New Delhi: With operational revenues of €675 million, Real Madrid was the second-largest football club in Europe in 2016-17. That season, shepherded by prolific striker Cristiano Ronaldo, Real held off Barcelona in Spain and broke the resolve of an Italian club to win Europe’s Champions League.

That Italian club, which almost matched Real in success that year, was ranked 11 by revenue. At €405 million, the operational revenue of Juventus was 40% below Real’s. While Real was the extravagant buyer of players, Juventus was the shrewd seller.

A year on, Juventus has broken the bank to buy Real’s prized asset, Ronaldo, to try and become something like Real itself: a superclub, where everything—revenues, spending, ambition, expectations—is magnified, each feeding into the other, creating a self-serving circle that must keep expanding for its own sake.

Six European clubs exist in that rarefied space, with operational revenues near or above $500 million and a global standing. None is from Italy. Juventus wants to join them, and it has found an opening with the 33-year-old Ronaldo: a proven match-winner close to, if not at, the peak of his footballing powers and commercial value. This €340 million project of Juventus to catapult itself to the next level, while intriguing, is anything but a done deal.

The annual Deloitte Football Money League report classifies revenues of European football clubs under three heads: match day, broadcast and commercial. The smallest of revenue heads is match day: what a club makes by selling tickets. Juventus’ Allianz Stadium in Turin has a modest seating capacity of about 41,500.

In comparison, Real Madrid has about 81,000 and Manchester United 75,000. In 2016-17, a year in which it made the Champions League final, Juventus did not even feature in the top 20 clubs by attendance. Further, in 2016-17, Juventus earned an average of €45 from each spectator per match—12th highest among all European clubs. This was significantly less than what the superclubs realised.

The second revenue category is broadcast, which is primarily TV rights revenue. In 2016-17, Juventus derived 58% of its operational revenues from here, a far greater proportion than the superclubs. This was primarily because of its strong showing in the Champions League.

While Juventus has won the Italian league for seven years running, the last time it won the Champions League was in 1996. In the last five years, it has lost two finals. With Ronaldo, the Champions League is a goal. To preserve its broadcast revenue, Juventus would have to match its Champions League showing, while hoping that a Ronaldo multiple is added in local TV rights deals.

The greatest leverage and growth potential for Juventus is commercial revenues, which covers sponsorship, merchandising and other commercial operations. Barcelona, Real and Manchester United have kit deals of 75-150 million euros a year. By comparison, Juventus operates in the 25-75 million euros band.

That’s partly because of its chosen construct. Juventus is owned by the Agnelli family, which also owns the Fiat Group. Juventus jerseys carry a Fiat automobile brand, Jeep, which reportedly earns the club 20-25 million euros a year. The greater visibility that Ronaldo brings is a terrific advertisement for Jeep. Alternatively, Juventus can bring in a marque brand on the jersey, and elsewhere, on sizeable terms.

Juventus has reportedly sold Ronaldo jerseys worth 50 million euros in the first 24 hours. That’s still a fraction of what Juventus is paying for him for four years. Besides the 100 million euros to Real, Juventus will pay 120 million euros to Ronaldo and, as a government rule, match that amount as taxes. Or, a total of 340 million euros.

Since news of Ronaldo’s signing, the market capitalisation of Juventus has increased by 25%, or 169 million euros, to 837 million euros (Chart 4). But unless there is a share sale, this increase is notional. Right now, the market view is that Ronaldo will make a difference to Juventus. How that plays out, on and off the field, will decide Juventus’ brave march to superclub status.

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