Thread by @SwissRamble

#SSCNapoli 2017/18 accounts cover a season where they finished second in the league with a club record for points under Maurizio Sarri, but were eliminated at the group stage of the Champions League before dropping down to the Europa League. Some thoughts in the following thread.

#SSCNapoli posted a €3m loss before tax, compared to €101m profit prior year, as profit on player sales dropped €74m to €30m and revenue fell €18m (9%) from €204m to €185m, mainly due to worse performance in Champions League. After tax, went from €67m profit to €6m loss.

Less progress in Champions League reduced #SSCNapoli revenue by €28m, impacting broadcasting, down €24m (17%) to €119m, & match day, down €1m (3%) to €19m. However, commercial was up €6m (16%) to €45m. Including player sales, revenue fell €92m (30%) from €308m to €216m.

#SSCNapoli wage bill climbed €17m (16%) to €118m, while other expenses also rose €7m (25%) to €35m. On the other hand, player amortisation decreased €11m (15%) to €65m and depreciation was €1m lower.

#SSCNapoli €3m pre-tax loss was by no means the worst in Serie A, as 7 others reported higher deficits, including the 4 largest clubs: Inter €10m, Juventus €10m, Roma €18m & Milan’s horrific €121m. Most profitable: Fiorentina €55m, Torino €54m, Atalanta €40m & Lazio €40m

The situation is much the same after tax with #SSCNapoli’s €6m deficit around mid-table. The largest four clubs (in terms of revenue) “lead the way” with the highest losses: Milan €126m, Roma €26m, Juventus €19m and Inter €18m.

#SSCNapoli benefited from €30m profit on player sales, mainly Zapata to Sampdoria €20m & Pavoletti to Cagliari €4m, though much lower than €104m in 2016/17 (Higuain to Juventus €86m & Gabbiadini to Southampton €14m). Only 10th highest in Italy, way behind Juventus €94m.

#SSCNapoli have now made 3 losses in the last 4 years, though have accumulated €190m profits in the last decade. Owner Aurelio De Laurentiis has said that accounts in the red represent a “stain” on his reputation and expects the club to return to the black in 2018/19.

Player sales are very important to #SSCNapoli, averaging €42m in last 6 seasons vs only €7m in previous 4. Need to periodically sell stars to balance the books. This season will include at least €60m of gains, mainly Jorginho to Chelsea, while Koulibaly could go for €100m.

#SSCNapoli EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered as a proxy for cash operating profit, as it excludes once-off items like player sales and exceptional items, fell from record €74m to €32m, a more “normal” result for the club.

Despite the fall, #SSCNapoli EBITDA of €32m is still the second highest in Serie A, only behind Inter €67m, but ahead of Juventus €28m. Interestingly, 12 clubs in Italy’s top flight generate positive EBITDA.

#SSCNapoli revenue growth highlights the importance of Europe, particularly the Champions League. The €204m record revenue in 2016/17 was greatly influenced by €73m from this tournament. In fact, excluding European money, revenue has only grown by €27m (24%) since 2011.

#SSCNapoli €185m revenue is 5th highest in Italy, but still less than half of Juventus’ €411m. As Sarri said, “Juve’s turnover is too high, they make another league.” Also more than €100m below Inter €290m and behind Roma €257m & Milan €220m, but well ahead of Lazio €129m.

As a technical aside, revenue has been adjusted to be consistent with other European leagues, i.e. excludes profit on player sales and changes in asset values, but includes player loans. #SSCNapoli revenue in their accounts is €185m, while Money League definition is €183m.

Compared to the other leading Italian clubs, #SSCNapoli revenue growth has been on the low side. For example, since 2012 their revenue has grown by just €34m, compared to Juventus €200m, Roma €134m and Inter €80m (though Milan have fallen by €49m).

According to the Deloitte Money League, #SSCNapoli had the 21st highest revenue in the world in 2017/18 with €183m (down from 19th the prior year). This is around the same level as Leicester City €179m, but ahead of clubs like Sevilla €165m, Lyon €164m and Benfica €151m.

#SSCNapoli broadcasting income dropped €24m (17%) from €143m to €119m, as the €2m increase in domestic income to €79m was more than offset by the €26m decrease in European income to €40m. This was the third highest in Italy, behind Juventus €200m and Roma €167m.

#SSCNapoli had €77m TV money from Serie A, a long way below Juventus €117m. Distribution: 40% equal share; 30% performance (5% last season, 15% last 5 years, 10% historical); 30% profile (25% supporters, 5% population). New deal from 2018/19 increases the equal share to 50%.

#SSCNapoli earned €40m TV money from Champions League group stage (€39m) and Europa League (€1m), €26m less than €66m the previous season. Around half of Roma €84m (semi-final) & Juventus €80m (quarter-final), but more than double Lazio €17m (highest Europa League).

#SSCNapoli Champions League revenue was also restricted by their share of the Italian TV pool, as first half is distributed based on the finishing position in the previous season’s domestic championship, where their 3rd place was only worth 15%, compared to 1st 50% and 2nd 35%.

#SSCNapoli have earned a healthy €171m from Europe in the last 5 seasons, only surpassed in Italy by Juventus’ €406m and Roma €227m, but comfortably ahead of Lazio €56m, Milan €52m, Fiorentina €41m and Inter €15m.

