The Cristiano Ronaldo Era at Juventus wasn’t a failure ... but, it must end

An important part of my 9-to-5 job is to produce financial forecasts for my business unit.

The way to do this it to take the data already available to you like the current selling trends or the information about previous year’s results and, to the best of your ability, try to predict what will happen in the future. Since I work in retail, this usually involves getting accurate figures on how much stuff we will sell, how our inventories will look and whether or not we will achieve our projected objective.

Obviously, the more specific you can get, the better, since these forecasts play a large role in determining how much stock we have to buy for the future and the last thing you want is to mess it up and end up with too little or too much inventory which subsequently messes up your overall performance. The easiest way to do one of these forecasts involves obtaining the current selling trend compared to your monthly results, get a daily tendency figure and then multiply that by the amount of days left in the month. Doing it like this, however, is almost always wrong because it fails to take into account all the nuances in day to day selling and assumes the current trend will stay the same regardless of changing circumstances.

An accurate forecast takes into account the current selling trend, sure, but also has to acknowledge your inventory levels, any upcoming promotions and your product mix. Maybe the trend you are comparing it to was an atypical month so the figures have to be tweaked to obtain a more accurate result, or your company is trying out a new big promotion that will get a big media push with hopes of increasing sales. So you tweak again and again until you come up with a figure that you can accurately defend as a reasonable expectation of how the business will perform in the future.

At face value this sounds rather complex — and it is — but I also have to admit that at its core, and despite all the business-y talk, mumbo jumbo, big words BS, the number you end up with is nothing more than a guess. Sure, when done correctly it’s an educated guess, but a guess nonetheless. You are betting on future results to behave somewhat similarly to past ones and no one can predict the that with a 100% accuracy. So, sometimes your forecasts end up being pretty close to reality and sometimes they are off by a significant amount.

Especially when something big and unexpected happens. Maybe a vendor is facing delays and the merchandise you thought would arrive on the sales floor by mid-month arrives late or doesn’t arrive at all. Or, in a more extreme case … a global pandemic ravages the world, forces you to shut down all stores and perhaps people have bigger fish to fry than whether they should get a new swimsuit to go on vacation.

I bring this up because purely out of morbid curiosity, I would absolutely love to see how the financial forecast numbers were looking at Juventus HQ around July 2018 and how catastrophically wrong they were.

Photo by Daniele Badolato - Juventus FC/Juventus FC via Getty Images

In case you have been living under a rock, our beloved club is not doing particularly well when it comes to paying the bills. A massive €400 million capital injection was needed mostly to cover all the losses that the club sustained during the last couple of years and there is a pretty significant chance that the club will make very little investment in a squad that has a number of inadequacies. How did we get here? How did the team that for years boasted a prudent, smart approach in all financial matters found themselves choked out by debt?

A case can be made that it started on that fateful July 2018 and what had to be a very precise, very well researched and pretty persuasive financial forecast that was made around then. One that assured the board and Juve’s parent company Exxor that shelling out over €100 million in transfer fees — with a salary to match that would completely shatter their carefully constructed wage scale for the team — for Portuguese superstar Cristiano Ronaldo was a good decision.

At the time, one can easily see the reasoning behind such a move. Juventus had been building their brand to appeal to international audiences for a couple of years and the move to sign Ronaldo — a brand into himself — was a logical next step in Andrea Agnelli’s plan for global reach.

(We can debate whether this move — and the others we will talk about in this piece — made sense from a football standpoint. In my opinion, almost all of the moves were at worst defensible with some legitimate solid ones, but that’s a subject for another article.)

As the J Hotel was being constructed with hopes of being added to a Turin complex that already boasted the Juventus Museum and the Allianz Stadium as well as signing on to play games abroad in China and Saudi Arabia, the plan was easy to see. Ride the Ronaldo train for a few years, take advantage of his massive brand — especially in emerging Asian markets where Ronaldo is wildly popular — make Turin a destination, hike up the ticket prices for people to see their new idol and parlay the rewards of all this success and newfound fans into a new TV rights deal that would help bridge the financial gap with the rest of the money league elite.

A rising tide lifts all boats, so once the piggybank was opened for Ronaldo, suddenly shelling out €40 million for Joao Cancelo or giving Emre Can a massive salary on a “free” transfer didn’t seem that egregious. They would have more money later, no problem.

(AKA, max out the credit card now because I have a bonus check coming in next month. If you’ve ever had a credit card you know how often these decisions work out.)

After the first year of Agnelli’s master plan, you can make the argument that it was going OK. The Ronaldo effect put the team on par with the biggest clubs in the world in terms of press coverage and notoriety. This extra attention increased the valuation for sponsoring the club, as Jeep renegotiated their contact to add €25 million yearly to their initial deal with the reigning Italian champs.

