Welcome back to Football Benchmark
and to Andrea Sartori, KPMG’s Global Head of Sports.
Let's focus on the big clash between Juventus and Inter, who are currently battling to win the Serie A.
They are competing not only on the pitch, but also off the field, by an economic and managerial point of view.
So, before such an important match, we want to analyze these two clubs,
focusing on their financial performance in the past years.
Juventus have been on top of the Serie A since 8 years and they are a key player also in Europe,
being the 10th most important club in terms of revenues.
On the other side, Inter are producing an extraordinary growth, right?
Yes, Inter are definitely closing the gap, as we can see showcasing their total operating revenues.
Starting with Inter, as we can see, in the last season under Thohir's ownership, namely 2015/16,
total operating revenue were of EUR 183 million.
That figure is EUR 366 million in their latest financial statement, the one of the 2018/19 season.
So, Inter have basically doubled their total operating revenues in 3 years.
If compared with other European clubs, Inter are the 14th team in Europe by revenues.
On the other side, Juventus grew from EUR 339 million in 2015/16
to EUR 464 million in 2018/19, an increase of 37%.
As mentioned before, Juventus are 10th in Europe by overall revenue.
The most interesting thing here is how the gap between the two teams has decreased in the past years.
Indeed, the gap was EUR 156 million 4 years ago,
while today it is EUR 100 million.
This was possible mainly due to an aggressive commercial strategy by Inter,
especially following the arrival of the Suning Group.
On the other side, Juventus were still able to stay ahead of Inter in the past season thanks to Ronaldo,
but now, thanks to Suning and its commercial partners, Inter are closer to the Bianconeri.
Exactly
Yes, and this is also a very positive case, because for example Pallotta has not been able to do the same with Roma.
If we focus on the chart, we can see two key moments.
One is when Suning became president of Inter after Thohir,
and their commercial revenues grew from EUR 71 to 144 million.
The key moment for Juventus was when Ronaldo joined them, and their commercial revenues grew from EUR 143 to 185 million.
Let's start with Inter.
They signed new commercial agreements, they sold the naming rights of the training centre in Appiano Gentile,
formerly called "La Pinetina".
They also signed a training kit sponsorship with Suning and Lenovo, and
some commercial deals between Suning and Inter in order to use the club brand on some Suning' products.
Moreover, since October 2019, Inter are adopting the same strategy that Juventus put into practice in 2015,
namely, they both control the licensing and merchandising directly.
This is another reason why Juventus have been able to grow by EUR 100 to 143 million.
Another one is, for sure, the transfer of Ronaldo to Turin.
Thanks also to him, the commercial revenues increased by EUR 42 million from the 2017/18 season to the next one.
Yes, so, to put it simple,
Juventus and Inter manage their merchandising without any intermediaries, such as Nike or adidas.
Yes, earlier, the kit suppliers were responsible also to sell their products,
while now the two clubs manage their merchandising directly.
Let's move on and focus on matchday revenues.
Again, Inter are behind the Bianconeri, but also in this case, they are closing the gap.
Juventus are probably still ahead thanks to owning their stadium, which allows them to be the leaders both on and off the pitch.
Exactly.
First of all, Allianz Stadium is smaller than San Siro:
the Bianconeri's home ground has 41,300 seats, while San Siro can boast around 80,000.
In the chart, we can see that, in the case of Juventus, matchday revenue grew
from EUR 44 million in the 2015/16 season, to EUR 71 million in 2018/19, a 60% growth.
On the other hand, Inter grew by 80%.
This is a clear result of better sporting performances for both clubs,
especially for Inter in the past season.
Inter are performing very well in terms attendance also in the current season,
as they registered a record of more than EUR 7 million matchday revenue in the UCL match against Barcelona alone.
Moreover, the average attendance at San Siro in this season so far is around 65,000 spectators.
This is an extremely good result if we consider that in the past season the average was 58,800.
