Categoria: Sport Law

JUVENTUS RISKS MORE THAN EXPECTED

On January 19, 2023, shocking news shook Italian football and could potentially have repercussions across Europe.
The Federal Court of Appeal of the FIGC accepted the prosecutor’s request to reopen the “capital gains case,” thereby revoking the initial verdict and reopening the sports proceeding against the club. Juventus was penalized with a 15-point deduction in the standings, and sanctions were imposed on 11 of its executives. Among the sanctions, Paratici received a 30-month ban, Agnelli and Arrivabene 24 months each, Cherubini 16 months, and Nedved, Garimberti, Vellano, Venier, Hughes, Marilungo, and Roncaglio 8 months each. The court confirmed the acquittal of the other eight clubs involved (Sampdoria, Pro Vercelli, Genoa, Parma, Pisa, Empoli, Novara, and Pescara) along with their administrators and executives.

The case had initially been closed in previous months due to a lack of evidence proving the club’s guilt. However, the provision for case reopening under “revocation” allows a trial to be reopened if new facts emerge, or if existing facts that were previously unavailable are brought to light. If these facts had been known during the initial trial, they might have led to a different outcome. In such cases, the principle of ne bis in idem is overridden to uncover a new truth.

Although the reasons for the ruling have not yet been released, preliminary reports suggest that the penalties do not target individual transactions but rather the “system” allegedly implemented solely by Juventus. It seems the court deemed that Juventus’ modus operandi violated the principle of fairness (Article 4 of the sports justice code), as player valuations were not based on technical considerations but rather on “accounting cosmetics.” The court appears to have judged the situation with substantial severity. While the General Prosecutor of Turin had recommended a 9-point penalty, 15 points were ultimately imposed, likely reflecting the gravity of the evidence presented.

What is surprising is that the initial statements from Juventus executives, echoed within the club’s ecosystem, oscillated between conspiracy theories (suggesting political retaliation for the creation of the Super League) and victimhood (claiming “others did it too, yet only we are punished”).

However, the reality is more nuanced. It is clear that many sports clubs are currently grappling with significant economic difficulties, rendering the management of football clubs increasingly unprofitable due to rising player salaries, high operating costs, and revenue shortfalls exacerbated by the COVID-19 crisis. It is likely that several clubs adopted similar practices to balance their accounts. Yet, Juventus, as a publicly listed company, was subject to specific accounting obligations and principles that do not apply to other clubs, potentially leading to charges of false accounting.

Juventus has announced its intention to appeal. Within 30 days of receiving the full reasoning for the ruling, the club can file an appeal with the Sports Guarantee Board at CONI, which can only address procedural legitimacy rather than the merits of the case. The board may annul the ruling, uphold it, or remand the case to the court for a retrial. Subsequently, Juventus could appeal to the Lazio Regional Administrative Court (TAR) and then to the Council of State.

As of now, the points deduction has dropped Juventus to 10th place in the standings, tied at 22 points (now 23 after a draw with Atalanta) with Empoli and Bologna. With 15 points deducted, qualifying for the Champions League is now a challenging objective, and the club’s stock value has fallen by 8%, dipping below 30 cents.

Furthermore, UEFA is closely monitoring developments. On December 1, it launched its own investigation, based on the Prisma inquiry and the Consob probe, into possible violations of financial fair play. These violations may relate to the salary maneuver during the COVID-19 crisis. In September, Juventus had agreed to return within fair play parameters within three years, paying a €3.5 million fine, which could rise to €23 million if the commitments are not met. However, if Juventus is found guilty of falsifying financial statements under investigation—statements on which the settlement agreement was based—UEFA could impose heavy sanctions, including exclusion from European competitions.

Additionally, March will bring a ruling from the European Court regarding the Super League dispute.

On the salary issue, the so-called “Ronaldo Letter,” recently published by Corriere della Sera, has also come to light. Dubbed “the document that wasn’t supposed to exist,” it is now in the hands of the Guardia di Finanza and investigators examining the Juventus case. This “side letter” stems from the salary maneuver during the 2020–2021 season, involving fictitious waivers of monthly payments by some players. The document states that Juventus was to pay Cristiano Ronaldo €19.5 million as part of a Supplementary Bonus Agreement by July 31, 2021. However, this document was never filed with the Italian Football League. While Ronaldo himself is not at risk, and may choose to join the legal proceedings as a civil party, Juventus faces significant repercussions on this front as well.

This situation likely explains the decision by Agnelli and the entire board to resign months ago, an attempt to distance themselves from a scandal that has now erupted and shows no signs of dissipating. Meanwhile, the players, deeply affected by the situation, must demonstrate unity and resilience to overcome off-field challenges, especially for the true victims of all this: the honest and unsuspecting fans, who certainly do not deserve a football world once again tarnished, much like on that infamous December 14, 2009, when Calciopoli shook Italian sports.

By Antonio Spampinato

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SERIE A LEAGUE READY TO BECOME A JOINT-STOCK COMPANY: A TURNING POINT FOR OUR LEAGUE?

