Ronaldo to Juventus set to provide major boost to club revenues

27 July 2018

The much heralded arrival of Cristiano Ronaldo in Turin, having signed a deal with Italian champions Juventus, has been the source of a great deal of debate since its announcement in July 2018. The €113 million price tag may well pay for itself, as the CR7 brand boosts commercial revenue at the club, although Juve may need to be patient to see its full benefits, according to a new study.

When one of world football’s all-time greats decided to call time on his spell at one of history’s most successful clubs, it was heralded by some as the end of an era. However, while Cristiano Ronaldo has since noted that players his age tend to “go to China or Qatar”, when news broke that he would exit Real Madrid for Italian giant Juventus, he described it in more optimistic terms as “the moment to begin a new cycle.” For a player of 33, a rapid decline and retirement plans often spring to mind, but Ronaldo, who has grown to be a legend in his own time, is no ordinary player.

As a result, despite the not-inconsequential financial matter of a €117 million price tag, there are few who regard the deal between the clubs as anything but a boon for Italy’s Old Lady. Indeed, many Italian headline writers even went as far as to hail Juve’s capture of the five-time Ballon d’Or winning Portugal forward as “the deal of the century”. Quite a statement, considering the purchase of Ronaldo will cost the club the equivalent of 28% of its operating revenues, according to analysis from KPMG’s Football Benchmark team.

Most relevant transfers by year (2009 to 2018) and transfer fee to operating revenues ratio

While the portion of operating revenues put toward Ronaldo’s purchase is still dwarfed by 2017’s borderline absurd deal for Brazil striker Neymar – costing €220 million, or 42% of Paris St Germain’s operating revenues – it ranks well above the average. Over the past decade, the average for the world’s most expensive transfers has been 22%, including the eye-watering fees splashed out by Manchester United for recent World Cup winner Paul Pogba, and Real Madrid for Welsh star Gareth Bale. In fact, the only two other times the magic 22% threshold has been crossed have been for Fernando Torres to join Chelsea, and the purchase by Real Madrid of Ronaldo himself.

In fact, the 2009 deal for Ronaldo points toward the potential benefits of spending big on a player who seemingly delivers every time. Los Blancos spent €94 million to make the then-Manchester United number 7 a Galactico, over 23% of the club’s operating revenues at the time. The evidence shown here is that by the time Bale was signed for €101 million six years later, that was worth 20% of operating revenues. Indeed, it’s a play hardwired into Real Madrid’s business DNA, as exemplified by the Spanish club’s €37 million cheque written to recruit David Beckham in the summer of 2003. While some questioned the logic of the free kick specialist’s arrival, long-suffering club President Florentino Pérez was assured he had obtained a player who would bring far more than that into his club’s coffers, and while it was far from the most successful period of Madrid’s glittering history, the transfer paid for itself in terms of publicity and sales.

Value of main and kit sponsors in 2017/18

A large part of Juve’s own motivation for signing Ronaldo is likely to have been this boost in sales, while bizarrely the on-pitch impact of the CR7 brand may have been secondary. Juventus has hardly been in the wilderness in the past few years, reaching several Champions League finals, and winning the Scuddetto for the past seven years running. However, the club, which rebuilt its reputation following a relegation relating to match-fixing allegations, moved into a new stadium and birthed a new logo in the past decade, is pushing to expand its identity into new lucrative markets, while bringing in new fans across Europe – something Ronaldo’s presence on next season’s team sheet will undoubtedly help with.

It is worth noting that the perceived risk to the club of the huge transfer fee was not directly taken from Juventus’ revenues, however, potentially making the decision easier to make. Workers at a Fiat Chrysler plant in Italy are set to strike after its main investor, the holding company owned by the Agnelli family, which owns both the club and the carmaker, shouldered the €113 million fee. For the USB union, the decision means Fiat is missing out on investment, adding that it was "unacceptable" that while Fiat Chrysler workers were making "huge economic sacrifices", millions of euros were being spent on the purchase of a player.


