AS Roma need to grab the chance, despite their financial limits

WHEN José Mourinho joined Roma, it looked like a statement of intent, a sign that the giallorossi were eager to become genuine contenders. They might not have been getting Mourinho circa 2004, but any club that aspires to win trophies is attracted by his track record. 

Roma’s 6-1 defeat in Norway in the Europa Conference League was a shocker for their fans and the Italian football community, Mourinho teams don’t lose like that and even with a weakened team, there was no way that should have happened. Roma should still qualify for the latter stages of the Conference League despite that humbling against Bodo/Glimt, but the Mourinho image was a little damaged by such a setback.

If that result was embarrassing for Roma and their coach, then the club’s financial condition is also a worry, despite the new ownership of the Friedkin Group. Roma lost € 185 million in the 2020-21 season, which continued the negative financial impact of the pandemic on Italy’s Serie A. Roma may also face sanctions in connection with breaches of Financial Fair Play rules.

Juventus announced their results recently and made a loss of € 210 million, which at the time was the highest ever for a Serie A club. Inter Milan topped that with a € 245 million loss in their title-winning season. AC Milan’s loss was € 96.4 million, a huge deficit but much lower than 2019-20 when they lost almost € 200 million.

In spite of these setback, Serie A has become very attractive for US investors like Friedkin owing to the competitive pricing of clubs and future broadcasting rights. Seven members of Serie A and two from Serie B currently have US backers in some capacity. 

Roma’s revenues actually increased by 35% to € 190 million, but their wage bill accounted for a very disconcerting 89% of income. Unsurprisingly, matchday income declined by 37% and since 2018-29 has dropped by 62%. TV income was up by 44% to € 124 million and commercial and other streams were up by 50% to € 53 million.

The biggest anxiety surrounding the financial results could eventually be the Financial Fair Play issues. The club’s press release said: “On the basis of the final figures as at June 30, 2021, a deviation from the UEFA break-even requirements for the reporting period for four years has been recorded. Therefore, the club may be subject to the sending of more economic-financial information and, subsequently, the Club Control Body in charge of the control, may requiest any contradictory clarifications for the appropriate assessments.” 

This may mean the club will face sanctions, although the rules are currently being rewritten and FFP punishments suspended. When they become operational again, a number of Italian clubs could be compromised.

Roma were less active than Juventus, AC Milan and Parma in the transfer market in 2020-21 but in 2021-22, they are so far the biggest spenders in Serie A having acquired € 100 million of fresh talent, including Chelsea’s Tammy Abraham (€ 40 million). Roma’s ability to spend underlines the confidence the club’s owners have in their objective of challenging at the top of Serie A and in Europe.

The Friedkin Group recently injected more cash in the club bringing Roma’s net debt to over € 300 million. They are, however, planning a capital increase of up to € 460 million, to be completed by the end of 2022. When they took the club over in August 2020, the company’s CEO, Dan Friedkin, proclaimed that Roma could become on the greatest names in football. 

But since the takeover, Roma have shelved plans for a planned new stadium after earlier signs that the project was gathering momentum. In February 2019, the city’s mayor said private financing was willing to contribute € 1 billion towards the cost. The new 55,000 arena was being driven by the club’s previous owner, James Pallotta. Friedkin subsequently analysed the scheme and came to the conclusion the financial, economic and legal conditions were unsuitable. It’s not completely over, though, as the club has confirmed they are in talks with the Rome authorities and reviewing their options, including a green and sustainable stadium for the future.

Last season, under Paulo Fonseca, Roma reached the semi-finals of the Europa League but were heavily beaten at Manchester United (6-2) at Old Trafford and eventually went out 8-5 on aggregate. They also finished seventh in Serie A, thus qualifying for the inaugural Conference League. 

Absence from the UEFA Champions League (and the Europa) will cost Roma dear in 2021-22. Every point in the group stage of the Champions League earns € 930,000 and just qualifying for the knockout stages wins a further € 9.6 million. With Serie A clubs suffering more than most from the pandemic, the income from the Champions League is vital, especially in the current climate. The Conference League prize money is, understandably, much lower, € 500,000 for a group stage win and winning the group yields € 650,000.