Serie A appears poised to become a joint-stock company, or at least partially so, with the creation of a “media company” that would support a dedicated channel for broadcasting Italy’s premier football league matches. The legal structure chosen is expected to be a joint-stock company, rather than a limited liability one, considering the significant stakes involved. The company’s purpose will extend beyond the production and distribution of audiovisual content to include consulting on TV rights, sales of images and advertising space, gaming and betting, archival rights, and even direct production and distribution of audiovisual products. In short, it will encompass all the primary economic aspects tied to the league. These areas of activity are anticipated to open the door for foreign investment funds in Italian football.

One of the main incentives for proponents of this shift is the potential power shift it could bring. By redrafting the company’s statute, economic decision-making power—often the most contentious—would be removed from the general assembly, effectively taking it out of the hands of the frequently quarrelsome club presidents and directors. This shift could counteract the internal conflicts that have often hindered important innovations needed to keep pace with the top European leagues. Notably, the current CEO of Serie A, Luigi De Siervo, is not mentioned in the reform proposal.

Regarding investment funds, the document states that the joint-stock company would be “entirely owned by the League,” with the possibility of later selling a minority share: the media company is not necessarily tied to private equity, but it clearly paves the way for such funds to enter, as they would likely acquire a stake in this entity.

This move could enhance the “Serie A” brand, appealing to an increasing global audience, particularly overseas, given the substantial presence of American club owners in Italian football. This raises a provocative question: could this be the key to restoring Serie A’s place among the European “Big Five”? Or at the very least, helping it close the gap with the now-dominant Premier League? As football fans know, this is a game about power and billions, and thus a highly sensitive issue. Currently, the coalition of clubs supporting this bold move appears to be in the minority: in the past, private equity was backed by the big clubs but opposed by Lotito’s faction, and now De Laurentiis has withdrawn support, with Scaroni’s AC Milan also less enthusiastic. The aim was to have governance for this new structure in place by the end of the year, but it remains to be seen whether this will happen or if further twists lie ahead.

By Marco Munari

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FAREWELL TO FINANCIAL FAIR PLAY: HERE IS THE NEW UEFA REGULATION

How many times have we heard about FFP? But more importantly, how often have we tried to discuss it without really understanding what it entailed? Well, now we might still be left with some questions, but we’ll need to shift our reference point. With the official announcement on Thursday, April 7, UEFA decided to overhaul the system that monitors European clubs’ finances, reforming it in a significant and substantive way and even changing its name. It will now be referred to as the “UEFA Club Licensing and Financial Sustainability Regulations.”

As explained by UEFA itself, this reform is focused primarily on the financial sustainability of clubs, without (for now) affecting competitive balance among them.

The new regulations will come into effect on the 1st of June and will be gradually implemented over a three-year period.

Curious about what will actually change? Let’s delve into the details of this reform.

To stabilise a system that was dangerously wavering in the post-pandemic context, UEFA has introduced three fundamental principles in its new financial plan: 1. solvency, 2. stability and 3. cost control.

1 – Solvency refers, as everyone now knows, to the timely payment of debts. The pandemic resulted in an estimated €7 billion loss for the European football sector, and many clubs were forced to increase their debts further. Now, to ensure creditors are repaid (and to facilitate sustainable and less risky investments than in the recent past), UEFA will conduct quarterly checks on the financial position of clubs every March, June, September, and December, allowing a maximum of 90 days to settle any new debt.

2 – Stability pertains to the classic concept of “balance of accounts.” Under FFP, clubs were allowed a deficit of up to €30 million over three years. Now, this limit has been doubled to €60 million. However, unlike previously, these deficits now include expenses that were once considered “virtuous,” such as investments in stadiums, youth development, women’s teams, and donations, which were often used to balance the accounts. New rules also apply to net worth: if it appears negative on a club’s balance sheet, it must improve by at least 10% in the following year. Additionally, this calculation will now be based on the calendar year rather than the season.

3 – Cost Control involves analysing each club’s expenses (player salaries, coaches, staff, agent fees, transfer spending…) in relation to revenue. Over the calendar year, clubs may spend up to a maximum of 70% of their revenue. The implementation will be gradual, with the percentage set at 90% for 2023/2024, 80% for 2024/2025, and 70% for 2025/2026. Cost control is often confused with the concept of a Salary Cap, a typically American system that limits player and coach salaries and mandates a maximum spending limit, which is not part of UEFA’s reform.

Penalties for failing to meet these standards can range from progressive fines to sporting sanctions (banning players from playing, exclusion from tournaments, or relegation to a lower competition).

But for Italian clubs? What can we expect?

Given the current debt situation and considering that Serie A was one of the leagues most affected by the pandemic in terms of revenue decline, maintaining expenses within 70% of revenue will be very challenging for our top clubs, especially since revenue in Italy is generally significantly lower than in other countries, like the Premier League, or top-tier clubs like Bayern Munich or PSG.

These challenges should prompt our clubs to control wage budgets, develop home-grown talent, and invest in facilities that ensure steady, clean, and lasting revenue streams—all areas where Serie A has struggled to gain traction.

Top European clubs, on the other hand, may find these regulations less restrictive: with high revenues, often boosted by substantial sponsorships, teams like Manchester City or PSG can continue to spend heavily on player acquisitions while managing high operating costs.

By Gianluca Zaghis

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