As several media organisations reported as the news broke, KPMG’s Football Benchmark team also believes that the real growth opportunity for Juventus is in the commercial space, although this will probably be impossible to achieve in the first season. Indeed, while matchday revenues are limited by stadium capacity (and ticket pricing limits), and media income is generated through agreements set at league/international levels, the Bianconeri need to strongly capitalise on the acquisition of Ronaldo, especially in merchandising and sponsoring.

With Juve still lagging behind the main European superpowers in this area, all eyes will be on the club’s commercial revenues in coming seasons. In 2016/17, English footballing institution Manchester United, Catalan giants Barcelona, Real Madrid and German champions FC Bayern München recorded €320 million, €288 million, €280 million and €344 million, respectively, more than double Juventus FC’s figure of €120 million. This disparity is even clearer when comparing the jersey value figure for the 2017/18 season. In particular, Juventus get €17 million per season from their main shirt sponsor, Jeep, and €23 million per season from kit supplier Adidas, making for a total of approximately €40 million, a huge distance behind Manchester United, Barcelona and Real Madrid, who reported a total jersey value of €156 million, €140 million and €95 million, respectively – meaning all eyes will be on the kit revenues of the Turin club in particular next season.

Juventus FC’s share price trend

While the long-term benefits remain to be seen, however, some pluses have already been witnessed by Juventus. In particular, when rumours emerged in early July – following a disappointing World Cup campaign for Ronaldo and Portugal – regarding the possible transfer, they significantly affected the club’s share price. As the rumour mill went into overdrive, it stimulated a steep increase in market capitalisation for the club, rising from €650-700 million to roughly €900 million, within the space of a week. During the period from then up until July 19th 2018, the price of Juventus’ stock rocketed up by approximately 32%.

Commenting on the Ronaldo-factor at Juventus, Andrea Sartori, Global Head of Sports at KPMG, said, “In a world in which major football clubs competing on the international stage are closer and closer to becoming entertainment companies, rather than being sport entities with a limited focus on shareholders’ value creation, our analysis demonstrates that although the acquisition of Cristiano Ronaldo presents some risks, Juventus FC’s investment might prove to be beneficial from the sporting, commercial and financial perspectives if not immediately, then within 2-3 years, when Juve might reach half billion Euros turnover. We believe that Ronaldo can be an accelerator of the visible growth that Juventus FC have already experienced throughout the years of Andrea Agnelli's presidency.”

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Champions League glory hard to buy for football’s economic elite

15 March 2019

The thrills and spills of knock-out football can still be one of the sport’s great levelling forces, with the Champions League’s second round having shown that the biggest spenders aren’t always able to buy their way to glory. While a league format broadly favours the squad depth of the beautiful game’s richest teams, half of the tournament’s wealthier teams exited in the first one-on-one elimination round.

As the Champions League burst back into life in February, following an agonising winter break, only two of the 16 teams re-launching their Champions League last-16 bid were from outside the so-called Big Five football leagues. With the exceptions of Portuguese champions FC Porto and Dutch footballing powerhouse AFC Ajax, teams from the world’s biggest spending leagues monopolised the second round. As outlined by analysis from KPMG’s Football Benchmark, the Premier League was represented by four teams, with three clubs come from La Liga and the Bundesliga respectively, while Serie A and Ligue 1 both retained two clubs.

This followed a grimly predictable group phase, which had seen the two most expensive squads progress in all but one of the eight collections of four teams. The one team to buck that trend, Ajax, had last won Europe’s premier club competition in 1995, but those halcyon days have long since faded into memory, and Ajax had failed to progress beyond the group stage in 13 years. With the second youngest squad in the tournament, what now seems to be an awakening football giant had some shocks in store for the second round too.

