Monday 27 February 2012

Genoa CFC, a football club or a factory?

Since promoted back to Serie A, Genoa always finished in mid-table except a single UEFA Europa League entry. The squad changed, from Rubinho to Amelia, Eduardo and Frey. Why the squad so unstable? Actually Genoa profited on Bonucci and Ranocchia before they made their club debut.

It is a nightmare to operate a club in Italy. Low gate income, discrimination of TV income, made a few Serie A club made a profit. Genoa was lucky: net loss of EUR 3,720,686 in 2006-07; a net profit of EUR 1,504,757 in 2007-08; from 1 July to 31 December 2008 a net loss of EUR 7,829,339 and 2009 a whole year of net profit EUR 598,212.

While the equity of the company was a negative of EUR 217,266; a positive of EUR 1,787,492, a negative of EUR2,541,847 and in 2009 a positive of 3,457,940. It means, Preziosi actually only need to re-capitalize a few million in order to keep the level merely above the water table.

Bonucci was a piece-weight of Motta and Milito deal. In that deal, Milito actually cost Genoa a few million (<10million), and Motta, a free agent. The result? 28 million and 10.2 million. Despite a cash-plus player deal, Genoa bought Bonucci for 3 million and re-sold half to Bari for  1.75 million, Genoa sold another half to Juventus for 8 million! 8+1.75 - 3, that's how Genoa operate. Genoa also successfully sold Bolzoni after a loan (0.4M for loan, and 1.05M for 50% registration rights= 1.45M, moreover Genoa had gain 0.2M from Frosinone for loan). Only Acquafresca, with a price tag of 9.5 million, became a flop. The case of Meggiorini still uncertain. A 5million price tag, sold half to Bari but Bari could not afford to buy another half, made his single season with the southern Italy side a 0.96 million loan. Genoa also bought him back from Bologna for the same price the club sold him to Bologna, yet another free loan. Torino recently bought half of the tag but Genoa could got nothing for the rest. Genoa was good at scouting and develop players. It knew when the players started to shine, the club could not afford their wage. And keeping them, did not mean a consistent result. Moreover, good result, Europe qualification, means bigger squad, bigger wage bill but imbalanced revenue grow. They aimed for Europe because it is the destination of the showroom, a winter sale. However Genoa also failed to keep the back bone to keep the result stable. Udinese, however, sold Quagliarella, Motta, Sanchez, Pepe, D'Agostino, Inler and Zapter without affecting the result.

Back to the numbers. In 2006-07 windfall profit on players was EUR 6,136,607 (that means, the revenue to sell  the player minus its un-amortize asset value) plus a loan income of 35,000. It almost offset the amortization of intangible asset (which most players contract, an way to reflect the transfer fee in installments)
of 8,459,065. Moreover a financial income of 7,288,833 from co-ownership that season (the excess fee what other clubs willing to buy the rest of the card or the discount other clubs gave to Genoa) The financial income exceed the write down of players rights of EUR1,518,007, the loan cost for the arrival  of 314,500 and the cost of sending players out for EUR402,000.

Much improvement in 2007-08 season, this time 21,782,405 player profit, Loan revenue was 975,000. amortization was 10,982,644, write down was 1,404,398, loan cost (to and from Genoa) was 794,000 and 939,746 respectively. Lastly a financial income of 400,000 but counter-weight by the cost of 401,990.

In the 6 months from 1 July 2008 to 31 December 2008, the numbers were EUR12,051,762, EUR348,046, amortization was 11,837,028, write down 242,041, loan cost 1,021,000 and 62,750. Lastly a financial income of 92,321.

In 2009 (calender year), which was huge. EUR42,184,032, EUR1,336,376, with amortization of EUR29,843,388, write down EUR4,671,413, loan cost 582,000 and 1,413,366; Financial income of 3,201,500, cost 1,901,000.

What's the use of these figure? It means Genoa generated income from players and exceed the buying cost! the audience paid the wage of the players and other clubs paid for the value-add/scouting service!

However the president was too mad on the football market of 2010, the introduction of UEFA Financial Fair Play made him only able to do dirty flopping youth player value and sell players to Russia. The last fool was Inter which bought Ranocchia for 19million and sell Destro for 4.5 million. Except a few Middle East idiot, FFP forced the club to make economic decision, and then a expected cool down in transfer market by UEFA. Unlike, Udinese, which they really bought South American in very cheap price, buying European as well as young Italian is more expensive, let's wait and see how Genoa is affected by the ice age of "mercato".

Edited on 6 August 2013
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Eventually in 2010 calender year Genoa had player selling profit of 38,880,710; loan revenue of 2,915,330, co-ownership income 7,050,000
 amortization 34,460,995 loan cost (to Genoa) 418,000 loan cost from Genoa 1,268,305, write-down of player 1,401,998 co-ownership cost 5,510,500: Net position: 5,786,242

player wage 47,648,255 TV revenue (including from UEFA) 32,134,601

In 2011, TV revenue  31,968,456, player wage 47,864,712

player profit 62,162,043 (mainly due to friendship with Milan and Inter), counter-option income 500,000, loan income 3,246,250 co-ownership income 17,024,500

amortization 40,801,899 loan cost 2,454,000 and 1,824,140 write-down 3,365,505 co-ownership cost 3,231,000 net position 31,256,249