JUVE report lower profits & higher debts

Juventus has posted its first half yearly results for 2018/2019 financial year with a profit of €7.5 million which is however down by 83% from the previous year (profit stood at €43million).

This negative variation mainly derives from lower revenues from players’ registration rights, down € 17.9 million, increased costs for players and staff, up € 38.2 million and higher amortization and depreciation on players’ rights, up € 24.7 million.

Figures of course don’t lie and as expected, the cost of the transfer of super-star Ronaldo is having its toll on the financials of the club. Juventus signed the striker from Real Madrid for €112 million in summer whilst he will be earning €120 million over four years. The total invested in their latest transfer campaign was of €223milion (thus half of this was spent on one player).

On the flip side of course, the club is hoping to be gaining from massive publicity and sponsorship deals. In fact, their overall revenues increased by 14% (€330 m from €290m) and this increase is mostly thanks to increase in sponsorships which were 61.4 million (an increase of 42% from the previous year). Adidas have made a new agreement with the club for a minimum fixed consideration of €408 million until 2027.

Finally, it was also reported that the club’s debts now stand at €384 million (an increase of 24%) part of which due to a discounted 3.375% bond of €175 million issued in February to re-capitalize the club.

It is expected that the 2018/2019 financial year will end in a loss for the club although this is usually influenced by the performance of sports results and in particular the UEFA Champions League.

Looking at the chart..

In another article just last week, we had reported an important GAP down which coincided exactly with the club’s 2-0 loss in their first round of their Champions League knock-out match thus decreasing their probability to continue the competition. Of course, if this really happens, this will put more pressure on their finances as Champions League matches guarantee a huge inflow of income from tv rights and sponsorships.

Since then the price has deceased a bit further to reflect the negative news from their latest financials.

At this point in time, I personally don’t see that the price will move further downward as both the financial results, and the potential of an early Champions League exit have already been priced in (price decreased by almost 20% in just one week).

As mentioned in my previous article, I think that a price level of €1.20 would be a very interesting entry point for a long.

 

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