the excesses of the transfer window!

Whoever says transfer market, also says strategies, capital gains or even ledgers, what’s more in the midst of economic uncertainty! As such, how can we not mention these “spurious exchanges” between clubs aimed, in particular, at improving their financial results? In June 2020, Juventus and Barcelona thus concluded the process of sending Miralem Pjanic (32) from Piedmont to Catalonia and Arthur Melo (25) in the opposite direction. This transaction, exchanged in name only, actually consists of the conclusion of two separate but closely related transactions. On the one hand, the Bosnian subsequently signed Culés for about 60 million euros, and on the other hand the Brazilian signed with the Turinese for 72 million euros!

Confusing conversion fees!

“We took a player we’ve been following for years who is younger than Miralem. After that, we ran an amazing financial operation.Then he received Fabio Paratici, the former sporting director of Torino. The sums arouse the curiosity of many observers. Could Arthur, who will replace Barcelona, ​​really be worth €72m two years after he paid €31m? And how do you explain that astronomical €60 million for Pianic who is at the time 30 years old and coming off an above-average season? After being alerted on the matter, Italian justice is also directly involved even if the old lady and 10 other Italian clubs who have had similar practices since then have been acquitted in court of first instance and on appeal. Back to these “exchanges” resulting in some shady capital gains.

As we explained in a previous article, the transfer compensation amortization makes it possible to spread the investment cost over the term of the newly signed player’s contract. So, when Barcelona sign Pjanic from Juventus, the €60m transfer fee paid to the Bosnian player – who signs a contract until June 2024 – can be amortized over 4 years, regardless of when the payment is made to Juventus. The same goes for Arthur, who at that time signed a contract until June 2025.

Beyond the quality of the players, the sums, relatively disconnected from the reality of the market at the time, call into question and raise questions about such an operation. From this point of view, if, on paper, the amounts spent are very high, little money goes in or out, in fact, from the coffers. On the other hand, the effect on the accounts is staggering, thanks to the idea of ​​added value … And here again, the explanation is accounting. Indeed, during the transaction, for the buying club, the cost of the investment is amortized and distributed over the term of the contract, while for the selling club, the capital gains from the sale (selling price minus the residual value of the player contract) are immediately in the accounts. In other words, from an accounting point of view, the buyer spreads the cost over several years while the seller immediately records the gain.

suspicious capital gains

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

  • For Barcelona, ​​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 – VNC (net book value) of the player (unknown).
  • For Juventus, in 2019-2020, the cost of Arthur was 14.4 million (72 million compensation / 5 years) and the revenue was 45 million (60 million compensation – 15 million VNC at that time). Transfer).

In short, by “exchanging” their players in the form of two transitions, both Turin and Barcelona generated significant income during the 2019-20 season with the costs spread over several seasons, which allowed them, among other things, to enter the nails of financial fair play. Moreover, they did not even need much money because the compensation was partially canceled and only 12 million euros (72-60) were to be paid from Juventus to Barcelona. Thus, the “pseudo-exchange” allows the two European leaders to increase their revenue for the 2019-20 season. An accounting stunt that presents, after all, the risk of a rush rush since the remaining costs will have to be consolidated over the next four years for Arthur and the next three years for Pjanic.

Immediate danger to football?

This kind of maneuver could thus cause at least two significant problems: inflated transfer fees and the potential overvaluation of the club’s assets. In fact, if Juventus and Barcelona exchange Pjanic and Arthur for €60-72m when their market values ​​looked much lower, why can’t they sell them for more and increase their revenue even more? Perhaps, because both clubs want to remain cautious and partly avoid the reckless rush we mentioned. However, if this kind of practice cannot be penalized, it will almost certainly result in a fake (relating to the players’ economic value) increase in transfer compensation. In addition, paid transfer fees are entered into the assets of the clubs, that is, they represent part of the resources available to the club to fuel its economic activity.

Generally, a company with large assets has a lot of resources and is therefore of better value. However, the asset is supposed to represent the position of the club objectively and should not be able to be sensitive to such accounting cycles. All this without mentioning the imbalance that has arisen between the clubs that use these and other practices. Transactions based on a certain form of complacency between the two parties involved which could then lead to a real inflationary bubble. And for good reason, such cashless trades in the cash registers should not make us forget that salary is paid in cash and not through various accounting adjustments. With this system, legal at the judicial level, it is very tempting to overestimate the player to record the largest amount possible on the financial balance sheet.

systematic deviation?

