This article analyses AS Roma finances in respect of the 2020/21 season.
Season review
AS Roma endured a challenging 2020/21 season as it navigated the financial impact of the pandemic. On the pitch, the club finished in a disappointing 7th place in Serie A, meaning AS Roma will compete in the inaugural UEFA Europa Conference League (UECL). Europe was however a bright spark in the season, with AS Roma reaching the UEFA Europa League (UEL) semi-finals.
The Romans also saw change in the boardroom following the takeover by US investors through The Friedkin Group. AS Roma finances remain in a challenging stat, with the club recording another substantial loss of €186m, taking losses over the past two seasons to €390m.
AS Roma Finances – Revenue
Revenue rose from €140m to €190m (35%), mainly driven by €30m of revenue relating to the 2019/20 season being recorded in 2020/21 due to the delayed 2019/20 season.
Matchday
Matchday revenue halved from €26m to €13m (51%) as the majority of games were played behind closed doors. The return of fans in greater numbers (still restrictions) means that matchday revenue should recover slightly in 2022.
Broadcast
Broadcast revenue rose from €80m to €124m (55%. This was mainly due to €21m of revenue from the 2019/20 Serie A season being recorded in the 2021 financial year. This is due to the season falling into July and August, with AS Roma’s 2020 financial year ending in June.
AS Roma’s broadcast revenue also benefitted from its run to the UEL semi-finals.
The Romans are in the inaugural UECL in 2021 which is not as lucrative as the UEL. As a result, AS Roma is likely to see a reduction in broadcast revenue unless performance domestically improved substantially. AS Roma will need to qualify for the UEL or UEFA Champions League (UCL) to grow broadcast revenue significantly. This is before considering the deferred revenue of €21m which will not be present in 2022.
Commercial
Commercial revenue rose from €35m to €53m (53%) following lucrative new deals with Zytara, New Balance and ICONIQ. The New Balance deal was particularly interesting with AS Roma terminating its previous deal with Nike to seek greater value.
AS Roma Finances – Revenue Summary
AS Roma finances appear healthy from a revenue perspective, rising by over a third in 2021. This was however driven by deferred revenue from the 2020 season when if stripped out and added back to 2020, would actually have resulted in a revenue decline. The return of fans in greater numbers will see some matchday revenue return however the lack of deferred revenue in 2022 and participation in the UECL will hurt revenue significantly.
AS Roma Finances – Operating costs
AS Roma saw its operating costs rise from €235m to €249m (6%) as the club slowed cost growth to improve profitability. It is worth noting that AS Roma attribute €10m of the €14m increase in costs to deferred costs that relate to 2020. This therefore indicates that costs actually fell in the 2021/22 season with 2020’s real number being €245m and 2021 being €239m.
Wages
The wage bill of AS Roma rose from €155m to €169m (9%) as the club looked to manage its costs. AS Roma’s wages to revenue ratio fell below 100% to 89% due to the temporary rise in revenue. This is still above the recommended 70% stated by UEFA.
With significant spending in 2021/22 to date, it is likely that wages will rise in 2022.
Other costs
Other operating costs remained stable at €80m.
AS Roma Finances – Operating Costs Summary
AS Roma has a high-cost base relative to its revenue profile. This has resulted in large losses and following another substantial investment in its playing squad following the arrival of Mourinho, this is unlikely to change.
AS Roma Finances – Transfers
AS Roma spent relatively largely in a subdued transfer market as clubs moved cautiously during the pandemic. In came Mancini (€21m), Veretout (€18m), Smalling (€15m), Perez (€13m), Kumbulla (Loan – €3m), Mayoral (Loan – €2m) and Reynolds (Loan – €0.1m) for a combined €71m.
Departing the club were Schick (€27m), Defrel (€10m), Gonalons (€4m), Ünder (€3.5m), Kolarov (€1.5m), Kluivert (Loan – €1m) and Florenzi (Loan – €0.5m) for a combined €47m.
This resulted in a net transfer spend of €24m, the highest since 2017.
Amortisation
Player amortisation charges fell from €94m to €89m (5%) as despite a higher net spend, the size of purchases was significantly lower than the previous four years (average of €119m per season).
Increased spending in 2021/22 is likely to see this player amortisation charges increase.
Profit on player sales
AS Roma had the rare case of recording an overall loss on player sales of €1.2m in 2021. This was driven by the termination/free transfers of Nzonzi and Pastore outweighing profit on other sales.
To date, sales in 2021/22 have been limited and therefore no significant profit on player sales is anticipated.
Transfer debtors / creditors
AS Roma is a net transfer creditor, owing more in transfer fees than it owed by other clubs. The club owe a high €170m in transfer fees while being owed only €40m, a net €130m creditor position. This has however not limited spending as the club continue to invest under its new ownership.
AS Roma Finances – Transfers Summary
AS Roma is investing heavily in its playing squad in the hope of improved sporting performance and the future revenue this brings. Until this sporting performance/revenue materialises, AS Roma is likely to incur large losses as a result.
AS Roma Finances -Profitability
AS Roma has recorded losses totalling €389m across the past two seasons as it invests in its playing squad. These losses may cause financial challenges for the owner which they will have to fund.
Operating profit / loss before player trading
Before player trading, operating losses decreased from €94m to €58m (38%) as AS Roma benefitted from the €30m of deferred 2020 revenue in 2021. With revenue in 2022 likely to fall, losses are likely to rise unless significant cost cutting measures are actioned.
Operating profit / loss after player trading
After player trading, losses fell from €172m to a still eye-watering €148m (14%). With limited player sales but significant spending to date in 2021/22, this number may worsen.
Profit / loss before tax
Significant net finance costs of €36m saw losses before tax of €184m.
AS Roma Finances – Profitability Summary
AS Roma’s losses are alarmingly high but as the saying goes “misery loves company” and it is not the only Italian club suffering from significant losses. The club will be hoping that performances will improve and a return to UCL football can help the club reduce these losses. It does however seem that profitability is a distant ambition that will take some time to reach.
Assets / Liabilities
AS Roma has significant third-party debt as it looks to fund its losses through a mixture of capital injections and debt financing.
Cash flow
The club’s cash reserves rose from €7.7m to €22.8m as cash outflows from operations of €64m, player transfers of €56m and capital expenditure of €4m were funded by financing inflows of €142m.
This cash injection was primarily from its new owners, both as a shareholder loan €31m and as equity (€145m), part of which was used to pay interest on existing debt.
Debt
AS Roma debt stood at €399m as it sought ways to fund its huge losses. Since the end of the 2020/21 season, new shareholder loans of €121m have been provided to AS Roma and subsequently converted into equity and therefore non-repayable.
This showcases the commitment by its new owners, but also the significant costs of running a large football club. It remains to be seen whether this investment will pay off.
Net debt
Net debt at the end of the 2020/21 season stood at €376m, relatively similar to the prior season.
AS Roma Finances – Final Remarks
AS Roma is one of the top clubs in the Italian Serie A. Under new ownership and new ambition, investment in the squad remains high. To date, this has not resulted in AS Roma finances, or the sporting performance improvements as hoped, with the club in desperate need of UCL football to reduce the rampant losses being incurred and burning a hole in its owners’ pockets.
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