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The Giallorossi have spent beyond their means in recent years and credit of €100 million from a capital increase does nothing to help them meet Uefa's new rules

SPECIAL REPORT
By Vittorio Campanile

Despite having recently completed a capital increase operation worth €100 million, Roma remain in danger of falling foul of Uefa’s Financial Fair Play laws.

As previously announced by president James Pallotta, the Giallorossi have successfully pushed through a nine-figure boost to the coffers. But under the rules set out as part of Michel Platini’s masterplan, capital increases cannot be used to offset losses in a bid to increase transfer budgets.

While the club have given the impression that the share initiative allows for more financial freedom, this is not strictly true when it comes to potential signings. Moreover, the losses made of the market in recent years still remain on their balance sheet when it comes to the budget by which Uefa will judge Roma’s readiness for European competition.

Financial Fair Play rulings state that no club can show a loss of €45m for the three-year period covering seasons 2011-12, 2012-13 and 2013-14. That figure is not the standard amount shown at the bottom of the balance sheet after all debits and credits have been taken into account, but must instead be devoid of inflated income such as donations from owners or related parties and capital increases like the one recently administered by Roma.

Roma, showing a loss of more than €50m over that period, will not only gain no benefit from the recent boost in the eyes of Uefa but will also fall further away from the break-even figure thanks to their additions in the transfer market this summer.

The club admitted in letters sent to shareholders to whom they floated the capital increase plan that there was risk involved due to the recent losses.

It stated: “As at the date of this prospectus, the issuer is not in line with the parameters set out by Financial Fair Play insomuch as: 1) the accumulated loss of the three years 2011-12, 2012-13 and 2013-14 will not meet the threshold, equal to a negative total not exceeding €45m, which is defined for the respect of ‘Break-even rule’. 2) it has a consolidated net worth which is negative.”

Roma ended the last two budget periods with a total loss of approximately €98m, although a provision within the Financial Fair Play laws comes to the aid of the Trigoria side to some extent in reducing its football-related losses.


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A clause championed by Ernesto Paolillo, the ex-Inter CEO, allows clubs to offset some losses by not including the contracts of players contracted before June 1, 2010, as well as investments made in an organisation’s youth structure.

As such, this allows Roma to exclude the contracts of Daniele De Rossi and Francesco Totti, but even taking those operations into account the club balance shows a total of more than €45m in losses.

Roma do, of course, have a return to the Champions League to look forward to, with a substantial increase in revenues likely to come with it. Calculations within the club suggest that Pallotta et al should be guaranteed a minimum of approximately €31m in bonuses, television revenues and the market pool generated by participation in the continent’s biggest competition, but their summer dealings could lose them much of that extra capital.

Walter Sabatini had been handed the job of reducing the debt levels when the transfer window began at the end of the 2013-14 season, yet the club have explained in a second letter to subscribers to the capital increase that €25.4m losses have been made on the market since May.

SUMMER SPENDING
€22m*
Juan Iturbe
€6m
Radja Nainggolan
€2.4m**
Antonio Sanabria
€4.7m
Salih Ucan (loan)
€2m Davide Astori (loan)
*could rise to €24.5m
**could rise to €7m
Added to the huge losses made in the last three years, this figure sees them well beyond the break-even figure of €45m for 2011-14, and sends them into a potential talespin ahead of the next loss limit of €30m between 2014 and 2017.

The losses over the summer include the arrival of Juan Iturbe from Verona for €22m, with the first installment of Radja Nainggolan’s transfer fee having also set them back €6m. Add in Iturbe’s salary of around €8m, and the outlay needs to be offset in some way. Such significant outgoings cannot even be reduced by the major sponsorship deal signed with Nike, with much of the fee having already been paid in a substantial advance.

Perhaps most worrying of all for Roma fans is the fact that, while Manchester City and Paris Saint-Germain received financial punishments and reductions of squad numbers due to their attempts to “get around” the rules by signing inflated sponsorships contracts, the Giallorossi’s case is much more akin to that which saw Malaga banned completely from European representation.

Roma, rather than finding new ways to bring in cash to attempt to offset the losses, have simply been in clear violation of the rules.

One of the few potential remedies is to recoup much of the losses on the transfer market, with around €50m needed to level up the shortfall and meet Uefa’s stringent rules.

Players such as Miralem Pjanic and Mehdi Benatia, who have been watched extensively by major clubs across Europe, could be sacrificed despite Sabatini insisting they are not on the market.

The numbers do not lie though, meaning something must be done if Roma are not to run the risk of being excluded from Europe. And the sales of at least two of their most prized possessions may be necessary in order to get the Giallorossi back in the black.

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