Juventus 2021-22 loss is staggering, but things could actually be worse

JUVENTUS have not had the best start to 2022-23 and already some people are calling for the head of coach Max Allegri. After a decade of dominating Italian football, Juve now have stiff competition in Serie A and in the past two seasons, Inter Milan and AC Milan have won the scudetto. Moreover, Juve haven’t been quite the same club since the Cristiano Ronaldo years.

The pandemic exposed some of the shortcomings of Italian football’s business model and Juve have suffered more than most. In 2020-21, they made a loss of over € 200 million and in 2021-22, the deficit widened to a net loss of € 254.3 million, the highest ever in Italian football history. They have now made a loss for five successive years.

It’s a very worrying situation, but Juve’s finances would have been even more challenging if they hadn’t completed a capital raising exercise in December 2021 that generated close to € 400 million. While this strengthened Juve’s equity, it was the second such exercise in a three-year period, following € 300 million raised in 2019.

In 2021-22, Juve’s revenues fell by 7.8% to € 443.4 million, largely due to under-performance in Serie A and the UEFA Champions League. After the complete collapse of income from ticket sales in 2020-21, Juve’s matchday revenues recovered to € 32.3 million, but around half the peak year of 2018-19. Broadcasting earnings dropped by 28% to € 170.5 million, a reflection of the club’s decline on the pitch since the highs of 2017 when TV income was over £ 234 million.

Juventus last five seasons

 Revenues €mPre-tax loss €mWages €mWage- income ratio

Commercially, Juve’s income was also down, from € 206 million to € 199 million. And yet, Juve’s wage bill went up by 9% to £ 351 million, representing a wage-to-income of 79%, seven percentage points higher than 2020-21. More positively, Juve have cut their net debt to € 153 million and have cash liquidity of around € 70 million. Of their gross debt (€ 223 million), € 176 million is owed to bondholders and € 6 million to banks.

The club has proposed a three-year plan for the years 2022-23 to 2024-25, which includes strategic and operating initiatives to maintain sporting competitiveness, economic and financial balance as well as improved operations and brand development. Interestingly, it also highlights the intention to take an active role in the reform and evolution process of the sporting industry. Juve’s ambition is to go shoulder-to-shoulder with Europe’s top clubs such as Real Madrid, Bayern Munich and Manchester City. The club was among those advocating the creation of a European Super League in 2021, a proposal that appears to have been aborted for now. However, the club’s chairman, Andrea Agnelli, was among the most enthusiastic supporters of this controversial project, so if global economic conditions worsen, it is likely another attempt will be made.

Juventus were beaten in two Champions League finals in 2015 and 2017, but since then, they have reached one quarter-final and three times could not get beyond the round of 16. It is arguable that the Cristiano Ronaldo experiment was not a big success, from both a playing perspective and financially.

Juve have been one of the most active clubs in the transfer market over the past five seasons (2018-19 to 2022-23). Only Chelsea (€ 900 million) have spent more than Juve’s € 877.9 million and their net spend of € 288 million is among the 10 highest worldwide. Clearly, this level of spending is unsustainable. In 2022-23, their transfer balance sheet is currently a positive after they sold Matthijs de Ligt to Bayern Munich for € 67 million. They picked up two notable big names on free transfers in Ángel Di Maria and Paul Pogba, both of whom are older than the likes of de Ligt.

Juventus cannot afford many more slip-ups in the Champions League in 2022-23, they’ve lost their first two games in the group stage, against Paris Saint-Germain and Benfica, so more setbacks may consign them to the Europa League in the knockout phase. That would surely impact their revenue generation into 2023.

The new Champions League – the start of a more self-serving period?

WHO IS Andrea Agnelli kidding? When he announces that the latest attempt to push European football towards the cliff edge is good medicine for the clubs, he really means it is beneficial for the elite and another step towards a European Super League. It’s undoubtedly designed to ensure the big guns remain the big guns and that, if all else fails, there is another way into the UEFA Champions League other than qualification on merit.

