Who says transfer market, also says strategies, capital gains or even account books, which is more in the midst of economic uncertainty! As such, how can we not mention these “false exchanges” made between clubs and intended, in particular, to improve their financial results? In June 2020, Juventus and Barça thus concluded an operation that sends 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 signed with the Culés for around 60 million euros, on the other hand 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., he then welcomed Fabio Paratici, former sporting director of the Turin club. These numbers, however, arouse the curiosity of many observers. Could Arthur, who replaces Barça, really be worth 72 million euros two years after being paid 31 million euros? And how do you explain this astronomical sum of 60 M€ for a Pjanic aged, at that time, 30 years old and coming off a more than average season? Alert on the subject, Italian justice is also directly involved even though the Vecchia Signora, and 10 other Italian clubs with similar practices, were acquitted at first instance and on appeal. Return on these “exchanges” that lead to some suspicious capital gains.
As we explained in a previous article, the amortization of the transfer fee allows you to spread the cost of the investment made over the duration of the contract of the newly signed player. Therefore, when Barça sign 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 of when the sum will be paid to to Juve. The same goes for Arthur, who signed, at the time, a contract until June 2025.
Beyond the quality of the two actors, the quantities, 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 enters or leaves, in reality, the coffers. The effect on the accounts is also spectacular, thanks to the notion of added value… And here again, the explanation is accounting. Indeed, 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 profit on the sale (the sale price minus the value player’s residual). 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 therefore 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 compensation / 5 years) and the income was 45 million (60 million compensation – 15 million VNC at the time) .
In summary, by “swapping” their players in the form of two transfers, the managers of Turin and Barcelona have both generated significant income over the 2019-2020 season while spreading the costs over several seasons, allowing them, among the ‘other things, to enter the nails of the Financial Fair Play. Also, they don’t even need a lot of money since the compensation has been partially canceled and only 12 million euros (72 – 60) have to be paid by Juve to Barca. A “false exchange” that therefore allows the two European leaders to increase their income for the 2019-2020 season. An accounting trick that presents, despite everything, the risk of the event, since the remaining costs have to be integrated for the next 4 years for Arthur and the next 3 years for Pjanic.
An immediate danger to football?
This type of maneuver could therefore cause at least two important problems: the inflation of transfer fees and the potential overvaluation of the club’s assets. Indeed, if Juve and Barca traded Pjanic and Arthur for 60 and 72 million euros when their market values seemed significantly lower, why couldn’t they sell for more and increase their revenue even more? Probably, because both clubs want to be cautious and partially avoid the influx that we mentioned. However, if this type of practice could not be sanctioned, it most certainly leads to a fictitious increase (decorrelated from the economic value of the players) in the transfer compensation. In addition, the transfer fees paid are included in the assets of the clubs, that is to say that they represent part of the resources available to the club to fuel its economic activity.
In general, a company with large assets has a lot of resources and is therefore better valued. In any case, 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 that use these practices and others. The 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 commercial 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 at the judicial level, it is therefore very tempting to overvalue a player to record the largest possible sum in the financial balance.
A systemic drift?
As such, there are many examples along the lines of the one shown with Pjanic and Arthur. In 2018, Stefano Sturaro (29), Juve midfielder, was loaned to Sporting. Soon 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 in the budget of the Turin club… 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 will thus add almost 42.7 million to their economic budget for the 2018/2019 season. Specialist, Juventus has also registered in its accounts half a billion euros more than the capital of the last five seasons, including more than 150 M € for 2019-2020 specifies the specialist site. Football and Finance.
And the other Italian clubs are not left out. With this in mind, Inter Milan is ready to sell Andrea Pinamonti (23) to Genoa in September 2020. The amount of the transaction? 18 million euros! All for a striker who comes from 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 did not sign , in recent months, to create significant capital gains via Primavera. Same story from the side of AS Roma where Davide Frattesi, Ricardo Marchizza, Marco Tumminello, but also Luca Mazzitelli brought, in total, 18 million euros to the Romanian training. 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 an interrogation agreement with the Old Lady. While Marley Aké went to the other side of the Alps for 8 million euros, Franco Tongya, now in Odense Boldklub, did the opposite for the same amount. And what about the LOSC with the transfer of Victor Osimhen to Napoli for 72 M€ during the summer transfer window 2020. We know the complex deal, but it is above all the four Neapolitan players hired “in exchange” by the Mastiffs who have something to challenge. Orestis Karnezis, 35 years old at the time of the events, recovered a year from the end of his contract against 5.1 M€! Claudio Manzi (21), recruited from LOSC in Naples for 4 million euros, immediately joined 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 euros, then he was also loaned to Fermana and Lecco in Serie C. Finally, he left the Dogues free, in July 2021, for joins Afragolese in Serie D… Finally, the last case is certainly the most telling. Ciro Palmieri (21) who also plays in Serie D, at Nocerina where he arrived for free last August. However, Lille had signed him for €7 million a year earlier before the loan to Fermana.
At a time when many formations are therefore trying to correct their budgets for “fictitious gains”, the authorities are trying to react. In 2018, Chievo Verona had been amended and stripped of points after a multitude of operations deemed fictitious with Cesena, which had allowed them to balance their accounts and be able to register in the championship. In November 2021, the Italian financial brigade was still investigating 11 Italian clubs and 59 of their managers, accused of inflating transfer compensation to increase their profits and sent to court. In addition to the Pjanic-Arthur exchange, 62 other transactions were scrutinized in this way.
However, all clubs and their executives, due to lack of sufficient evidence, were acquitted on 15 April 2022, with confirmation on appeal on 17 May 2022. Unable to prove that a transfer fee had been paid overestimated, the justice system unfortunately decided to consider. that there is still no reliable method to object the transfer fees. “The evaluation method adopted by the Federal Prosecutor [pour justifier la surévaluation des joueurs] it can be considered “an” evaluation method, but not “the” evaluation method. (…) The non-existence of the method of assessing the value (…) can legitimize the recognition of rights for any amount”in addition specified the motivations of the court.
Faced with the legal impasse, the solution for the federation would then consist in a stronger regulation of transfers to prevent such practices from happening again 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 evaluation of the transfer compensation after the first year. 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 anyone”asked Gianni Infantino, president of the body since 2016, during a conference entitled “Comment to the Regulations on the Status and Transfer of Players”.