the excesses of the transfer window!


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Who says transfer market, also says strategies, capital gains or even books of accounts, what is more in the midst of economic uncertainty! As such, how not to mention these “false exchanges” made between clubs and aimed, in particular, at improving their financial results? In June 2020, Juventus and Barça thus concluded an operation sending Miralem Pjanic (32 years old) from Piedmont to Catalonia and Arthur Melo (25 years old) in the opposite direction. This transaction, which was exchanged only in name, actually consisted of the conclusion of two separate but closely related transfers. On the one hand, the Bosnian therefore signed with the Culés for around 60 million euros, on the other the Brazilian signed with the Turinese for 72 M€!

Confusing transfer fees!

“We took a player who we have been following for years and who is younger than Miralem. And then, we managed a superb financial operation., then welcomed Fabio Paratici, former sports director of the Turin club. Sums arousing, however, the curiosity of many observers. Could Arthur, replacing Barça, really be worth €72m two years after being paid €31m? And how to explain this astronomical sum of 60 M€ for a Pjanic aged, at that time, 30 years old and coming out of a more than average season? Alerted on the subject, the Italian justice is also directly involved even if the Old Lady, and 10 other Italian clubs with similar practices, have since been acquitted at first instance and on appeal. Back on these « exchanges » leading to some suspicious capital gains.

As we explained in a previous article, the amortization of transfer indemnities makes it possible to spread out the cost of the investment made over the duration of the contract of the newly signed player. Therefore, when Barça signs Pjanic from Juve, the transfer fee of 60 million euros paid for the Bosnian – who signs a contract until June 2024 – can be amortized over 4 years, regardless when the sum will be paid to Juve. The same goes for Arthur, signing, at the time, a contract until June 2025.

Beyond the quality of the two players, the amounts, relatively disconnected from the reality of the market at the time, question and raise the question of such an operation. From this point of view, if the sums disbursed are, on paper, very high, little money goes in or out, in reality, of the coffers. The effect on the accounts is on the other hand spectacular, thanks to the notion of added value… And here again, the explanation is accounting. In fact, during a transaction, for the buying club, the cost of the investment is amortized and spread over the duration of the contract, while for the selling club, the capital gain on sale (the sale price minus the residual value of the player’s contract) is immediately recorded in the accounts. In other words, from an accounting point of view, the buyer spreads the cost over several years while the seller records the gain immediately.

Suspicious capital gains

Let us then take the example of the Arthur-Pjanic case to highlight the mechanisms mentioned above.

  • For Barça, in 2019-2020, the cost of Pjanic was 15 million (60 million compensation / 4 years of contract) while the revenue obtained for Arthur was 72 million – the VNC (net book value) of the player (unknown).
  • For Juve, in 2019-2020, the cost of Arthur was 14.4 million (72 million indemnities / 5 years) and the revenue was 45 million (60 million indemnities – 15 million VNC at the time). transfer).

In summary, by “exchanging” their players in the form of two transfers, Turin and Barcelona leaders have thus both generated significant income over the 2019-2020 season while spreading the costs over several seasons, allowing them, among other things, to get into the nails of Financial Fair Play. Moreover, they did not even need a lot of cash since the compensation was partially canceled and only 12 million euros (72 – 60) were to be paid from Juve to Barça. A “false exchange” therefore allowing the two European leaders to increase their revenue for the 2019-2020 season. An accounting trick presenting, despite everything, the risk of headlong rush since the remaining costs will have to be integrated for the next 4 years for Arthur and the next 3 years for Pjanic.

An immediate danger for football?

This type of maneuver could thus cause at least two important problems: the inflation of transfer fees and the potential overvaluation of club assets. Indeed, if Juve and Barca swap Pjanic and Arthur for 60 and 72 million euros when their market values ​​seemed significantly lower, why couldn’t they sell them for more and increase their revenue even more? Probably, because the two clubs want to remain cautious and partially avoid the headlong rush we mentioned. However, if this type of practice could not be sanctioned, it would most certainly lead to a fictitious increase (decorrelated from the economic value of the players) in transfer compensation. In addition, the transfer fees paid are entered in the assets of the clubs, ie they represent part of the resources available to the club to fuel its economic activity.

Generally speaking, a company with a large asset has a lot of resources and is therefore better valued. Nevertheless, the asset is supposed to objectively represent the situation of the club and should not be able to be sensitive to such accounting pirouettes. All this without mentioning the imbalance created between the clubs using these practices and the others. Transactions based on a certain form of complacency between the two teams concerned which could then lead to a real inflationary bubble. And for good reason, these trading operations carried out without cash in the cash registers should not make us forget that a salary is paid in money and not through various accounting adjustments. With this system, legal on the judicial level, it is therefore very tempting to overvalue a player to register the largest possible sum on the financial balance sheet.