Group Stage values

Despite an impressive Europa League run which saw the team reach the final two years ago, Ajax had not progressed in a Champions League knockout stage tie since the 1996-97 campaign. That all changed this time, as Erik ten Hag’s men overturned a first leg deficit to trounce Real Madrid 5-3 on aggregate. Having felt hard done by in a 2-1 defeat at the Johan Cruijff ArenA, the Amsterdam club cruised to a 4-1 victory at the Santiago Bernabéu, a result which saw the tournament’s fourth most expensive squad crash out to the third cheapest remaining team.

The supremely expensive team, which had won three Champions Leagues on the trot, had crashed out in spectacular style. For many footballing purists, the end of the seemingly invincible Galacticos would have been enough to restore some of their faith in the sport – but there would soon be more schadenfreude to revel in, as a succession of Europe’s most bank-breakingly costly teams would soon join Los Blancos in their exit.

The pick of the bunch was unquestionably Paris Saint-Germain, who forfeited a 2-0 first leg advantage to somehow crash out of the Champions League. The team, who are fast becoming known as the foremost bottlers in Europe, faced a grim dissection in the French press following a 3-1 defeat by Manchester United at Le Parc de Princes. While it would be over-egging it to paint United as ‘giant killers’, the Red Devils squad is worth markedly less than the club bankrolled by Qatari oil money. PSG hold two of the most expensive players of all time in French World Cup winner Kylian Mbappe and Brazilian playboy Neymar.

Second Round values

Elsewhere, the round’s cheapest squad proved further that money is not everything, as Porto overcame Roma (the Italian club has since parted ways with manager Eusebio Di Francesco in the wake of this humbling) – while Juventus battled back to beat Atlético Madrid. The most ‘balanced’ tie of the round, there was a squad value difference of only €22 million between the two squads, in favour of the Spanish giant. With that being said, €113 million of Juve’s price-tag came from the summer acquisition of Cristiano Ronaldo. Ronaldo’s tie-settling hat-trick went to show that money spent in the right place ultimately makes the difference.

Spending wisely

At the same time, there were also four teams which lived up to their large price-tags. Manchester City pummelled Schalke over the course of two legs, hammering the German team 7-0 in the second game. With the largest squad market value in the tournament, the Citizens showed that their spending had not merely been a frenzy provoked by having large amounts of money to throw about – a la PSG – and that every penny had in fact been used to craft one of the continent’s most well-balanced and dangerous teams, to ultimately contend for the title.

Tottenham Hotspur similarly brushed off Borussia Dortmund, while Liverpool eventually overcame Bayern Munich, to leave no German teams in the tournament. Meanwhile, Barcelona similarly did for the French contingent of the Champions League, bundling out Olympique Lyonnais 5-1.

Operating Revenues

Going forward, the humbled economic superpowers of European football will take solace from the fact that their huge operating revenues will allow them to buy up talent which has emerged in this year’s Champions League. With Real Madrid having re-installed Zinidine Zidane as Head Coach, the club has already committed itself to spending big in the summer, cashing in some €50 million of its €743 billion revenue stream from last year to sign Éder Militão from Porto – who has impressed in this year's Champions League – in the summer.

Whether the PSG project is financially sustainable in the long-term remains to be seen, meanwhile, but with a huge portion of commercial revenues including shirt-sales from the club’s array of superstars, it will likely also seek to bring in more big names in the summer. The club was reportedly in the running to sign Ajax star Frenkie de Jong, before Barcelona finally secured his services from the end of the season.

The likes of Ajax will meanwhile face an uncomfortable wait, as a range of its new crop of outstanding players inevitably attract the attentions of Europe’s top spenders. With the lowest operating revenues of any team left in Europe, the club will face an uphill struggle to hang on to the likes of teenage captain Matthijs de Ligt. However, it would not be the first time that the club has been plundered for its top talent, and what Ajax and clubs of its size can take forward is that with the right eye for lower-key recruitment, they can rebuild, and still challenge Europe’s elite.