The effect of Cristiano Ronaldo to Juventus

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In an unusual way, Juventus broke his piggy bank this summer to be able to afford Cristiano Ronaldo. A transfer that will weigh heavily in the accounts of the club but that could prove profitable in the medium and long-term. 

Over the past years, Juventus was used to give his players when the salary aspirations of these became too large. This was the case with Paul Pogba, sold during the transfer window summer 2016 to Manchester United for a fee of 105 M€.

A policy that coincided with the new economic model of Juventus, adopting a cautious management in order to balance its income statement. A strategy that has proved successful since the alpine club has accumulated nearly 50M€ of profits during the period 2014-2017 while gleaning all Serie A titles and reaching two European finals.

JUVENTUS: AN EFFORT FINANCIAL NEVER REALIZED TO RECRUIT CRISTIANO RONALDO!

But this logic of balance could be shattered with the arrival of Cristiano Ronaldo. For the 33-year-old Portuguese star, Juventus has agreed to pay a transfer fee of around 100 M€, constituting a new record for the club.

Beyond the amount paid to acquire the player at Real Madrid, Juventus would have also made a contract offer to five times Golden Ball, an annual salary of 30 M€ net per year over the next four seasons. Pay incredibly high while Juventus had not used so far to pay salaries to 10 M€ per year.

Adding amortization of the transfer, the salary of Cristiano Ronaldo, different contributions, and the bonus paid to his agent Jorge Mendes for the transaction; ex-Real Madrid should weigh a load of 90 million euros per season in Juventus accounts. And even transferred or let go some big salaries at the beginning of this decision with players like Gianluigi Buffon and Stephan Lichtsteiner leaving the club. Juventus will have to continue to adjust its workforce during the summer transfer window to compensate for the arrival of Cristiano Ronaldo.

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Yet, despite the figures “windfall” mentioned already for several weeks in the European press, the arrival of Cristiano Ronaldo has been welcomed by investors. Even if the title is a correction today, the course of Juventus went in a month from 0.63 to €0.90. With an increase of more than 5% recorded yesterday, the day of the official announcement of the transfer.

The exceptional nature of this transfer is therefore considered positively by the markets. Since the signing of Cristiano Ronaldo seems to be part of the reorientation of the strategy of brand operated by Juventus for several years.

A shift which saw the first boost at the beginning of the year 2017, when Juventus has unveiled its new log at a worldly ceremony organised in Milan, the capital of fashion! Through this radical change of Visual identity, Juventus wanted to show the will to escape football codes to become a lifestyle brand and global. A revision which was also accompanied by the live takeover of its merchandising activities.

A strategy that has already begun to bear fruit. Juventus has been able to considerably expand the distribution of its products, including signing new partnerships in the image of the agreement reached with Costa Cruises. As a Result: merchandising/licensing revenues have increased substantially over the last years to be closer to the bar 20 M€.

THE JUVENTUS BRAND PART IN THE CONQUEST OF THE WORLD

In his desire to create a global brand of entertainment, Juventus management fails not the international dimension. To increase its visibility in different markets, the Turin club encourages the conclusion of agreements with platforms to the global audience, the image of the partnership which is forged recently with Netflix.

While the different strategic choices made by Juventus have already allowed the club to increase its commercial revenue from an international perspective, the signing of Cristiano Ronaldo should be a huge boost in the internationalization of the Juventus brand. On social networks, CR7 is today one of the world’s most powerful sports brands. A signature which will open up new business horizons to Juventus.

Even though this transfer is likely to be not profitable in the short term, however, by recruiting Cristiano Ronaldo, Juventus has offered substantial assets to put music to perfection his internationalization strategy, permitting the arrival at Juventus (finally) which won the C1 while the effects could be strengthened. All an all, this was not a bold move but maybe one of the last pieces in the strategy to become a global and iconic brand and open new markets.

 

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