In a summer where even the biggest clubs are cutting costs and holding back on big transfer sums, the deals between Barcelona and Juventus for midfielders Miralem Pjanic and Arthur are outliers.
Juventus have agreed an €80m (£73m) deal for 23-year-old Brazilian Arthur, with Barcelona set to bring in 30-year-old Pjanic for €70m (£64m).
On the surface the deals would appear to involved a simple exchange of €10m (£9.1m) between two clubs for whom that sum is a drop in the ocean, even in a post-Covid-19 world. But football finance expert The Swiss Ramble has revealed how both clubs could post £50m-plus profits from the transfers.
It may explain why the two European giants, who fight a perpetual battle to keep in line with UEFA’s Financial Fair Play regulations, are so keen on a swap which feels like it would have little net impact on their respective teams. That is to say that both are top class midfielders, and while Pjanic is a better player today, that is negated by the fact that Arthur is seven years younger.
Now on to the complicated bit, with full credit and thanks to The Swiss Ramble.
They start by explaining that when a player is bought, his purchase costs are spread over the years of his contract in a club’s accounts, whereas player sales are immediately booked to the accounts. This is the key to the whole equation.
Players are considered assets, so transfer fees are not fully expensed in the year they are purchased, and instead written off evenly over the length of a contract in a process called player amortisation.
Arthur was bought by Barcelona from Gremio for €30m (£27.4m) on a six-year contract two years ago, so the annual amortisation is divided by six to make €5m (£4.6m). The player’s ‘book value’ reduces by €5m (£4.6m) a year, so it is now €20m (£18.3m).
If Arthur is sold for €80m (£73m) this summer then, Barca’s profit would be €60m (£54.8m) on the books.
Moving on to Pjanic, he was purchased by Juventus for €35m (£32m) on a five-year contract in 2016, so the annual ammortisation was €7m (£6.4m). His book value reduced by €7m (£6.4m) a year, so was €21m (£19.2m) when he signed a two-year extension in 2018. Now on a five year-contract, the €21m (£19.2m) divided by five becomes €4.2m (£3.8m) a year. Two years on, his value on the accounts is therefore now €13m (£11.9m).
So if Pjanic is sold for €70m (£64m), crucially in a deal separate to Arthur’s, Juventus are able to record a €57m (£52.1m) profit on the 30-year-old.
For Barcelona, the benefit from such accounting might only be short term.
For now they will be able to add to their profits during a year in which the club are in dire financial straits due to the impacts of the coronavirus pandemic, which could help in terms of meeting Financial Fair Play requirements.
As The Swiss Ramble puts it: ‘It would improve profit for FFP purposes. I think UEFA would only intervene if the values were absolutely ridiculous.’
But in reality Juventus should benefit more in the long run, because in real cash terms they will recruit a player who is seven years younger for an outlay of just £9m.
We may see plenty more of these sorts of deals with the financial difficulties presented to football clubs by the coronavirus pandemic.
Pjanic-Arthur is the very definition of a win-win situation.