In fact, #SSCNapoli €171m revenue from European competition in the last 5 years is the 13th highest of all clubs over that period, ahead of the likes of Borussia Dortmund €166m, Liverpool €153m, Sevilla €150m and Tottenham €140m.

#SSCNapoli match day income fell €1m (3%) to €19m, split domestic €15m (up €2m, 14%) and Europe €4m (down €3m, 38%). This was a long way below the other leading Italian clubs: about a third of Juventus €56m and around half Roma €39m, Inter €36m and Milan €35m.

#SSCNapoli average attendance rose from 36,605 to 43,050, the third highest in Italy only behind Inter 57,529 and Milan 52,690. There is a project to redevelop Stadio San Paolo, described as “an ever increasing toilet” by the colourful president De Laurentiis.

#SSCNapoli commercial income increased €6m (16%) from €39m to €45m, comprising sponsorship €31m, merchandising & licensing €4m and other commercial €11m. Around the same as Roma, but only a third of Inter €151m and Juventus €146m, and also below Milan €78m.

#SSCNapoli long-standing shirt sponsor since 2015 is mineral water producer Lete, worth €6.5m a year, while kit supplier Kappa replaced Macron in 2015 in a deal worth €8.5m a year. Leaves them a long way behind Juventus €40m: Jeep €17m and Adidas €23m.

#SSCNapoli player loans income was flat at €2.5m. Mainly relates to Nikola Maksimovic (Spartak Moscow) and Alberto Grassi (SPAL). This is a useful revenue stream in Italy for some clubs, e.g. Sampdoria €16m, Genoa €10m, Inter €9m, Juventus €8m and Atalanta €7m.

#SSCNapoli wage bill increased by €17m (16%) from €102m to €118m. Most of the growth came from player salaries, up €13m to €92m, and bonuses, up €3m to €12m. Wages have more than doubled in 6 years from €58m in 2012, as wages to turnover ratio rose from 38% to 64%.

In fact, since 2012 #SSCNapoli wages growth of €60m has only been outpaced by Juventus €109m, but is just ahead of Roma €56m. Over the same period, both Milan and Inter have seen their wage bills cut (by €56m and €9m respectively).

Nevertheless, #SSCNapoli €118m wage bill remains the 5th highest in Italy, a long way behind the other leading clubs: €30-40m behind Roma €159m, Inter €156m and Milan €150m, and less than half of Juventus’ €259m. On the other hand, there is a sizeable gap to Lazio €80m.

Despite the increase in #SSCNapoli wages to turnover ratio from 50% to 64%, this is still around mid-table in Serie A, around the same level as Juventus 63% and Lazio 62%. Just over half the clubs in the Italian top flight are within a 60-70% range.

#SSCNapoli player amortisation, the annual cost of writing-off transfer fees, dropped €11m (15%) from €76m to €65m, though has still more than doubled in 6 years (from €28m in 2012). Note: club uses the declining balance method, instead of charging evenly each year.

#SSCNapoli player amortisation of €65m is now the 4th highest in Italy, but still a long way below big-spending Juventus €107m, Milan €82m and Inter €78m.

Although #SSCNapoli net transfer spend has reduced in the last 3 years, averaging €2m sales, compared to €25m spend in the preceding 7 years. However, the jump in sales from €27m to €79m has disguised an increase in gross spend from €52m to €77m.

In fact, over the last 3 seasons, #SSCNapoli net transfer sales of €5m is in stark contrast to the three biggest spenders over this period, namely Milan €262m, Inter €196m and Juventus €188m.

The picture is different in gross transfer spend with #SSCNapoli €232m being the 5th highest in Italy, though this is still only around a third of Juventus €618m. It is also a lot lower than Milan €405m, Inter €379m and Roma €328m.

The additional outlay in the transfer market has resulted in a significant increase in the value of the #SSCNapoli squad in the books, doubling from €49m in 2013 to €98m in 2018. As De Laurentiis said, “We had to invest and we did it.” Obviously market value even higher.

#SSCNapoli have had zero financial debt for the last two years (and only had a €4m shareholder loan before that). De Laurentiis observed, “In Italy there are two or three clubs with balanced books, and I’m the only one who doesn’t have any bank debt.”

The absence of bank debt at #SSCNapoli is in stark contrast to clubs like Inter €521m (Goldman Sachs financing), Juventus €329m (mainly for new stadium) and Roma €266m (Goldman Sachs again and Unicredit).

As a consequence, #SSCNapoli paid no interest in 2017/18, which provides a major competitive advantage against the likes of Inter €35m, Roma €33m and Milan €23m. This is a real compliment to the club’s ability to fund itself from its own operations.

However, #SSCNapoli do owe €93m in transfer fees, though are themselves owed €34m by other clubs. Even this is only around half of the other leading Italians: Inter €178m, Roma €176m, Juventus €175m and Milan €172m.

Thanks to their sustainable approach over a number of years, #SSCNapoli have an incredible €119m cash balance, which is well over twice as much as the nearest Italian club, Roma €48m. To place this in context, the other 19 Serie A clubs combined have €187m.

A comparison with Europa League quarter-final opponents Arsenal highlights #SSCNapoli’s financial challenges in Europe, as their £164m revenue is £224m less than #AFC £388m, while their £105m wage bill is not even half of the Gunners’ £223m.

Unless #SSCNapoli can somehow grow their revenue commercially, they will have to continue to rely on Champions League qualification, boosted by some lucrative player sales, if they wish to maintain their self-sustaining business model.