Juventus capital gains? Cosi fan tutte (according to Bocconi professor on Sole 24 Ore)
After the conviction of Juventus (-15 points in the current championship) the debate on capital gains reopens. Was it the rules of Financial Fair Play that encouraged them? What does a study cited by two Bocconi economists in the Confindustria newspaper, Il Sole 24 Ore, claim?
The Federal Court of Appeal held that Juventus had made " excessive use of artificial capital gains " and had an "incorrect modus operandi" by repeatedly altering the " balance sheet values and their informative significance ". These violations cost the "Old Lady" 15 penalty points , to be served already in the current championship, and various inhibitions for the deferred administrators. St
THE "NEW ELEMENTS" WHICH MADE JUVENTUS REOPEN THE PROCESS ON CAPITAL GAINS
The reopening of the capital gains trial, according to the Court of Appeal, is supported by new facts that justify the -15 to Juve.
“ It is indisputable that the factual framework determined by the documentation sent by the Turin Public Prosecutor's Office to the Federal Prosecutor's Office , and transferred by the latter in support of the revocation, was not known by the Federal Court at the time of the revoked decision and, if known, would have determined for certain a different decision – reads the reasons -. Exactly according to the provisions of art. 63, paragraph 1, lett. d), GTC. And it is a factual framework supported by an impressive amount of probative documentation". Basically, the financial statements of FC Juventus SpA " are simply not reliable ".
Weighing on the increase in penalty points (from 9 to 15) are the company's precedents "which concerned accounting alterations that lasted for several years or of significant size and intensity (which in the past led to penalties of fluctuating value but, in certain cases, even significant ones), it is deemed necessary to re-determine the sanction with respect to the requests of the federal prosecutor's office".
PRISMA INQUIRY: PRELIMINARY HEARING ON 27 MARCH
We must not forget that Juventus is expected to attend a preliminary hearing on 27 March for the Prisma investigation into their accounts.
The Turin Public Prosecutor's Office will have to establish whether the Juventus club and 12 suspects (Agnelli, Nedved, Paratici, Arrivabene, Re, Bertola, Cerrato, Gabasio, Roncaglio, Vellano, Boschetti and Grossi) will go to trial for the following charges: crimes of false corporate communications (art. 2622 of the civil code), obstacle to the exercise of the functions of public supervisory authorities (art. 2638 of the civil code), market manipulation (art. 185 of Legislative Decree 58/1998) and fraudulent declaration through the use of invoices or other documents for non-existent operations (Article 2 of Legislative Decree 74/2000).
CAPITAL GAINS: IS IT REALLY THE FAULT OF JUVENTUS?
But is Juventus really responsible? The two economists from Bocconi University, Antonio Marra and Donato Masciandaro, asked the question, and the answer is by no means obvious.
“ The abuse of capital gains by football clubs – write the two economists in Il Sole 24 Ore – is the effect of wrong national and European rules, which encourage deviant behavior especially in clubs that aspire to compete at an international level”.
The "Juventus case" would therefore be only the tip of the iceberg in the existence of a "toxic relationship between the rules, UEFA and the national teams".
THE STUDY ON TRANSFERS AND EXCHANGES
Bocconi economists entrust their thesis to the study The Consequences of Accounting-Based Regulation: Real Effects on European Football1 Players Transfer Market by Massimiliano Bonacchi – Free University of Bolzano Stern School of Business, New York University, Fabio Ciaponi – University of L' Aquila, Antonio Marra – Bocconi University SDA Bocconi – School of Management, Ron Shalev – Rotman School of Management University of Toronto.
The analysis examines market operations (transfers and their effect on companies for available transactions) in the five major European leagues in the decade 2008-2018 . The study, therefore, examines the transfer market and their effect on the clubs of over 4,600 operations, 579 exchanges, of the Premier League, Serie A, Ligue 1, La Liga and Bundesliga.
THE IMPACT OF THE FFP RULES ON CAPITAL GAINS (AND ON JUVENTUS)
The study reports four findings. The first is that UEFA's introduction of Financial Fair Play (FFP) “represented a turning point, and from that moment clubs can be classified in UEFA – participating in UEFA competitions – and not, as the behaviors of the two groups change. For UEFA clubs, transactions are increasing and, in particular, “ the sale of players under 21 (+25%) ”. After the introduction of Financial Fair Play, the average profit generated by these transactions “ explodes for UEFA clubs (+115%), with the prices of the transfers of young players up +60% .
The increase is even more marked if the sale is an exchange (+141%)”. The reason, according to the two economists, would be to be found in the fact that "UEFA clubs use capital gains instrumentally to comply with the rules of the FFP". As regards the 579 exchanges analysed , "after the introduction of the FFP, the players subject to exchange systematically had a transfer value that was much higher both compared to the market value (data taken from www.transfermkt.de ) and compared to operations carried out for cash (+23%)". And this difference “has more than doubled since the introduction of the FFP”.
THE CLUBS THAT MAKE MORE CAPITAL GAINS HAVE WORST RESULTS
The third result evaluates the sporting performance of the players being traded who appear to be, "at the same age and position and transfer value", worse than players transferred for cash. Finally, the teams that make more use of capital gains have " worst performances on the field: position in the national championship, eliminations in European competitions ".
The conclusion reached by Prof. Antonio Marra and Donato Masciandaro is that today capital gains "resemble more like a toxin, generated by wrong rules" and that without a radical reform, the music of capital gains, for all clubs not just for Juventus, will not change.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/plusvalenze-juventus-cosi-fan-tutte-secondo-prof-della-bocconi-sul-sole-24-ore/ on Wed, 01 Feb 2023 10:06:54 +0000.