. They went out of the UEFA Champions League in the round of 16, losing to Lyon. At the end of 2019-20, they disposed of manager Maurizio Sarri, installing Andrea Pirlo in his place. Juve have longed to win the Champions League and reached the final in 2015 and 2017, but they seem further away from success than at any point in the past decade. Their financial situation may not be existential, but it may affect their ability to be competitive in European competition.
Despite the current financial situation, Juventus have signed a number of players for 2020-21, including Arthur from Barcelona (a deal which sent Pjanic to Spain) and have taken Alvaro Morata on loan from Atlético Madrid. But their star player, Cristiano Ronaldo, is 35 and their coach has no track record as a manager.
More positively, Juventus are still trying to expand their global footprint and have struck a partnership with the Hong Kong-based Raffles Family Office in order to grow their presence in Asia. Juventus opened a marketing office in Asia 2019.
For some years, football experts have been warning of a bubble-like situation that could burst at any time. The covid-19 pandemic may have created that scenario, in which case, Juventus may be just one of many clubs to feel challenged by the crisis. It would certainly be no surprise if the club’s rivals in Italy reported similar problems in the months ahead.