Yahoo Finance Is 33-year-old Ronaldo worth $129 million to Juventus?
Real Madrid star player Cristiano Ronaldo recently signed a four-year, $129.3 million deal with Italian club Juventus, jolting the soccer world.
A reported $60 million worth of Ronaldo jerseys were sold amounting to almost half his transfer fee, in a span of 24 hours. Juventus (JUVE) stock jumped over 4 percent.
Juventus has been the most valuable football club in Italy since 2014. In June 2018, Forbes reported that Juventus’ team value was $1.47 billion. That number is expected to increase now with the addition of arguably the greatest player of his generation.
But how much value does 33-year-old Ronaldo truly add?
Juventus will only receive a fraction from the reported jersey sales, due to the fact that jersey manufacturers receive most of the revenue and clubs get a royalty. And when asked to comment on Ronaldo’s jersey sales, a Juventus spokeswoman told Yahoo Finance that the reported number of 520,000 jerseys was “incorrect” but would not elaborate any further.
‘Michael Jordan has been retired since 2003’
While it’s hard to quantify the value of the Ronaldo signing, there are indications that it will be substantial.
Doug Shabelman, president of Burns Entertainment, said the Ronaldo move “creates a bigger buzz about an already successful team and a fanbase that will last for generations. [A signing like this] has such a lasting impact.”
Shabelman added that Ronaldo’s presence provides Juventus with a way to “gear up” fans in a much bigger way. “Michael Jordan has been retired since 2003 and his jerseys still sell out at the United Center,” he said. “You’ll see the same thing with Ronaldo and Juventus.”
Research supports this claim. In 2006, economists found that Michael Jordan generated $53 million in broadcast revenue for teams other than his employer and characterized this as a “superstar externality.”’
As for the financial risks that come with the Ronaldo signing, Shabelman doesn’t see many. “These teams rarely make these decisions when they can’t gain the money back.”
‘Juventus is trying to make a statement’
Not all observers agree. Yahoo soccer columnist and sports lecturer Leander Schaerlaeckens doesn’t think that the Ronaldo deal makes sense.
Schaerlaeckens noted that because of the Union of European Football Association (UEFA)’s Financial Fair Play Regulations, Juventus will have to break even due to the amount of money the team spent signing the player. To offset the expenditure, Schaerlaeckens asserted, Juventus will have to sell off other players.
“The only real room for financial growth is with potential prize money and international sponsorship, which can be hard to rely on,” he said.
Schaerlaeckens further argued that generating money doesn’t seem to be the motive behind signing Ronaldo. “I suspect one of the reasons is just prestige,” he explained. “Ronaldo is 33 years old and chances are that he’ll stay productive. Juventus is trying to make a statement that Italy is still a player in the soccer world.”
‘Meaningful upside for the team’
Juventus has won the Coppa Italia, the country’s top tournament, every year since 2015. In the UEFA Champions League, Europe’s elite competition, Juventus reached the finals in 2016-17 and the quarterfinals this year. Both times the club lost to Real Madrid — Ronaldo’s old team.
Ronaldo has scored 658 goals for his club and country during his 17-year career and is the all-time leading scorer in the Champions League.
“Such a transfer creates a window for Juventus to tell and extend its story and reinforce to its fans their commitment to winning,” David Carter, executive director at the University of Southern California Marshall Sports Business Institute, told Yahoo Finance. “Few developments stoke fan interest as the acquisition of a global superstar, so the team must act quickly to capitalize on this.”
All signs suggest that Ronaldo will at least sell tons of tickets (in addition to jerseys). In 2007, economists published a 9-year study of all the clubs in the first German soccer league to analyze star attraction on ticket sales. They found that superstars, compared to local heroes, enhance attendance both at home and abroad (on top of boosting popularity).
And while there is a direct economic value that will likely pay for his massive contract eventually, Carter stressed that the most significant impact will be the elevation of the Juventus brand going forward.
“Short-term financial gains, when added to long-term branding opportunities, will yield meaningful upside for the team and elevate its status worldwide.”
Aarthi Swaminathan contributed to this report.
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