Cristiano Ronaldo effect: economics of big-money transfer to Juventus

Cristiano Ronaldo’s £99m transfer from Real Madrid to Juventus this month not only shocked the footballing world but also marked a thrilling new chapter in the Portuguese’s glittering career.

With his five Ballon d’Ors, five Champions League winner’s medals and a European Championship title, Ronaldo will become the next icon to wear the famous stripes of the Bianconeri. He will be stepping into the shoes of names such as Alessandro Del Piero, Zinedine Zidane and Michel Platini.

To some pundits Ronaldo, who is 33, may be in the twilight of his career, but after 450 goals in 438 matches for Real, Juve will be hoping he can fire them to glory both in Italy and Europe.

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It’s not just Ronaldo’s statistics on the pitch that Juventus have invested in though, but also his CR7 brand and social media influence.

The auditing company KPMG – through its Football Benchmark report – has looked at the economics of the player’s move from Madrid to Turin.

Here’s a breakdown of the report’s findings:

Ronaldo’s massive fan base

Andrea Sartori, KPMG’s global head of sports, says Juve and its shareholders have a golden opportunity to benefit from Ronaldo’s on-field talent and off-field business reach.

Sartori writes: “Besides having acquired the potential of his on-field performance, the signing of such an iconic player can provide the ‘Old Lady’ with the unique opportunity of leveraging on Ronaldo’s massive fan base, both from a communication and commercial perspective.

“However, we also do believe that Juventus FC’s shareholders will be able to fully capitalise on this investment if their business strategy will be adapted in order to better monetise their social media audience, which is expected to grow significantly in the months to come.”

KPMG reports that Ronaldo has more than 332 million followers combined through his Facebook, Instagram and Twitter accounts.

CR7: Ronaldo the brand

The striker’s success on the pitch for Manchester United, Real Madrid and Portugal has helped him create his own CR7 brand and attract major sponsors and endorsement deals.

Last month Forbes reported that Ronaldo was third on the list of the world’s top 100 highest-paid athletes this year, behind boxer Floyd Mayweather and footballing rival Lionel Messi.

In the year to 1 June 2018, Ronaldo earned a total of $108m (£80.9m) with £45.7m in salary and winnings and £35.2m in endorsements. His sponsors include Nike, Electronic Arts and Herbalife.

What will the transfer mean in business terms?

The Italian giants will “need to increase their operating revenues over forthcoming seasons”, KPMG says, to justify the major outlay of Ronaldo’s £99m transfer fee and his four-year contract worth £26.7m net per season.

KPMG says it is “unlikely that they will see a major positive impact from the CR7 acquisition in the 2018/19 financial year”. But the firm believes that as well as matchday and broadcast revenues, the major growth opportunity for Juventus will come in commercial space, especially in merchandising and sponsoring.

“Within three football seasons, we do believe it is realistic for Juventus FC to add an additional €75m [£66.8m] to €100m [£89.1m], complementing the €120m [£106.9m] reported in their latest accounts as at 30 June 2017,” the KPMG report says.

“There is no doubt that the signing of CR7 provides the club with a new, greater bargaining position with their main sponsors.

“In addition to that, the global appetite for Ronaldo provides the Bianconeri with the opportunity to sign new lucrative licensing agreements, combined with the identification of new global sponsors.”

The report also says that commercial revenues might be found in countries where Juve have not yet established a strong brand presence, but where Cristiano Ronaldo has “major visibility.”

When the Ronaldo transfer rumours started on 2 July and in the days after his official unveiling, Juventus’s stock price increased by approximately 32%.

Juve and Ronaldo get social

With 332m followers, Ronaldo’s digital fan base is six times that of Juventus’s 55m, but there are already signs of major growth for the Italian champions.

From 5-17 July, the Portuguese star’s move to Turin sparked a social media boom for Juve. The club’s Twitter and Instagram accounts attracted follower increases of 15% and 25% respectively.

Juve’s Twitter accounts grew from 7m followers to more than 8m, while the Instagram accounts increased from 10.1m followers to 12.5m.

“Before even stepping on the pitch with a black and white jersey, the acquisition of Ronaldo resulted in high visibility for Juve, with social media numbers already headed upward,” said KPMG.

“What matters is not only the absolute number of followers, but also their geographical distribution in order to understand in which markets Juventus FC can expand their presence.”

KPMG adds: “Ronaldo’s social media exposure within Asia, South and Central America, and the US would help the club to create a more global brand which, in turn, would eventually result in higher revenues.”

The spillover effect of the Ronaldo-Juve deal

KPMG reports that it’s not just Ronaldo and Juventus who may benefit from the big-money, big-business transfer, but Italian football as a whole.

The country’s top division, Serie A, is seeking a title sponsor after its deal with TIM expired at the end of last season. KPMG says that the transfer gives Serie A the opportunity to “leverage on the presence of Cristiano Ronaldo [and] might allow the league to strike a more favorable deal”.