Engineer, great budget expert, full professor of Industrial Economics at the La Sapienza University of Rome and, previously, Director General of the Ministry of Budget and Vice President of IRI, Riccardo Gallo, seventy years of good looks, is also a great fan of football and couldn't get over the fact that his Roma, despite often playing head-on, almost never managed to win a championship: only three in all. Blame the referees? “No, the ultras say this. The truth is all written in the balance sheets. If Juventus win more, the reason is there." Analyzing the financial statements of the football clubs far and wide and comparing in particular the financial statements and the corporate structure of Juventus and Roma, first and second in the standings in the current Serie A championship, Gallo found confirmation that the the key to sporting success is only partly the talent of the players or, at least, that this is the effect but not the cause of victories and that the real difference between one club and another is above all the owned stadium and the equity. He explains why in this interview with FIRSTonline.
Professor, in one of your recent articles published in Il Foglio, entitled "Here's why Juventus win and Roma don't", you supported an eccentric thesis: that in football titles are not won only on the pitch. In what sense?
“In the sense that endemically and structurally the cost of the performance of a club's players is much higher than the revenues from tickets and season tickets linked to that club's matches. As a consequence, in order to be able to achieve the economic balance of management, every football club must resort to a combination of other factors, which however almost always prevent the building of a competitive and winning team, especially even in European competitions. For example, the first and most banal solution is to buy players whose services cost little, but in that case winning against stronger teams may even happen but obviously it is very unlikely; the second alternative is to wage a political battle within the Lega Calcio, to ensure a more advantageous distribution of the rich TV rights, with a Lotito-like scheme, however this too improves the situation but it is not enough; The third solution is to know how to bet on players who show ample room for growth, baby-talents, create an environment conducive to their growth, then sell those whose current market value has significantly increased compared to the purchase cost charged in the balance sheet, so as to achieve “divestment gains” that compensate for the structural losses we mentioned earlier; Palermo and Udinese do it and very well at the provincial level, and Rome and Naples at the national level, but this feeds in the players, despite being serious professionals, a spirit of disillusionment which is detrimental to their performance and to the harmony of the team. squad. Finally, there is the best model, that of Juventus, which even before taking the field, thanks to its owned stadium, a stable and strong corporate structure, and an approach that is dominant on the market in every sense, lays the conditions for WIN".
According to her, the two key factors are therefore the stadium and the net worth of a company: why?
“Let's say that these aren't the only key factors, there are also TV rights and UEFA prizes, of which Juventus is the first beneficiary, much more than Rome and Naples, because they usually spend more rounds in European competitions, like this one. year, and then there are sponsorships and merchandising. The question of the stadium concerns not so much tickets and season tickets, but the whole set of commercial revenues linked to the facility as a whole: shops, restaurants, entertainment halls, shows, etc. The stadium is no longer experienced once every 15 days only by the fans, but becomes a permanent attraction for the whole family, (simplifying) on the Las Vegas model. And the commercial revenues complement the insufficient football revenues. With regard to equity, let us first of all clarify that it is the sum of share capital, reserves and profit for the last year, ie it is how much the shareholders have risked in the company. The share capital is in a way the soul of the company, if there is no venture capital there is no company: if an entrepreneur does not put money into it, it means that he does not believe in the company. Well, in Juventus' latest financial statements, risk capital was equal to 9% of total assets, therefore a low but still positive amount, while Roma closed with an even negative net worth, equal to minus 117 million".
In addition to the financial statements, does the corporate organization also matter?
“Juventus also wins because it has never changed ownership, it has always belonged to the Agnelli family: continuity of shares and partners who never tire of investing money, firmly believing in the project, are a fundamental factor. It may seem abstract, but footballers also perceive this aspect, they feel an atmosphere of trust and great ambitions."
It would almost seem that the field and talent have no more weight…
“They have it, but less than the corporate organization. Let's take the example of Totti, who is unanimously the best Italian footballer of the last twenty years and is an asset of Roma: a single player, as talented and decisive as he is, affects all the various fronts, both sporting and economic and financial, but certainly not alone can solve the managerial balance of the company. Talent matters when all the players on a team are strong, and this is only possible by having a corporate structure like Barcelona, Real Madrid, Paris SG, Bayern Munich, Chelsea, Manchester United. In Italy, Juventus is for the moment the only permanently international competitive team”.
Apart from Juventus, Italian football clubs are generally sources of losses: who can still have an interest in investing in today's football?
“Investment can be dictated by various factors, which we have also witnessed historically. We had the irrational passion à la Franco Sensi or that of the first Berlusconi, who then also exploited the ownership of Milan for political reasons. Then there was the interweaving of power that led Saras, when it was still benefiting from Eni's push, to invest heavily in Inter, first with Moratti father and then with Moratti son. Recently there has also been the territorial motivation with the Sassuolo case: Squinzi has compacted an entire industrial district, that of ceramics, around a football team that is also doing well”.
And then, fortunately at this point, there are the big foreign funds.
"I wouldn't expose myself on those because I don't know the story well, but if it's true that, for example, Inter's Asian ownership has a lot of money, it would do well to invest it in a business model like the one we talked about, with a stadium income-diversifying property. It is not enough to have financial resources, you have to believe in a project”.
What do you think instead of some alternative management models, such as those proposed by De Laurentiis in Naples or Cairo in Turin?
“De Laurentiis will sooner or later sell Napoli, I don't see a clear future. The situation for Cairo, on the other hand, is different, because in addition to being the owner of Turin, he is also the majority shareholder of RCS and La7: there is a profound difference with the activities that the Napoli boss has behind him… ”.
Juventus, Roma and Lazio are also listed on the Stock Exchange: what do you think of the listing? Was it and will it be useful?
"It didn't help and it won't help, because the fans show that they are not interested in the popular shareholding of their favorite team".
Finally, speaking of the stadium: Roma are also trying to make their own, amid a thousand obstacles.
“On the one hand, I think Roma should absolutely build it, for the reasons we have mentioned. Moreover, seeing the Giallorossi budget, commercial revenues are already an interesting part and could increase thanks to a proprietary plant. The problem, however, is that this facility will not belong to the sports club, but to a connected company, controlled by Pallotta and owned by the builders who are part of the project. It will therefore be able to be managed separately, and one day even sold, and we don't know how much benefit it will bring to the growth of the team with these conditions. In conclusion, those who ideologically maintain that the project for a new stadium such as the one proposed by Pallotta pursues goals unrelated to football are dead wrong, precisely because we have seen how commercial revenues and sponsorships are essential to supplement the insufficient revenues linked to matches and allow further efforts for football successes, while those who doubt that the Roma stadium can permanently solve the problems of economic equilibrium are right, precisely because it will be owned by companies only indirectly connected to AS Roma".