So, to sum up, Juventus are able to earn more money from matchday with a smaller stadium,
while Inter can boast a bigger audience and attendance thanks also to lower ticket prices.
Absolutely, yes.
The revenue per seat for Juventus is three times higher than the that of Inter.
On average, the revenue per seat in Juventus’ stadium is EUR 73, while in San Siro it is EUR 25.
However, I am sure that the revenue per seat for Inter's home matches will be higher in the next season.
Great, after the revenues, let's focus now on staff costs.
There is no doubt that Juventus pay higher salaries than Inter, also due to the Ronaldo effect we have already mentioned.
On the other side, Inter have also incremented their staff costs.
Nevertheless, their staff costs-to-revenue ratio is more or less stable.
They have been able to respect the UEFA Financial Fair Play 70% threshold recommendation despite the staff costs increase, no?
Yes, and this is true for both the clubs.
Considering the analyzed seasons, we can see that Juventus increased their staff costs by 48%,
while Inter by 55%.
However, if we focus on the staff costs-to-revenue ratio,
Juventus saw this KPI increased from 65% in the 2015/16 season
to 71% in the last season, a little bit over the threshold suggested by UEFA.
On the other side, Inter were able to decrease this ratio from 56% to 53%.
This has been possible due to a remarkable increase in revenues, even bigger than the growth in staff costs.
Yes, basically Inter’s revenues incremented faster than their staff costs.
It would be interesting to see the effect of this season on the next financial statement.
Absolutely, because Inter invested a lot in buying players, Lukaku and Eriksen among others.
This is exactly what happened to Juventus between the 2017/18 and 2018/19 seasons after the arrival of CR7.
Great, now let's analyse their profitability,
as, also in this case, there are some similarities.
We have to note that Inter were under the Settlement Agreement with UEFA until the past season.
We can see that Inter invested much more than Juventus.
Namely, they registered much more losses after tax than the Bianconeri.
Yes, absolutely, their loss after tax was way more than that of Juventus.
Yes, consider that according to their past 4 financial statements, Inter registered a total loss of EUR 150 million.
We can say that Thohir contributed to a loss of EUR 60 million, while Suning for the rest, EUR 90 million.
On the other side, Juventus registered an aggregate loss after tax of EUR 12.5 million during the same period.
In the last two seasons, they closed with a negative result:
almost EUR 20 million in the 2017/18 and EUR 40 million in the past one.
The previous two seasons, their result after tax was positive, especially thanks to the 2016/17 season,
when they sold Pogba to Manchester United.
So, as we said before, also regarding the result after tax, there is a strong analogy between the two clubs.
Yes, and we have to notice also that Inter received in total more than EUR 700 million,
if we take into consideration the acquisition cost, the capital increase made by the Suning Group,
and the commercial revenues coming from China (around EUR 100 million/season,
of whom EUR 45 million expired on June 2019).
All these investments increased also Inter's Enterprise Value.
Enterprise Value is a KPI given to the most important European clubs by KPMG,
in order to determine the value of a football club.
Again, also in this case, the similarities between Inter and Juventus are strong,
especially following the arrival of the Zhang family, owners of the Suning Group at Inter.
Closing the gap regarding Enterprise Value would be more difficult for Inter,
but they are growing year after year.
Yes, they are the club that increased the most
according to our latest Football Clubs Valuation Report.
Indeed, Inter’s EV increased from EUR 491 to almost 700 million, namely a growth of 41% in one year.
However, their Enterprise Value (as at January 2019) is still half of Juventus' EV (EUR 1,548M).
Indeed, from 2016 to 2019, the Enterprise Value of Juventus increased by 73%, while Inter’s grew by 57%.
So, in this case the gap is still quite big, no?
Yes, absolutely.
It will also depend on whether Inter will keep playing in the Champions League and if their owner will keep investing.
And then, of course, there is also the possibility to build a new stadium for Inter.
So, thank you, Andrea Sartori for this analysis of Juventus and Inter,
Football Benchmark is back next week!
