There are 15 minutes to go. The ball speeds across the penalty area. And Cristiano Ronaldo — arguably the best footballer of his generation who Juventus has just bought for €100m— fluffs his lines, misses his shot and loses the opportunity to score on his home debut for the Italian club.
Yet, among the crowd of 40,000 fans at the Allianz Stadium in Turin, Andrea Agnelli, president of Juventus — and the man who signed the cheque — stands to applaud. It helps that a teammate rifles the ball into the net after Ronaldo’s slip, but the real triumph, says Mr Agnelli, was luring the Portuguese striker to the club in the first place.
“It was the first time that the commercial side and the sporting side of Juventus came together in assessing the costs and benefits [of a signing],” says Mr Agnelli, a scion of the billionaire family that has owned the club for 95 years. “The opportunity of Ronaldo was thoroughly assessed . . . and it made sense, both on and off the pitch.”
On the pitch the team does not need Ronaldo to dominate Italian football. Juventus, the country’s most successful club, has won seven consecutive Serie A league titles. It has, however, fallen short in recent seasons of the Champions League, losing twice in the final of Europe’s most prestigious tournament in the past four years. Ronaldo, in contrast, has won the last three Champions League finals with Real Madrid.
Off the pitch, Juventus believes the player presents an unparalleled financial opportunity, described by executives as “the Ronaldo effect”.
The Turin club is looking to invert the business model that has prevailed in football for decades. Elite clubs rely on large crowds and lucrative broadcasting deals to convince sponsors to pay to be associated with their teams. Under the new model, the global celebrity of Ronaldo is expected to drag fans and corporate groups to Juventus, with higher broadcasting money to follow.
There are early signs the bet is paying off. While in secret talks to sign Ronaldo, Juventus increased average season ticket prices by 30 per cent. All 29,300 have been sold. On match day the Juventus stadium superstore is doing a brisk trade in Ronaldo replica shirts, costing up to €154.95 — among the highest prices in Europe. For his home debut, fans travelled from all over the world while television networks spent days trailing his arrival in Turin.
Juventus ranks 10th in Europe by revenues chart
Investors seem to agree that the Ronaldo effect will provide exponential value to Juventus. The club’s share price has more than doubled, raising its market capitalisation to €1.5bn, since July.
“Ronaldo brings a level of stardust that is difficult to find in any sports person,” says Gareth Balch, co-founder of the digital sports marketing company Two Circles. “In the sponsorship buyer’s mind, there is a level of irrationality that exists in every human . . . which is that having Ronaldo elevates Juventus into a group of football clubs that it was not in before. If executed correctly, Juventus can really profit from its investment.”
Mr Agnelli took over the running of the club in 2010 and set about attracting a new, global audience. He believes Ronaldo is the catalyst for the club to achieve a grander ambition: become the world’s pre-eminent team. That means winning the biggest trophies, while earning more in revenues than any other club. “We will plan, one after the other, the last remaining steps to become number one,” says Mr Agnelli.
Juventus, however, trail well behind the sport’s financial leaders. The quartet of Manchester United, Real Madrid, Barcelona and Bayern Munich earn €150m-€250m more than Juventus in annual revenues. Other clubs, fuelled by rich owners, such as Manchester City, Paris Saint-Germain and Chelsea, also generate more income.
The club believes Ronaldo can help it climb up football’s financial ladder, betting that his appearance in its famous black-and-white striped shirt will convince corporate sponsors to pay more to be associated with the player and club. Mr Agnelli points to Real Madrid’s “Galactico” policy of hiring marketable superstars such as David Beckham, and PSG’s recent €222m signing of the Brazilian forward Neymar , as precedents.
The strategy is not without risk. At 33 Ronaldo is coming to the end of his playing career. A dip in form or a lay-off from injury would damage the team’s prospects. Some argue the short-term imperatives should not be mixed with a club’s long-term commercial strategy.
“At Bayern Munich, if they buy a player, it has to fit in from a sports perspective and not from a brand perspective,” says Jörg Wacker, a board member at the German club. “Of course, Cristiano Ronaldo is an ambassador for the brand . . . [but] he was ambassador for Real Madrid. Maybe in five years, he’s gone. For us, the number one focus is the club and not the player.”
To sign the striker Juventus agreed to pay Real Madrid a €100m fee over two years, a further €5m in payments that will ultimately be paid to clubs that trained him as a young player, and about €12m in fees to his agent, Jorge Mendes. Ronaldo’s four-year contract provides a salary worth more than €50m a year after tax, according to reports. The remuneration package will also allow Juventus to use his “image rights”, so that the player — who earns an estimated $47m a year in personal endorsements — can also be used in Juventus promotional campaigns.
Financial services firm KPMG estimates that, including the transfer fee, amortised over the duration of his contract, Juventus will pay around €340m, or €85m a year for Ronaldo’s services.
Juventus revenue sources chart
To satisfy financial fair play regulations designed to force clubs to break even, Juventus has offloaded other players on expensive salaries. But the impact of the Ronaldo transfer, which will be realised in the current financial year, is expected to push the club into a second season of losses.
In the year to June 30 2018, Juventus made a loss of €19.2m on revenues of €504.7m, compared with a profit of €42.6m on revenues of €562.7m the previous season.
Executives believe the Ronaldo transfer will pay for itself over time by counteracting the club’s biggest commercial weakness: playing in Italy. During the 1980s and early 1990s, Serie A was considered the best league in the world. But it has since been overtaken.
According to Deloitte, the English Premier League receives €3.3bn a season for domestic and international broadcasting rights. Spain’s La Liga generates €2bn each year from television rights deals. The Italian league, however, makes just €1.4bn a season. Though watched avidly in its home country, Serie A has yet to attract significant international audiences.
Ronaldo: where the money is coming from
Sponsorship
