Juventus Spends $340 Million to Land Ronaldo, Shares Up 42% Over Last 7 Days


Cristiano Ronaldo has signed a 4-year contract with Serie A club Juventus worth $50.5 million/year. In addition to the annual salary, Juventus will pay Ronaldo’s former club Real Madrid a transfer fee of $140 million bringing their total investment in the Portugese futbol star to more than $340 million. Ronaldo, who earned $61 million last season, is taking a pay cut to join Juventus.

Howie Long-ShortJVTSF shares popped +31% ($1.34) on Tuesday’s news that Ronaldo had officially signed, before closing at $1.18 (+16.25%). The stock has climbed +42% over the last week; word that Ronaldo could be leaving Spain for Italy first broke on Monday July 2nd.

I wonder if enthusiastic JVTSF shareholders are aware that Italy’s council of ministers recently approved a ban on gambling advertisements (existing agreements can be fulfilled), within the country, come 2019. They should be, because the ban extends to soccer clubs sponsored by gaming companies. More than half of Serie A teams currently have deals in place with gambling related companies and the pending loss of those sponsors has begun to cause “extreme worry” within the league. It’s been estimated that the ban could cost the teams more than $821 million.

Earlier this year, Forbes valued Juventus at $1.472 billion, just 3.3x revenue. For comparison purposes, Real Madrid was valued at $4.088 billion (5.5x revenue). The Carolina Panthers sold at 6x revenue ($2.3 billion).

In February, JVTSF reported half-yearly financials for the first half of 2017-2018. The franchise posted profits of +/- $50 million. Unlike publicly traded American pro franchises, JVTSF revenues/profits are “strongly influenced by the performance of sports results and in particular the UEFA Champions League”. This past season the club reached the Champions League quarterfinals, before losing to Real Madrid.

Fan Marino: Despite his age (33), Ronaldo’s transfer fee increased from 2009 when Real Madrid paid Manchester United $133 million (accounting for inflation) for the 5x Ballon d’Or winner.

Ronaldo may be the best player in the world, but the annual value of his team contract lags far behind both Messi ($84 million) and Neymar ($73 million). However, when you add the $47.5 million/year (most of any futbol star) he makes from endorsements, appearances and licensing, Ronaldo becomes the 2nd highest paid soccer player in the world; Messi remains 1st taking in $111 million/year.

It’s possible (if not likely) Ronaldo will appear against his current squad on American soil. Real Madrid is scheduled to play Juventus in the International Champions Cup in Washington D.C. on August 7th.

There should be a few other opportunities to see Ronaldo in the U.S. this summer. Juventus will make appearances in both Philadelphia (July 25, vs. FC Bayern) and Harrison, NJ (July 28, vs. Benfica); and will take on the MLS all-stars in New Orleans on August 1.

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Author: John Wall Street

At the intersection of sports & finance.

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