Aaron Ramsey has signed a staggering £400,000-a-week pre- contract deal at Juventus
that will net him £83million over four years.
The Serie A
giants confirmed on Monday that Wales international Ramsey had signed a four-year agreement ahead of joining in the summer when his current deal with Arsenal expires.
But many have been scratching their head as to how the Italian giants can afford the move given the huge outlay to sign Cristiano Ronaldo
from Real Madrid
The Portuguese star blew the club's wage structure apart having joined from Real Madrid and Ramsey will join him as one of Europe's premier earners.
looks into how Juventus can afford it, any potential implications with financial fair play and why the free transfer model is proving a hit in Turin.
Wait a minute, aren't they already paying Ronaldo a lot?
He is a five-time Ballon d'Or winner and he was never going to come cheap.
On a reported £500,000-a-week pre-tax, Ronaldo and Ramsey will amass nearly £1m-a-week in wages between them.
Ronaldo makes close to £3,000 every hour, a figure most of the Italian population will not earn in a single month.
The key to the Ronaldo signing is that the costs are gradually being offset over the four years of his contract in a move known as amortisation.
That means that the full value of the £88m deal did not go into the club accounts immediately for the 2018-19 season.
The Serie A champions split up payments to Real Madrid into equal chunks of four which means around €25m each year.
In combination with his wages means a total of around €85m every 12 months.
The owners can afford this outlay, can't they?
Estimations made by Forbes in June 2018
Juventus are owned by the Agnelli family, kings in the automotive industry given they own Fiat and Ferrari, through their holding company EXOR.
According to Forbes' estimations
, Juventus' annual revenue stands at $442m (£344m) and their current debt stands at just 6 per cent.
Ronaldo marked a shift in the club's approach to financing deals - an anomaly to their usual fixation on free transfers.
In a report in the Financial Times
, Andrea Agnelli, part of the owning family, said: 'It was the first time that the commercial side and the sporting side of Juventus came together in assessing the costs and benefits [of a signing]. The opportunity of Ronaldo was thoroughly assessed... and it made sense, both on and off the pitch.'
The 'Ronaldo effect' as it quickly became dubbed is proof that big name arrivals such as Ramsey can boost revenue overseas.
Juventus' share price more than doubled upon Ronaldo's arrival and should the club continue to attract the greatest players in world football, it will no doubt soar beyond its market capitalisation to €1.5bn.
Closer to home the club raised the price of season tickets for the new season by 30 per cent and they sold out in minutes, providing a significant boost to the revenue stream.
Free transfer model strikes again...
AARON RAMSEY'S JUVENTUS DEAL BROKEN DOWN
£1.6million a month
£57,142 every day
£4,761 every hour
£79 every minute
Not paying a fee, as they did with Ronaldo, is typical of Juventus' model in recent years.
They happily picked up a young Paul Pogba from Manchester United, secured German midfielder Emre Can after he left Liverpool and enticed Dani Alves when he realised he had no future at Barcelona.
It is an effective model, particularly with younger players as any sales generated huge profits having acquired them previously for nothing.
Other star names arriving on a free have included Sami Khedira, Andrea Pirlo and World Cup-winning captain Fabio Cannavaro.
No transfer fee means that players will receive a higher signing on fee and in the case of Ramsey has seen him secure a lucrative deal.
But when tax is deducted the Arsenal man is likely to pocket a net sum of €7.5m per annum, which works out to around £250,000-a-week.
But how does it all comply with Financial Fair Play?
WHERE DOES RAMSEY RANK AMONG PEERS?
(£600,000 per week at PSG)
2. Lionel Messi
(£500,000 per week at Barcelona)
3. Cristiano Ronaldo
(£500,000 per week at Juventus)
(£400,000 per week at Shanghai SIPG)
5. Aaron Ramsey
(£400,000 per week at Juventus)
6. Gareth Bale
(£350,000 per week at Real Madrid)
7. Alexis Sanchez
(£350,000 per week at Manchester United)
(£320,000 per week at Shanghai SIPG)
9. Mesut Ozil
(£300,000 per week at Arsenal)
10. Paul Pogba
(£290,000 per week at Manchester United)
There is no immediate panic in Turin.
Financial Fair Play (FFP) is not a major concern as their costs for years 2017-19 will only be assessed ahead of the 2019-20 season.
They would only find themselves in hot water if they have a net transfer spend of €100m this summer.
Ronaldo's arrival will skew the end of the assessed period but the division of payments to Madrid is likely to deflect any serious damage when assessed alongside revenue.
Ramsey's deal will see him slot in as the fifth-highest earner pre-tax in world football with Ronaldo coming in third after Barcelona captain Lionel Messi and £198m Paris Saint-Germain star Neymar.
His international team-mate Gareth Bale slips down a place with his £350,000-a-week in Madrid only good enough for sixth position.
Brazilian ace Neymar is reported to take home £600,000-a-week at the club before tax.
Should Juventus have miscalcuated their outlay and they overtake the €100m threshold they will be put under investigation
But given Ramsey is arriving on a free, plus their ability season after season to generate capitol from player sales, it should be relatively easy to steer clear of sanctions.