TURIN, ITALY – JANUARY 18: Roberto Spada, Monica Tardivo, Andrea Agnelli, Pavel Nedved during the Juventus shareholders meeting at Allianz Stadium on January 18, 2023 in Turin, Italy. (Photo by Daniela Badolato – Juventus FC/Juventus FC via Getty Images)
Juventus, Italy’s most powerful football club, will be forced to drop 15 points in Serie A after an Italian court found it essentially falsified transfer finances.
The points deduction will apply to the current season, pending a potential appeal, and will be a major blow to Juve’s hopes of remaining among European football’s elite. It will take the Turin-based club from third place to a joint 10th mid-season – just a few years after winning nine consecutive titles.
The Italian Football Federation announced the points deduction on Friday after prosecutors reopened “capital gain” case. The term is Italian for “capital gains”, which is what Juventus allegedly did by inflating the value of departing players when they were traded from the club.
A ‘capital gain’ case
Juve, which is also a publicly listed company, first attracted the attention of the Italian government in or before 2021. CONSOB, the state body responsible for regulating the stock market, has investigated dozens of transfers that are suspected of being in breach of either football’s financial rules or even criminal law.
Juventus was not the only club under investigation, but it was the primary one. After a long investigation, all those involved were acquitted in May. But the Italian soccer federation announced last month that a federal prosecutor had decided to appeal and take up the case again.
A month later, on Friday, it announced the sanctions resulting from the appeal. In addition to the points deduction, Juventus president Andrea Agnelli will be suspended from Italian football for two years. The other executives involved have also been suspended.
The Italian court responsible for the verdict will reportedly present its reasoning in 10 days. Juve will then have 30 days to appeal. It is unclear whether the Serie A table will be altered while the potential appeal is pending.
What did Juventus do?
The case revolved around a whole question: Who, exactly, can decide how much a football player is worth?
In many high-profile transfers, the answer is simple. The two clubs are negotiating the price. The player moves in one direction, millions of dollars go to the selling club, and those millions become the player’s value in the club’s accounts.
However, the answer becomes murky when the transfer is not just player for money, but player for player (-and-money). Take, for example, a Swap between Juventus and Barcelona 2020. In total, Juve sent Miralem Pjanic and roughly $14 million to Barca in exchange for Arthur Melo. So how much, in dollar terms, was each player worth?
What Juve and many other clubs have realized is that they could inflate the value of players in these trades. Juve and Barca decided Pjanic was worth 60 million euros ($67.8 million) and Arthur 72 million euros ($81.4 million), despite neither player being anywhere near as good. They could then record these inflated values on their books to help their accountants.
They claimed – and in May the authorities agreed – that only they, the clubs, have the right to decide how much a player is worth. Juve, on these grounds, denied wrongdoing.
Why would Juventus do that?
“Capital gains” — the difference between the reported sale price and the market price — were short-term fixes to help Juve (and other clubs) comply with football’s “Financial Fair Play” rules.
FFP, which has since been revised, has prevented clubs from spending far beyond their means. According to the rules, the transfers of a certain club and the salaries of players cannot exceed its income by more than 30 million euros in a period of three years.
But there were loopholes – namely, transfer fees were amortized over the course of a player’s new contract. If Juventus bought the player for $50 million and signed him to a five-year contract, the transfer fee would only count for $10 million against the team’s spending limit each season.
The transfer fees he received for outgoing players were simply income. When he sold Pjanic, technically for some $68 million, that sale immediately increased the spending cap by $68 million.
So by increasing the value of players in transfer deals, Juve would give themselves more room to maneuver in that season’s transfer market — more financial flexibility to build a team capable of challenging for the Champions League crown.
But of course, in the longer term, this type of business has sent clubs like Juve into financial ruin. The Bianconeri, as they are known, have already fallen from the pedestal at the top of Serie A and among the real contenders for the Champions League. They were, even before Friday’s penalty shootout, struggling to keep pace with AC Milan and Napoli on the pitch, not to mention the bank accounts of the English Premier League’s top clubs off it.
Now, pending an appeal, they risk missing out on next season’s Champions League and the revenue it guarantees. Their short-term thinking has a big long-term cost.
Why was only Juventus punished?
Juventus is not the only Italian club that engaged in this type of transfer – and as a rule, football rules, it was allowed.
But this was not an investigation by European football authorities. It was an investigation by Italian state authorities. At the moment, Juve is the only club that has been fined, probably because, as a public joint-stock company, it allegedly misled shareholders and engaged in illegal accounting practices.