On the pitch, the team won the league title yet again and, despite being bounced in the quarterfinal stage of the Champions League, the team made a splash in the following transfer season, paying €85 million for wunderkind Matthijs de Ligt as well as more “free” transfers with massive wages in Aaron Ramsey and Adrien Rabiot to reinforce the midfield.

However, the cracks were starting to show. Reports suggested that given all their new expenses, Juventus would have to make the Champions League semifinals at the very least in order to break even. Their revenues were not at a point where they could sustain this level of spending for much longer but theoretically it could all still pan out. A strong European showing under new manager Maurizio Sarri, sustained domestic success, plus another year of strong sellout crowds at inflated ticket prices could help make the ambitious gambit helmed by Agnelli work.

All in preparation of what would truly be the difference maker, that new domestic and international TV rights deal. The one key deciding factor that could either put Juventus in the same playing field financially as all the other giants in the industry or leave them solidly in that second group of European superpowers.

Captain Giorgio Chiellini cut the ribbon of the brand new J Hotel on Nov. 19, 2019, praising how beautiful and comfortable it was and calling it a “second home.”

That’s as good as it got for the club in the coming months.

On March 8, 2020, Juve beat Inter in the first match with no fans in the stands at Allianz Stadium — something that would end up being the new norm as the COVID-19 pandemic wreaked havoc in Italy and the whole world — and then started a three-month-long hiatus without any games. Once the season resumed in June, Juve would limp to the finish line to lift their ninth straight Scudetti. Unfortunately, they also got eliminated in the Champions League Round of 16 against underdog Lyon, which was yet another blow to their financial health as they missed out on that important European competition revenue.

Sarri got sacked at the end of the year, Andrea Pirlo was given the first team job after being announced as the Under-23 side’s manager a week earlier because there was no money to sign anybody else and Juventus faced yet another season of having no fans in the stands as the J Hotel presumably collected dust.

We all know how everything unfolded after that, the team underperformed, finished barely in the Champions League spots, surrendered their reign over Italy and yet again did poorly in Europe getting eliminated by Porto in the round of 16. The Supercoppa and Coppa Italia wins were a nice feather in their caps sporting wise, but did little for the financial well being of a club that was in the deep red at this point.

To put the cherry on the failure sundae that was Juventus’ 2020-21 season, the new TV rights deal — something I’m assuming had to be key in the Juventus board master plan — ended up being massively underwhelming. In a COVID-19 depressed economy, Serie A didn’t have a chance as their new domestic rights deal — mainly backed by DAZN for the exclusive rights and SKY Sports for some assorted non-exclusive matches — came at 5% less than their previous one. Their US rights were acquired by CBS Sports for $75 million annually for the next three years, which doesn’t sound bad at first until you realize that it’s dwarfed by the whooping $200 million the Premier League gets on a yearly basis.

Or as Italian journalist Carlo Garganese puts it …

Yup, pretty much.

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So, why is the main focus of this piece about Ronaldo? Why is the whole thesis about why Ronaldo must go?

To his credit, the results on the football pitch have been unimpeachable. Winning individual awards galore, becoming the fastest player in Juve history to reach 100 goals and putting forth legendary performances such as the second leg against Atletico Madrid in early 2019 — it’s hard to ask more of the guy than what he has already done.

Yet, it was his signing, his wages, his fame and popularity, the whole CR7 Inc. in short that put the club in the position that it is in right now. When you bring in a player like him, it puts any team on a win now timeline, it puts expectations and pressures that the club ended up not being equipped to handle. It forces you to make decisions through the Ronaldo prism and while that modus operandi might have worked for other clubs at different points in his career it just wasn’t feasible given the circumstances of the time he happened to be a Juve player.

Unfortunately for him, at this point in time and given all the off the field stuff that comes with the player, it behooves all parties to go their separate ways.

With that being said, what is best for everyone might not be what actually happens as his wages might be the deal breaker in any sort of transfer for Ronaldo out of Turin.

(If you want any more proof that the whole “Ronaldo pays for itself!” argument was wrong is that despite him being very much available no club has been even remotely interested in signing the aging superstar.)

When the signing of Ronaldo was announced, Juventus faithful everywhere — and on this blog, too! — were blinded by the possibility of finally lifting that coveted but elusive Champions League trophy. Agnelli and the board were surely hoping that too, but they had to also be imagining finally taking that top spot in the competition that really mattered to them, the Deloitte Football Money League.

And I’m sure a number of very smart, very well paid analysts at Continassa pulled out the spreadsheets and constructed a very reasonable, perhaps even probable path that would get them there. I’m quite confident their numbers made a ton of sense at the time but in life as in football you never know what the future holds … or indeed, when a global pandemic happens.

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