As such, there are many examples similar to the one shown with Pjanic and Arthur. In 2018, Stefano Sturaro (29), the Juventus midfielder, was loaned to Sporting. Quickly injured, he will finally be brought back to Piedmont before being transferred for €16.5m to Genoa! The most expensive transfer in Rossoblo’s history and a capital gain of 12.9 million on the balance sheet of the Torino club … And what about Emil Audero, who left for Sampdoria for 20 million euros (capital gain of 19.9 million) or Alberto Seri, who moved to Cagliari for 9 million euros ( capital gains of 8.9 million). With these three players, the Bianconeri added nearly 42.7 million to the economic balance sheet for the 2018/19 season. The specialist, Juventus also recorded in his accounts a capital gain of half a billion euros over the past five seasons, including more than 150 million euros for 2019-2020. Calcio and finance.

Other Italian clubs were not excluded. With this in mind, Inter Milan hastened to sell Andrea Pinamonti (23) to Genoa in September 2020. The amount of the deal? 18 million euros! All for a striker coming from a disappointing loan from Frosinone… And the list doesn’t stop there for the Nerazzurri. Federico Valietti (6 million, in Genoa), Zinho Vanheusden (12 million, in Standard), Ionut Radu (8 million, in Genoa) or even Davide Bettela (7 million, in Atalanta), Inter have not stopped, in recent months, to achieve Significant capital gains via Primavera. The same story on the Roma side, where David Frattisi, Riccardo Marchesa, Marco Tominello and Luca Mazzetelli raised 18 million euros for the Romanian squad. A widespread practice in Italy, but tends to be exported. In this sense, some French clubs are also involved.

In January 2021, OM made an interrogation deal with the old lady. While Marley Aki would go to the other side of the Alps for €8 million, Franco Tongia, today at Odense Boldklub, was doing the opposite for the same amount. And what about LOSC with Victor Osimhen moving to Napoli for 72 million euros during the 2020 summer transfer window. We knew the complex deal, but above all, the four Napoli players who were appointed “in return” by the Mastiffs who have something challenging. Orestis Karnezis, 35 at the time of the facts, has recovered one year after the end of his contract for €5.1 million! Claudio Manzi (21), who was recruited by LOSC in Naples for 4 million euros, was immediately loaned to Fermana at Serie C, before leaving for free last summer. Luigi Liguori (23 years old) also made the trip between Naples and Lille in 2020 for €4 million, then was also loaned to Firmana and Lecco in Serie C. He finally left Dogues for free, in July 2021, to join Afragolese in Serie D… Finally, the last and certainly the most indicative case. Ciro Palmieri (21) who also plays in Serie A, is at Nocerina where he arrived for free last August. However, Lille recruited him for €7 million the previous year before loaning him to Firmana.

What are the solutions?

At a time when several formations seek to correct their balance sheets with “fake capital gains”, the authorities are trying to respond. In 2018, Chievo Verona was fined and points withdrawn after several operations deemed fake with Cesena, which allowed him to balance his accounts and the ability to score in the tournament. In November 2021, the Italian Finance Brigade was still investigating 11 Italian clubs and 59 of their leaders, accused of inflating transfer compensation to increase their capital gains and sending them to court. In addition to the Pjanic-Arthur exchange, another 62 transactions could have been examined in this way.

However, all clubs and their executives, due to a lack of sufficient elements, were acquitted on 15 April 2022, with the resumption confirmed on 17 May 2022. Thus, justice has unfortunately considered that there is no reliable way to determine the subject of transfer compensation. Evaluation method approved by the Federal Prosecutor’s Office [pour justifier la surévaluation des joueurs] It can be considered as “A” evaluation method, but not “method” of evaluation. (…) The lack of a method for assessing the value (…) can legitimize the recognition of rights to any sum”Moreover, the motives of the court were specified.

Faced with the legal stalemate, the solution for the union would be to regulate transfers more aggressively to prevent such practices from recurring in the future. Italian justice also indicates Three axes of organization About setting the value and price of exchanges, about capital gains treatment and evaluating transfer compensation after the first year. Lots of lines of business for the Italian Federation, but in general for the football regulatory bodies. last february, Gazzetta dello sport He revealed, in this sense, that UEFA, disturbed by this hand ploy 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 someone else.”Gianni Infantino, head of the authority since 2016, wondered, during the conference titled Commentary on the regulations regarding the status and transfer of players..

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