It’s all getting quite tiresome – periodic attempts at squeezing the governing bodies by strategically-placing information on the creation of a super league that will break-up the existing network of competitions. This undermines UEFA/FIFA and most of Europe’s football associations while also casting doubt on the future of the game. But what really happens is the fear of a breakaway forces people to accept a new deal for the elite, one that shovels more cash in their direction while consigning the poor to the workhouse.

Change can be good, so reformatting a competition suffering from fatigue need not be a major problem, as long as there is a degree of democracy and respect for the small guy. It is really difficult to have any sympathy or understanding for clubs and owners trying to stack the odds in their favour. Self-serving is an understatement.

The UEFA Champions League is currently in the knockout phase, and once more, it has underlined it is the most exciting football competition – once it reaches the two-legged stage. It’s clear that people like Agnelli don’t particularly like this part of the Champions League as it can quite easily signal the end of the road before a club’s appetite for cash has been satisfied. Juventus, for example, Agnelli’s club, surprisingly lost their last 16 tie with Porto. For most clubs, the real juice is to be had from the groups, anything other than that is a bonus. Juve’s relatively early exit – their second successive round of 16 defeat – will cost them on their balance sheet for 2020-21.

Ironically, this latest cosy restructuring comes at a time when Juventus are in danger of losing their Serie A title for the first time since 2011. Furthermore, their acquisition of Cristiano Ronaldo in 2018, aimed at improving their chances of winning the Champions League, hasn’t worked out, and CR7 is rapidly reaching the end of his career.

Porto, along with the clubs that have knocked them out since Ronaldo joined, Lyon and Ajax, would have to work hard to earn a place in any premier list compiled by elitists like Agnelli. Hence, there’s a degree of schadenfreude circling Turin after their latest setback.

The proposal for a 36-team phase, with each team playing 10 defined games promises to be more complicated than any previous incarnation of a UEFA club competition. Football is a simple game that has always performed best with easy-to-understand formats, but administrators are often obsessed with complicating structures. The current VAR debacle is a case in point, as is the trend to increase the size of calendar events like the World Cup, European Championship and FIFA Club World Cup. When a competition’s constitution starts to be determined by co-efficients, simplicity starts to become compromised. And if performance is not the sole factor in qualification, you move nearer to creating a closed league, the very antithesis of football’s soul. Apparently, four places in this new 36-team concept will be given over to those clubs with the best historic performance in Europe, which would provide an admission route for clubs with great pasts and patchy presents – such as AC Milan, Manchester United and Benfica.

The restructuring includes a proposal to prevent the top clubs from buying players from each other. In some respects, this could benefit smaller clubs, but this will not work very easily. Is this proposal an attempt to share the money around or a way to prevent, for example, a club using financial muscle to snare the best players from within the top bracket? Would this not create a system that encourages clubs to get around the system? For example, PSG want to buy a player from Manchester City but cannot, so City sell him to, say, Fulham and then they offload him to PSG. 

There’s also a suggestion that in order to accommodate a lucrative Champions League environment, some domestic leagues could be slimmed-down. Fine if you’re playing a minimum of 10 Champions League games, but what about the rest, will they settle for fewer top-class games? Of course not.

Another debatable point is the construction of a broadcasting deal that includes just the last 15 minutes of games, allowing those with short attention spans to catch the action in a short, sharp package. Agnelli claims young people are turning their back on football. This does seem unlikely, but if they are, it is surely the price of tickets that is a deterrent for the younger generation. Of course, nobody really wants to address this problem as it means lowering expectations on revenue generation.

Nobody is pretending football is a true democracy, but ideas that come from the privileged, in any walk of life, never have the interests of the majority. Whatever happens, the elite clubs will find their place at the top of the pyramid, but making it increasingly harder for the rank and file to exist, let alone flourish, demonstrates that football at the highest level has very little interest in preserving the eco-system. Those golden eggs are becoming more and more fragile.