This article analyses Lazio finances in respect of the 2020/21 season.
Season review
Lazio were back in the big time in 2020/21 as they played in the UEFA Champions League (UCL) group stages for the first time since the 2007/08 season. It got even better for the club as it reached the knockout phase for the first time since 2000.
Domestically, the club unfortunately couldn’t qualify for the UCL again, finishing 10 points of 4th.
Despite UCL football boosting finances, the club still saw losses rise to €26m as they felt the impact of no fans in the stadium.
Lazio Finances – Revenue
Revenue rose from €92m to €147m (60%). following the return of UCL football. In addition, there was also deferred revenue in respect of the 2019/20 season being recognised in 2020/21.
Matchday
Matchday revenue fell to zero from €10m as the club played the entire season 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 €78m to €144m (84%) as the club reached the UCL round of 16. This was also driven by revenue from the 2019/20 Serie A season being recorded in the 2021 financial year. This is due to the end of the 2019/20 season falling into July and August, with Lazio’s 2020 financial year ending in June.
UCL revenue was €53m of broadcast revenue compared to only €14m of UEFA Europa League (UEL) revenue in 2020, highlighting the sizeable financial difference.
With Lazio back in the UEL in 2021/22 and the absence of any deferred broadcast revenue, broadcast revenue will fall significantly.
Lastly, Serie A has agreed a new broadcast cycle from 2021/22 on reduced terms which will adversely impact the broadcast revenue of Lazio.
Commercial
Commercial revenue fell from €3.4m to €3.1m (8%). Lazio has struggled commercial, with no shirt sponsor since 2019. However, the club has secured a deal with crypto exchange Binance from 2021/22 worth around €10m per season. This will boost commercial revenue considerably, as will a reported €4m per season kit deal with Castore (not yet finalised).
Lazio Finances – Revenue summary
It was a strong revenue year for Lazio in 2021. A return to the UCL and a bumper broadcast revenue year providing the perfect storm. However, what comes up must come down and a failure to qualify for the UCL will see 2022 revenue fall significantly, even with the return of fans and new sponsorship deals.
Lazio Finances – Operating costs
Operating expenditure rose significantly in 2021, from €97m to €157m (61%). This growth almost identically matched revenue growth, and therefore profitability was largely unimpacted.
Wage
Lazio saw its wage bill more than double from €67m to €134m (102%). This was driven by some performance bonuses from the 2019/20 season being paid in the 2021 financial year. In addition, the club paid significant bonuses to its players for qualification and performance in the UCL. With the club not qualifying for the UCL in 2021/22, wages should fall.
Other costs
Other operating costs fell from €31m to €23m, predominately from costs savings due to games being behind closed doors.
Lazio Finances – Operating costs summary
The cost base of Lazio grew significantly in 2021 as the club competed in the UCL. The absence of UCL football should reduce wages and the overall cost base of the club in 2022. This will be necessary to avoid much larger losses given the anticipated revenue reduction.
Lazio Finances – Transfers
Lazio spent a reasonable amount in what was a cautious transfer market. In came Muriqi (€20m), Akpro (€13m), Fares (€8m) and Hoedt (Loan – €1m) for a combined €42m. Departing Lazio were Berisha (€4.5m), Badelj (€2m) and Bastos (€0.5m) for a combined €7m.
This resulted in a net transfer spend of €35m, significantly higher than the €12m spend in 2020.
Amortisation
Player amortisation charges rose remained relatively stable, falling from €34m to €33m (2%). Significantly lower spending in the 2021/22 season to date will likely result in this figure shrinking.
Profit on player sales
Lazio recorded a profit on player sales of only €3.1m, while receiving €1.8m in loan fees and wages. This was due to a lack of player sales which hurt profitability (see profitability section). Sales have been similarly low so far in 2021/22.
Transfer debtors / creditors
Lazio is a net transfer creditor, owing more in transfer fees than it owed by other clubs. The club owe €60m in transfer fees while being owed €36m, a net €24m creditor position. This may have contributed to limited 2021/22 transfer spending.
Lazio Finances – Transfers summary
Lazio has not sold any significant players in the past two seasons, perhaps driven by a more cautious transfer market. This has had an impact on its finances, but has evidently contributed to its sporting performance also, highlighting the delicate balance between finances and squad value.
Lazio Finances – Profitability
Lazio recorded back-to-back losses as it navigated COVID-19 and a subdued transfer market.
Operating profit / loss before player trading
Before player trading, Lazio saw its operating losses increase from €6m to €10m (73%). This was driven by cost growth slightly outpacing revenue growth. With revenue anticipated to drop significantly in 2022, losses at this level are likely to rise.
Operating profit / loss after player trading
After player trading, operating losses rose from €21m to €38m (85%). This was driven by a reduction in player sales (€17m to €3m). With minimal player sales so far in 2021/22 and operating losses expected to rise before player trading, losses here are likely to be higher.
Profit / loss before tax
Due to net finance income of €7.6m as a result of equity investments (dividend from subsidiary), Lazio recorded a loss before tax of €31m. This compares to a loss of €13m in 2020.
Lazio Finances – Profitability summary
Lazio may have to brace itself for a large 2022 loss as revenue dips significantly without UCL football. This will however be offset by a smaller wage bill and should Lazio sale any players in the winter transfer window, this could go a long way to mitigating losses.
Lazio Finances – Assets / Liabilities
Despite its losses, Lazio did not require any significant funding in the year.
Cash flow
Lazio’s cash reserves remained stable at €2.7m. This was due to cash inflows of €42m being perfectly offset by cash outflows on player transfers (€27m), capital expenditure (€5.2m) and financing (€10m). Within financing outflows was a capital injection of €12m which helped fund the debt payable to external parties.
Debt
Lazio’s debt levels fell from €54m to €37m as it paid down a significant amount of its external debt. This will reduce finance costs going forward which will aid profitability.
Net debt
Net debt hence fell from €51m to €34m as it used some of its UCL money and owner funding to reduce indebtedness.
Lazio Finances – Final Remarks
Lazio enjoyed a year in the UCL which boosted its finances during two pandemic-hit years. Having not qualified for the 2021/22 season, the club will need to manage its costs carefully to avoid losses mounting. While this could be balanced by player sales, that may reduce its chances of return to the UCL. Tough decisions to be made…
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