A systemic drift?

As such, there are many examples along the lines of the one exhibited with Pjanic and Arthur. In 2018, Stefano Sturaro (29), Juve midfielder, was loaned to Sporting. Quickly injured, he will finally be repatriated to Piedmont before being transferred for 16.5 million euros to Genoa! The most expensive transfer in the history of Rossoblu and a capital gain of 12.9 million on the Turin club’s balance sheet… And what about Emil Audero, who left for Sampdoria for 20 million euros ( capital gain of 19.9 million) or Alberto Cerri, transferred to Cagliari for 9 million euros (capital gain of 8.9 million). With these three players, the Bianconeri thus added nearly 42.7 million to their economic balance sheet for the 2018/2019 season. Specialist, Juventus has also recorded in its accounts half a billion euros in capital gains over the last five seasons, including more than 150 M € for 2019-2020 specifies the specialized site Calcio and Finance.

And the other Italian clubs are not left out. With this in mind, Inter Milan was quick to sell Andrea Pinamonti (23) to Genoa in September 2020. Transaction amount? 18 million euros! All for a striker coming off a disappointing loan at Frosinone… And the list doesn’t stop there for the Nerazzurri. Federico Valietti (6 million, at Genoa), Zinho Vanheusden (12 million, at Standard), Ionut Radu (8 million, at Genoa) or even Davide Bettela (7 million, at Atalanta), Inter has not stopped , in recent months, to create significant capital gains via Primavera. Same story on the side of AS Roma where Davide Frattesi, Ricardo Marchizza, Marco Tumminello, but also Luca Mazzitelli have, in total, brought in 18 million euros to the Roman formation. A practice widely observed in Italy, but which tends to be exported. In this sense, some French clubs are also involved.

In January 2021, OM concluded a questioning deal with the Old Lady. While Marley Aké was going to the other side of the Alps for 8 million euros, Franco Tongya, today in Odense Boldklub, was doing the opposite for the same amount. And what about LOSC with the transfer of Victor Osimhen to Naples for 72 M€ during the summer transfer window 2020. We knew the complex deal, but it is above all the four Neapolitan players hired « in exchange » by the Mastiffs who has something to challenge . Orestis Karnezis, 35 years old at the time of the facts, recovered one year from the end of his contract against 5.1 M€! Claudio Manzi (21), recruited by LOSC in Naples for €4m, immediately loaned to Fermana in Serie C, before leaving for free last summer. Luigi Liguori (23) also made the trip between Naples and Lille in 2020 for €4 million, then was also loaned to Fermana and Lecco in Serie C. He finally left the Dogues free, in July 2021, for join Afragolese in Serie D… Finally, the last case and certainly the most telling. Ciro Palmieri (21) who also plays in Serie D, at Nocerina where he arrived free last August. However, Lille had recruited him for €7m a year earlier before loaning him to Fermana.

What solutions?

At a time when several formations are therefore seeking to correct their balance sheets by « fictitious capital gains », the authorities are trying to react. In 2018, Chievo Verona had been fined and withdrawn points after a multitude of operations deemed fictitious with Cesena, which had allowed him to balance his accounts and be able to register for the championship. In November 2021, the Italian financial brigade was still investigating 11 Italian clubs and 59 of their leaders, accused of inflating transfer compensation to increase their capital gains and sent to court. In addition to the Pjanic-Arthur exchange, 62 other transactions would have been scrutinized in this way.

Nevertheless, all the clubs and their executives, for lack of sufficient evidence, were acquitted on April 15, 2022, with confirmation on appeal on May 17, 2022. Unable to prove that a transfer fee had been overvalued, the justice system unfortunately decided considered that no reliable method for objectivating transfer fees still existed. “The evaluation method adopted by the Federal Prosecutor’s Office [pour justifier la surévaluation des joueurs] can be considered ‘a’ valuation method, but not ‘the’ valuation method. (…) The non-existence of the method of assessing the value (…) can legitimize the recognition of rights for any amount »moreover specified the motivations of the court.

Faced with the legal impasse, the solution for the federation would then consist in regulating transfers more strongly to prevent such practices from recurring in the future. Italian justice also indicates three areas of regulation: on the definition of the value and price of exchanges, on the treatment of capital gains and on the valuation of transfer compensation after the first year. So many lines of work for the Italian federation, but more generally for the regulatory bodies of football. Last February, Gazzetta dello Sport revealed, in this sense, that UEFA, annoyed by these sleight of hand at the accounting level, kept an eye on these transactions. “The big question about transfer fees and financial settlements is whether we should have a mathematical calculation of the value of a player’s contract or whether it should be left to the discretion of clubs, agents, intermediaries or anybody »wondered Gianni Infantino, president of the body since 2016, during a conference entitled “Commentary to the Regulations on the Status and Transfer of Players”.

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