Roma, High Management Costs Lead to Conservative Financial Choices

The non-participation in the 2016-17 edition of the Champions League has severely damaged Roma. The operations on the transfer market are also due to that.

Nowadays, football is a business that must take into account the financial factors. Although fans dream of trophies and seeing top players performing for their beloved sides, the truth is different.
Since his arrival in Rome, the American investor James Pallotta clarified that his long-term plan for the top club of the Italian capital would have been to develop a sustainable business model.
His actions in the past seven years are the result of meticulous financial strategies that should lead the club to an unprecedented economic solidity. The fans of the Giallorossi are in turmoil because they await a trophy for too many years. But today’s actions of the president and his collaborators were largely foreseen in the financial reports released over the years.

On Monday, May 21, 2018, the AS Roma capital increase was triggered, but the financial experts predicted that the approximately €20 million, of the €115 million planned, would have not been enough to cover the club’s excessive expenses. The operation was already approved by the shareholders’ meeting at the end of October but as stated in the informative document released “The capital increase is part of a significant deterioration of the economic, financial, and equity situation of the AS Roma group.” According to the data reported, “On March 31, 2018, the Group’s gross financial debt amounted approximately to €270 million.”

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The capital increase, which was then signed and implemented, could have not been the solution to a complex financial situation. The AS Roma financial documents clearly clarified that “Even in the event of full subscription [of the capital increase], it will not be sufficient to meet the total net financial requirement of the group for the 12 months following the date of the prospectus”.

The informative document also mentioned that “In the absence of the measures identified to cover the total net financial requirement for the 12 months following the date of the prospectus, the group is expected to deplete the liquid assets by the end of July 2018”.

In June 2018, the Giallorossi announced that during the option period 228,766,760 new shares were subscribed, equal to 86.31% of the new shares, for a total value of €99.056,007.08.

Although the club of Trigoria has always said to be fully confident about its financial situation, the transfer market operations, put into practice by the Roma sporting director Monchi last summer, had clearly been reported as one of the main solutions to give a solid management liquidity to the club.
The American investors led by President Pallotta have always poured fresh cash into the Roma coffers when needed. But the participation in the Champions League is still a vital requirement for a variety of financial and brand expansion reasons.
In fact, the club counts on the “net operating cash flows deriving from the performances that will possibly be achieved by the first team during the participation in the UEFA Champions League competition in the 2018/19 season, and by the possible signing of new sponsorship agreements”.

In light of that reported above, the approximately €100 million banked by Roma having reached the Champions League semifinals against Liverpool FC were not enough to change the club’s financial route. But they certainly supported the investments of the club to further improve the strength of the roster.

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The capital increase document also reported that “From January 1, 2018, to the date of the statement, the economic performance of the group was significantly influenced by the revenues deriving from the victories obtained in the knockout stages with Shakhtar Donetsk and FC Barcelona, which allowed the qualification for the semifinals of the competition played against Liverpool FC.

The long-term partnership with Qatar Airways and the sale of the player Emerson Palmieri significantly increased the Group’s overall revenues, compared to the results achieved in the first six months of the 2017/2018 financial year.

In conclusion, Roma are still implementing a very remunerative trading strategy to cope with excessive club management costs. The departures of Radja Nainggolan, Kevin Strootman, and the one that was about to bring Edin Dzeko to Chelsea, are to be evaluated both from a sporting perspective and a financial point of view. The Belgian midfielder and the Dutch international were two of the highest paid players on Di Francesco‘s roster. The Bosnian star, instead, suddenly decided to remain in the Italian capital after a deal between the three parties involved was almost sealed.

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About Stefano Bernardini 3434 Articles
A Roman between New York, Philadelphia, and Rome achieving his dreams. Persistence can make extraordinary things happen. Editor of AS ROMA 360 | Collaborated with & Calcio e Finanza | Reported on Major League Soccer | Featured on Bleacher Report & OneFootball EN.

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