What they did wrong and what it means

On Friday, Juventus were found guilty of making illegal substitutions and were docked 15 points by the Italian Football Association’s sports council, a decision that will move them from third place in the mid-table. . Eleven former Juventus directors were also banned, including former president Andrea Agnelli (two years), former football manager Fabio Paratici, now at Tottenham Hotspur (2½ years) and sports director Federico Cherubini (16 months).

It’s been a big physical bump for the Turin club, so here’s a Q&A to make it clear.

Question: What did they do wrong?

A: The engineering change, which usually changes deals, where little or no money changed hands but the company gained a statistical advantage (on paper).

That is the magic of amortization. If you release a player to another club for, say, 10 million salary, you can record that 10 million as income. But if you spend 10 million to get a player and he signs, say, five years, you can spread that 10 million in the middle of the life of the contract.

Question: So, if I get a person for 10 million and download someone for 10 million, I have a profit of 8 million? Ten million in and two million out, because I’m investing 10 million in five years?

A: On paper, yes. In real life, no. And, of course, you have to account for 2 million per year for the life of the contract. But in the short term, in your example, you can show a financial value of 8 million.

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This is not a mistake and it is the beauty of every club in Europe in their statistics. The problem arises when the two teams make a swap deal and increase the value of the players. In general, there are two separate deals, but in practice, they compare to each other and since no money changes hands, you can put the prices you want on the player.

So in the example above, if you get a player for 100 million and move a player to the same club for 100 million then – presto! — you got 80 million (and so did another company).

Question: Shouldn’t Juventus have been accused of this and disbanded?

A: Yes, they were sued along with eight other clubs (Genoa, Sampdoria, Empoli, Pro Vercelli, Novara, Pescara, Parma and Pisa). They have successfully argued that no one can put a target value on a player and therefore, no one has a say in the transfer fee – or, more precisely, the number you put on a player. in a swap – it is increased. In other words, the player needs what the market is playing, and the court agrees with them.

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Q: Why was the case reopened? It’s like double jeopardy to me, being tried twice for the same crime…

A: Prosecutors have agreed to reopen the case because they say new evidence has come to light. That evidence comes from a separate investigation called Prisma, and the indictment is that they not only did these fraudulent transactions at inflated prices, but were part of a systematic attempt to cook up the book Yes, and based on wiretaps and written evidence (including handwritten notes), they know that what they are doing is not above board.

It is a criminal investigation because Juventus is listed on the Italian Stock Exchange and has strict reporting requirements – according to investigators, this is related to accounting fraud. Sports prosecutors did not have the evidence they had when they cleared Juve and other clubs, so the case was reopened.

Question: Yes, but if two companies enter into a fraudulent agreement to cook the books, shouldn’t both be punished?

A: That’s a fair question, and it’s a matter of Juve’s defence, given the fact that they’ve been cleaned up in this one. Due to the investigation procedures, the difference is seen in many of those agreements, the fact that they think they have evidence – thanks to the Prisma investigation – that it was organized and planned, and that they know they are wrong. .

That said, there are other companies that appear in the evidence collected by Prisma – not just the eight that have been cleared – and could be sued. Some of the conversations suggest that they also know that what they are doing is not up to scratch.

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Q: I don’t know. If, as Juve said, there is no law to prevent this, why should they be punished?

A: Yes, there are no specific rules in sports circles. There is a rule about transparency with stakeholders, especially if you are a subscription company, as it is a matter of criminal investigation.

The plaintiffs argue that they violated Article 4 of the rules of the Italian FA, which covers fairness and justice, and Article 31, which covers fraud. (This, Juve might say, begs the question: If these deals aren’t illegal, how do they account for the fraud?)

Q: So what’s next?

A: Juve will wait for “documented reasons” to support the court’s appeal against the penalty. Then, they will appeal with the Italian Sport Certification Board, which is the highest court. They do not judge by virtue, they only consider whether the sports council follows the procedures and applies its own rules properly. That means they can guarantee a penalty or cancel it, they can’t, say, give Juventus a reduced penalty.

If the decision is upheld, Juve will have one last shot at the Court of Arbitration for Sport in Lausanne. But it’s a difficult time for their lawyers, because there are many trials going on…

Q: Like?

A: Yes, there is a Prisma investigation itself, which can lead to a custodial sentence. It doesn’t just cover system transfer errors; It also covers the fraudulent record over pay cuts taken by players during the COVID period.

In particular, it has already been reported that the players have volunteered to give a salary of four months, in fact, according to the complaint, most of the parties will receive one of those salaries . This allowed Juventus to change prices from one accounting period to another.

In some ways, this trial is more serious because it is a criminal trial and Juventus is listed on the Italian Stock Exchange, which means it is more difficult to report. That’s why the Agnelli family closed their entire class in November. That’s a criminal investigation, and they could face a sports investigation for that.

Then there is the fact that they are being investigated by UEFA for breaching Financial Fair Play. If they entered a false account to meet FFP requirements in previous years, they could be sanctioned for that.

Finally, the Prisma investigation revealed questions about swap deals with other companies that were not covered in this investigation because they did not see the evidence at the time. It can lead to additional charges.

Q: One thing I don’t understand is why, if the prosecution asked for a nine-point penalty, the court ended up with a much higher penalty. of punishment, hold them to 15 points…

A: Yes, it’s strange to me. The explanation is that for the meaning of the word, it must have a significant impact on the team – enough to deny them, say, a place in the Champions League. When they were charged, nine points were enough. Then they went on a run of good results and moved the table, so the court was more difficult.

I think that because there is no precedent or jurisprudence on that idea, they feel that there is nothing to stop them from exercising. But the judge is usually ahead of the prosecutors’ request.

Q: And what are the effects on the pitch?

A: Not good. Juventus posted Serie A losses of more than $250 million last year, breaking their own record from the first year of $210m. One of them is COVID, but remember that those losses come with the benefits of these questionable practices. If the punishment means they won’t be in the Champions League next year – and it’s very difficult to get 15 points on the pitch – then the loss of income is even greater.

Yes, and Juve’s shareholders have already invested around €700m in new capital over the past few years.

That is why the new president of Juve, Gianluca Ferrero, explained that he will be stronger going forward. And that translates to more confidence in the youth academy and, of course, less spending.

Q: One last thing for Tottenham fans: What to do with Fabio Paratici, the manager of Spurs who managed the changes?

A: Well, first of all those two charges have been filed, so you are innocent and proven guilty. His ban may not go into effect until he settles those charges. If the ban stands, it will also depend on the decision of FIFA and UEFA to extend the ban around the world and be recognized.

Of course, this whole thing is not a bad thing for him, so it will really come down to the team and how they feel about him, if he is accepted.

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