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Juventus docked 10 points for financial irregularities

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Serie A giant, Juventus football club, is set to lose its spot in Europe after having points docked in light of suspect transfer dealings.

25th May 2023
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Italian football club Juventus has had 10 points docked from its league total, after being accused of suspect transfer activity during the 2019/2020 and 2020/2021 seasons. The points reduction drops the prestigious club from second place to seventh in the competitive Serie A league and out of the lucrative European qualification spots for next season.

While the previous deduction of 15 points for the Old Lady, as the team is affectionately known, was reversed back in April by Italy’s Olympic Committee (CONI), a tribunal was re-opened due to a separate criminal probe into the club’s finances. This led the Italian Football Federation (FIGC) to “renew its assessment on the penalty to be imposed on Juventus for the so-called ‘capital gains case’.”

Along with the 10-point deduction, bans given to former chairman Andrea Agnelli, ex-chief executive Maurizio Arrivabene and sporting directors Federico Cherubini and Fabio Paratici have also been upheld.

In a statement released after the decision, Juventus said that it “takes note of what was decided by the FIGC Court of Appeal and reserves the right to read the reasons to evaluate a possible appeal to the guarantee board at CONI.”

An own goal

Juventus’s accounting inconsistencies first came to light back in September 2021, after the club released its annual financial report, which included a note saying that an inspection was “currently underway”.

In the months following, news was leaked to the Italian press alleging financial irregularities linked to plusvalenza, the Italian equivalent of capital gains, on its player transfers, with Italian prosecutors taking umbrage with many of the club’s dealings in the transfer market.

Of the 62 transfers investigated for false accounting, 42 involved Juventus, with the infamous Miralem Pjanic and Arthur Melo deals being of particular concern. While other clubs including Sampdoria, Pro Vercelli, Genoa, Parma, Pisa, Empoli, Novara and Pescara, were also investigated, they were later acquitted.

Aside from the accusations of false plusvalenza bookkeeping, Juventus has also been accused of paying more than 20 players, including team icon Cristiano Ronaldo, €90m (£79.5m) in deferred wages off the books during the Covid pandemic.

Commenting on the announcement, University of Liverpool football finance lecturer and qualified accountant Kieran Maguire likened the decision to a “VAR turnover” on Juventus’s financial transactions and saw the profits raked in by the club as “eyebrow raising”.

“The football industry has a record of smart people making dumb decisions as they chase the field trophies regardless of financial consequences and jeopardising the existence of the club as a continuing entity,” Maguire added.

The beautiful game?

There is likely to be some level of apprehension from across the Channel in light of yesterday’s rulings against Juventus, with Manchester City’s own run-in with Financial Fair Play (FFP) allegations still yet to be decided.

The reigning champions of the Premier League and Treble hopefuls are facing 115 charges of breaching financial regulations, with the Premier League accusing the Manchester giant of breaking its FFP rules over a nine-year period between 2009 and 2018.

However, Maguire argued that, while City’s track record should be scrutinised, the length of time it took for the Premier League to take action suggests that the footballing body “might have been asleep on the job for several years”.

Yet, while the club denies any wrongdoing, the allegations have left a significant mark on what has been a glittering season for the “Cityzens”. And, if found guilty, its domination of the league over the past decade will invariably be brought into question and tougher regulations being introduced as a result.

“If Manchester City broke the rules, there needs to be a tariff. If it’s a one-off, that could be seen as scapegoating the club. But if it’s a sign of a much tougher regime, there will be interesting times ahead,” Maguire concluded.

Replies (3)

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By JustAnotherUser
25th May 2023 14:35

I have read this twice and yet to understand what they were charged with and what the actual findings were....

- in light of suspect transfer dealings...
-after being accused of suspect transfer activity...
-accounting inconsistencies
-alleging financial irregularities
-investigated for false accounting
-accusations of false plusvalenza bookkeeping
-also been accused of paying more than 20 players, including team icon Cristiano Ronaldo, €90m (£79.5m) in deferred wages off the books during the Covid pandemic.

What I found elsewhere....
Essentially engineering transfers, usually swap deals, where little or no money changed hands but the club drew an accounting benefit (on paper).

It's the magic of amortisation. If you offload a player to another club for, say, a 10 million fee, you get to record that 10 million as revenue. But if you spend 10 million to acquire a player and he signs, say, a five-year deal, you can spread that 10 million evenly across the life of the contract.

So buy someone for 8m, sell one for 10m, profit = 2m.....

This isn't illegal and it's how pretty much every single club in Europe does their accounting. The problem arises when two clubs engineer a swap deal and inflate the value of the players involved. Officially, they're two separate deals, but in practice, they mirror each other and because no cash is changing hands, you can put whatever valuation you like on the player.

However... Weren't Juventus already charged with this and cleared? Yes

It's a criminal investigation because Juventus are listed on the Italian Stock Exchange and have strict reporting requirements -- and after being cleared new evidence came to light showing: not only did they create these fraudulent swap deals at inflated valuations, but it was part of a systematic attempt to cook the books according to the investigators, this amounts to accounting fraud.

The crux of the matter... there's no specific rule in the sporting sphere. There is a specific rule about being transparent with shareholders, especially if you're a listed club, though that's a matter for the criminal investigation.

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Replying to JustAnotherUser:
paddle steamer
By DJKL
27th May 2023 11:24

The football equivalent of garages inflating both selling price and trade in allowance to qualify the deal for HP.

The catch with inflating player purchase price on swap deals is it is can kicking . The amortisation either bleeds the club's earnings over the next say 5 years or they take the hit recognising a loss if they sell on within the five years, can kicking that will build up if continued over a few years and eventually cause real issues that such an approach cannot cover.

Football's equivalent of teeming and lading or in more layman terms borrowing from Peter to pay Paul.

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Caroline
By accountantccole
25th May 2023 15:19

I am thrilled with this - small chance Brighton will get them as a European game and they're only a couple of hours from where I am based - Whoop!!!

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