Written by Pablo Saez Arce (12.02.2022)
Despite their rich background and being the most successful team in domestic competitions, since the takeover of Andrea Agnelli in 2010 as Chairman, Juventus showed some of their most consistent high-class performances in their history. In just his second season (2011/12) as the leader of this slowly awakening beast, he managed to bring home the Serie A title. To give some perspective, the last time the team had officially won it was in the 2002-2003 season.
But this was only the beginning of a legendary dynasty.
The club was victorious in the league for a record-breaking 9 times in a row, also winning the Coppa Italia and the Supercoppa Italiana 5 times each. If we do the math, that is 19 trophies in around 10 years, basically racking up 2 trophies every season. These ridiculous numbers are hard to come by in such competitive leagues.
At the European level, they reached the finals of the Champions League in the 14/15 and the 16/17 seasons, losing to Spanish giants FC Barcelona and Real Madrid respectively. In 2018 they even added Cristiano Ronaldo to their squad for a club record 117 million euros (Transfermarkt).
Figure 1 – Juventus’ 2014/15 team.
Yet, since the 2020 pandemic, things have only gone downhill for Juventus. Between the departures of key players such as Cristiano Ronaldo, Miralem Pjanić, Paulo Dybala, failing to go beyond the Quarter Finals in the UCL and finishing below 3rd place in Serie A; the club’s performance has been relatively disappointing. All these have taken place in just the last 2 seasons, which is rather worrying given how Juventus is as a club.
On the financial side of things, the club is wounded. It has seen 464 million euros in losses in their last 2 fiscal years, which includes a net transfer spending of -110.89 million euros (Transfermarkt) and a whooping 900 million euro debt (Deloitte) in 2022.
Whilst the previously mentioned details don’t paint the happiest of pictures, it is the most recent stories that create the most doom around the club. The 15 point deduction for “The Old Lady” in Serie A, saw them drop from 3rd to 11th place.
But what was the cause of this from a business and financial standpoint?
Before getting into the details, it is important to set forth that Juventus is among a very few number of clubs that are publicly traded, which means that anyone can purchase shares from the club and have a limited stake in the club. This means that they have relative major obligations and a big responsibility to deliver for their public shareholders.
In late 2022, the Italian “Guardia di Finanza” (Law Enforcement for the Minister of Economy and Finance of Italy) launched an investigation over some false accounting done by the club – specifically for paying players “off the books”. This accusation appeared to resemble the world crashing down for Juventus.
The entire board of directors resigned on November 29th. Amongst these there were Chairman Andrea Agnelli, VP Pavel Nedved and CEO Maurizio Arrivabene. Whilst the investigation is still slightly in the air, the severity of the fraud might result in sanctions which could go to the extreme of demoting the club to Serie B or even Serie C.
But why is such a big deal for the club to be caught doing so?
Well it’s quite simple: false accounting is a form of fraud. Dishonest financial statements aim to manipulate figures for the benefit of companies, usually with the intent to reduce the amount of taxes needed to be paid to the government. In terms of the fake accounting that Juventus underwent, the list is quite extensive, but for the purposes of keeping it simple we will provide you with the important factors that have caused the sanction.
Firstly, according to Italian newspaper “Il Fatto Quotidiano”, there were at least 17 players that were paid around 60 million euros (completely tax-free) in the period of the COVID-19 lockout. Due to the halt of games at the time, the club was not generating any revenue, and this meant that if they paid their players it would likely drive elevated losses, possibly breaching FFP (Financial Fair Play) rules. Secondly, the club was accused of inflating and manipulating the transfer values of around 50 players. Such was done with the purpose of attempting to show higher revenues in order for them to benefit in the form of balancing their books. The third and final red flag would be the 34 million euros of undeclared debt, once again with the purpose of balancing their books.
Additionally to the 15 pt. deduction, members that were involved in the fraud have almost all been sanctioned by the FIGC (Italian Football Federation). Pavel Nedved (Former VP), Fabio Paratici (Former Club Director), and Maurizio Arrivabene (Former CEO) have all been issued bans ranging from 16 to 20 months from Italian football. Former president Andrea Agnelli isn’t excluded from the list as he’s been given a 2-year ban.
All in all, from a football perspective the club is in a visibly difficult situation. Despite the somewhat promising turnaround they had around the end of 2022, which saw them go up to 2nd place, the continuous financial struggles and legal issues have shut all hopes down. Though it isn’t safe to say that the club has a hit trough, given its rich history, high marketability and big fanbase, to me it is unlikely for their situation to worsen further. The club must now enter a rebuilding phase as it sees important players ageing, and should seek a financial reset by acquiring new investors to fix, manage, and go back to its original state.
References
https://www.90min.com/posts/why-juventus-have-been-handed-a-serie-a-points-deduction
https://football-italia.net/juventus-in-crosshairs-for-e34m-in-undeclared-debts/
http://www.ibianconeri.it/2019/02/27/juventus-la-stagione-2014-15/