Roma’s goal is clearly to get among the Champions League contenders, but they will have to improve their away form in Serie A. Their home record is good, five wins and a draw and only two goals conceded, but away from the Stadio Olimpico they have won once and lost their last three games, the most recent at Juve. Their latest performance saw them hold early season leaders Napoli to a 0-0 draw, a game that saw Mourinho sent off, but one that redeemed the team after the disaster at Bodo/Glimt.

Roma remain one of Europe’s underachievers and their three scudettos – the last in 2001 – is a paltry return for such a big, well supported club. Although they have won nine Coppa Italias, their only success in Europe has been the fledgling Inter-Cities Fairs Cup in 1961. Although they have the potential to be champions and a European force, they are currently way behind the likes of Juventus in terms of financial clout or business acumen. Regardless of that, the 2021-22 season may be one of the most open in Italian football history, there’s an opportunity to be grasped.

AC Milan: The light shines brighter

AC MILAN may have lost both of their UEFA Champions League games, but things are looking better off the field for the Rossoneri after some grim financial results in recent years.

Milan were beaten 3-2 at Liverpool and capitulated at home against Atlético Madrid in their first two Champions League group fixtures, but they could easily have ended with maximum points. They led in both games and were only beaten by Atléti with a last-gasp penalty. They have done enough so far to suggest they have very positive momentum.

They are in a tough section, with Porto still to play, so even securing third place will be a major challenge. Meanwhile, in Serie A, Milan have made a strong start to the season, winning five of their first six games and now sit in second place, two points behind resurgent Napoli. 

Milan’s owners, Florida-based Elliott Management, took the club over in 2018 and were presented with a loss-making giant with a glorious domestic and European heritage. But the club had fallen way behind Juventus and was struggling to keep pace with San Siro stablemates Inter. Last season, they finished in second place behind Inter.

Elliott are part of a growing trend of alternative investors moving into football as an asset class with potential. Hedge funds and private equity firms have been lending money, buying media rights and purchasing stakes in clubs of all sizes. 

Clubs desperate for cash have been welcoming these new investors with open arms. Milan are one of nine clubs owned by US investors in Serie A, all of whom are attracted by the league’s historic potential and possible new TV deal. There is a significant degree of risk involved here, as Serie A has often struggled to attract global brands. However, overseas money is exactly what Italian football needed to become more competitive.

There was better news for Milan in the preliminary viewing of their financial performance for 2020-21. After two seasons of calamitous financial reporting, Milan have halved their losses, with 2020-21 coming in at € 96.4 million, a considerable achievement given their 2019-20 loss was € 192.4 million and 2018-19 was € 142.5 million. They are still running at an unacceptable deficit, but they are moving very much in the right direction.

Milan have stemmed the flow of losses to some extent, but they are still some way off being able to compete at the very highest level. They still trail behind Juventus and, to some extent, Inter. They are fortunate that they do not have any bank debt, but in 2019-20, their net debt was over € 100 million. Their wage bill in 2020 was in worrying territory, but as of today, it may be significantly lower after the departure of Gianluigi Donnarumma (PSG) and Hakan Çalhanoglu (Inter), both of whom left on free transfers. 

Elliott have a strategy that is essentially focused around younger players, although their highest wage earner is Zlatan Ibrahimovic, who is almost 40. The club is rumoured to be interested in Arsenal’s Alexandre Lacazette, but his wages (around € 9 million) would make him Milan’s biggest earner, which may not fit comfortably with Elliott’s approach. AC Milan’s squad, with an average of 24.9 years, is the youngest in Serie A. 

The return of Champions League football is part of Milan’s objective of becoming more profitable. Elliott Management have enough confidence in the current regime to allow € 70 million to be spent on strengthening the squad, including the loan acquisition of Brahim Díaz, the 22 year-old Spanish midfielder from Real Madrid. Díaz has started well, scoring three goals already in Serie A.

Both Milan clubs are hoping a new era will unfold once the long-awaited replacement for the iconic San Siro is constructed. AC Milan’s president, Paulo Scaroni, believes the new stadium will be ready by 2024 and work will commence in 2022. “I hope for a quick approval because two years have passed since the presentation of the project and things are already being done in Milan,” he told the Italian media. “Our goal is to have a Milan that generates cash; we are beginning to see it and have entered into 20 new partnerships.”

