What they did wrong and what it means

Juventus were found guilty of transfer violations on Friday by the Italian Football Association’s sporting tribunal, a decision that saw them drop 15 points from third place to mid-table. Eleven current or former Juventus directors were also banned, including former president Andrea Agnelli (two years), former chief football officer Fabio Paratici, now at Tottenham Hotspur (2½ years) and sporting director Federico Cherubini (16 months).

It’s a huge blow for the Turin club, so here’s a Q&A to help you understand.

Q: Why were they found guilty?

A: Basically engineered transfers, usually swap deals, where little or no money changed hands, but the club made an accounting profit (on paper).

This is the magic of depreciation. If you offload a player to another club for, say, 10 million in fees, you record that 10 million as revenue. However, if you spend 10 million to sign a player and he signs a five-year contract, you can spread that 10 million evenly over the duration of the contract.

Q: So if I buy one guy for 10 million and drop another one for 10 million, I magically make 8 million? Ten million in, two million out, because I’m spreading a 10 million loss over five years?

A: On paper, yes. In real life, no. And, of course, you need to factor in 2 million annually for the duration of the contract. But in the short term, in your scenario, you can show a capital gain of 8 million.

– Stream on ESPN+: LaLiga, Bundesliga, MLS, more (US)

It’s not illegal and every club in Europe keeps their accounts as often as possible. The problem arises when two clubs enter into a transfer agreement and increase the price of players. Officially they are two separate contracts, but in practice they mirror each other and since no cash changes hands, you can put whatever price you want on the player.

So, in the above example, if you buy a player for 100 million and transfer a player to a club for 100 million, then — presto! — You earned 80 million (also another club).

Q: Wasn’t Juventus already accused of this and cleared?

A: Yes, they and eight other clubs (Denovia, Sampdoria, Empoli, Pro Vercelli, Novara, Pescara, Parma and Pisa) were charged and eventually cleared. They have successfully proven that no one can objectively evaluate a player, and therefore no one can tell the transfer price, or rather, the price you put on the player at the time of the swap has gone up. In other words, the player is worth playing the market, and the court agreed with them.

Also Read :  Pele's daughter shares an old photo of herself with legendary father and her sisters

Q: So why was the case reopened? It seems to me like double jeopardy, being tried twice for the same crime…

A: Prosecutors successfully agreed to reopen the case because they say new evidence came to light. The evidence came from a separate, criminal investigation called Prisma, and the indictment was part of a systematic effort to prepare the books for these fraudulent swap contracts at inflated prices. Oh, and according to wiretaps and written evidence (including handwritten notes), they knew what they were doing was above board.

This is a criminal investigation because Juventus is listed on the Italian stock exchange and has strict reporting requirements – which investigators say amounts to accounting fraud. When the sports prosecutors cleared Juventus and other clubs, they did not have this evidence, hence why the case was reopened.

Q: OK, but if two clubs entered into a fraudulent agreement to cook the books, shouldn’t both be punished?

A: That’s a fair question and it’s another element of Juve’s defense that they’ve already cleaned up. Based on the court case, the difference appears to be that many of these transactions, because of the Prisma investigation, were believed to have evidence that it was systematic and planned, and that they knew it was wrong. .

That said, there are other clubs in the evidence that Prisma has collected, not just the original eight that have been cleared – and they could still be charged. It is clear from some of the conversations that they also know that this is not what they are doing.

Also Read :  USA midfielder Giovanni Reyna almost sent home from World Cup

Q: I still don’t understand. As Juventus say, why punish them if there is no rule preventing it?

A: Yes, there is no special rule in the field of sports. There is a certain rule of thumb about being transparent with shareholders, especially if you are a listed club, which is a criminal matter.

Prosecutors also allege violations of Article 4 of the Italian Football Federation’s rules, which cover fairness and impartiality, and Article 31, which covers false scoring. (This, Juventus might say, begs the question: If these deals aren’t illegal, how can they lead to false billing?)

Q: So what?

A: Juventus expects “written reasons” to support the court’s reasoning at the sentencing. They then appeal to the Italian Sports Guarantee Council, which is essentially the highest court. They do not judge on the merits, they simply judge whether the sports referee followed procedures and applied his rules correctly. This means they can confirm or overturn the verdict, and cannot, for example, give Juventus a reduced sentence.

If the decision is upheld, Juventus will have one last shot at the Court of Arbitration for Sport in Lausanne. But there will be some free time for their lawyers as there are several investigations going on…

Q: For example?

A: Yes, there is a Prisma investigation that could theoretically lead to a prison sentence. This does not simply include alleged systematic transfer violations; also includes a false account of player pay cuts during COVID.

Officially, the players volunteered to give up four months of their salary, but in fact, according to the allegations, many had additional contracts to recoup some of that salary. This allowed Juventus to shift costs from one accounting period to another.

In some ways, this investigation is more serious because it is a criminal investigation and Juventus is listed on the Italian stock exchange, which means they have strict reporting requirements. That’s why the Agnelli family changed the entire board in November. It’s a criminal investigation and they may face a sports investigation into it.

Then there is the fact that they are being investigated by UEFA for financial fair play violations. If they engaged in false accounting in previous years to meet FFP requirements, they may also be penalized for this.

Finally, the Prisma investigation opened up questions about transfer deals with other clubs, which were not aware of the evidence at the time because it was not included in the investigation. This could lead to new charges.

Q: One thing I don’t understand is that if the prosecution asked for a nine point penalty, the judge added 15 points to them and ended up with a more severe penalty…

A: Well, it seems a little strange to me. The explanation, apparently, is that for the sentence to be meaningful, it would have to have a significant impact on the club – enough to deny them, say, a place in the Champions League. When they charged, nine points seemed enough. Then they got better results and moved up the table, so the judging was tougher.

I think that since there is no clear precedent or jurisprudence on this point, they felt that there was nothing to stop them from going more aggressively. But, of course, it is unusual for a judge to exceed the demands of prosecutors.

Q: And how does it affect the field?

A: Not good. Juventus posted a record Serie A loss of more than $250 million last year, beating the previous season’s record of $210 million. Some of these were of course COVID, but keep in mind that these losses were accompanied by gains from allegedly questionable transactions. If a penalty means they won’t be in the Champions League next season – and 15 points on the field will be very difficult – then that’s also a loss of revenue.

Oh, and Juve’s shareholders have injected €700 million in new capital in recent years.

It’s part of what Juveno’s new president, Gianluca Ferrero, has made clear is going to be much tougher going forward. This would lead to more reliance on the youth academy and of course less cost.

Q: A final thought for Tottenham fans: What will happen to Spurs’ managing director of transfers Fabio Paratici now?

Answer: First he has two charges left, so you are innocent until proven guilty. His ban will not take effect until he exhausts those appeals. If the ban remains in place, it will depend on whether FIFA and UEFA decide to extend the ban worldwide.

Of course, all this work won’t do him any favors, so it really comes down to the club and how they feel about him if he’s cleared.


Leave a Reply

Your email address will not be published.

Related Articles

Back to top button