Photo: Valentina CC-BY-NC-ND 2.0

Italian football clubs still lagging the leaders

ONCE UPON a time, Italian clubs ruled Europe, not just on the pitch but also through their purchasing power, attendances and in players wages that attracted some of the world’s top stars. Serie A was the envy of most European leagues, notably in England where people became fascinated by the glitz, glamour and smoke bombs of Italy’s Calcio.

Between 1989 and 1996, an Italian club won a major European prize in all bar one season and in the year they didn’t take a trophy back to Italy (1992), Sampdoria and Torino were runners-up in the European Cup and UEFA Cup respectively.

Top 10 highest revenue-generating football clubs 2018/19 (in £) Infographic PA Graphics

Today, Italian clubs have substantial debts, they struggle to compete in the UEFA Champions League and financially, they trail behind Europe’s leaders. While Juventus have made a good fist of hanging onto the tails of the Real Madrids and Barcelonas, their financial model doesn’t produce enough in revenues to go seriously nose-to-nose with the Spanish giants.

The Deloitte Football Money League 2020 underlines, once more, the gulf between Italy’s top clubs and their European peers. Furthermore, they don’t seem to be making up much ground on the elite, even though some clubs look like they have plateaued in terms of revenue generation: Real Madrid (+0.7%), Manchester United (+7%), Bayern (+5%), Chelsea (+1.3%) and Arsenal (+1.6%).

Juventus’ revenues went up by 16% to € 460 million and they moved back into the top 10. La Vecchia Signora continue to dominate Serie A, strengthened by the arrival of Cristiano Ronaldo in 2018-19. They clinched their eighth consecutive Scudetto, finishing 11 points ahead of Napoli. But Juve regularly field the most experienced team in Serie A with an average age of over 29 – something which should concern their fans. Their wage bill is also high, more than 70% of income – not a healthy figure.

Juve, for all the progress they have made – their commercial revenues of € 186 million, buoyed by lucrative sponsorship deals, are substantially more than their Italian rivals – are still way behind the leading Spanish and English clubs. But Juventus still represent Italy’s only credible Champions League contender even though in 2019 they fell at the quarter-final stage, surprised by a young and vibrant Ajax team.

Juventus’ nearest contender is Inter (placed 14th by Deloitte) in terms of revenues. Showing signs of resurgence after the fresh impetus of hiring Antonio Conte as coach, Inter saw income go up by 30% to € 365 million. They are also the best supported by average attendance, with crowds close to 59,000 at the San Siro.

AC Milan cannot claim to be in particularly good shape after making a big loss in 2018-19 and slipping out of the Deloitte top 20. Milan are actually generating less money than they were 15 years ago, despite having average gates of 55,000. They recently signed Zlatan Ibrahimovic for the second time, a transfer that was arguably aimed at giving the club a morale boost. It’s sad to see a club with such a colourful history struggling to adapt, but it also – in many ways – underlines the decline of Italian football. And it is also a reminder that reliance on a controlling individual for financial support – a la Berlusconi – is not an optimal way to run a club.

Italy desperately needs competition for Juventus, but clubs need to become more profitable for that to happen

Inter and AC Milan are hoping to have a new arena that can make them more competitive on and off the field. Juventus have shown that stadium ownership can bring many benefits, but there is opposition to demolishing the very symbolic San Siro.

Roma (16th) and Napoli (20th) complete the five-team representation in the Deloitte report, although Roma’s revenues are around 50% of Juve’s and Napoli’s are on par with AC Milan.

Game of the People has said it before, but Italy desperately needs competition for Juventus on the field, but this will only happen if Italian clubs can become more profitable. This is a country with some of the most iconic clubs in the world, names that helped shape pan-European football. Juventus didn’t catapult themselves to the forefront through inflated investment by a rich oil-man, it was done on the back of long-term strategic thinking and a relaunch of the club. That sort of approach is available to anyone with the business skills and patience to preside over a transformation. Right now, clubs like AC Milan badly need that if they are ever going to become a major force once more.

Photos: PA