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Generally<\/strong><\/p>\n Players represent the main source of finance for football clubs in Italy.<\/p>\n This is because of the lack of additional revenues from infrastructure, such as muti-purpose stadiums, which can be used to host events outside match days, as well as the lower level of sponsorship and TV rights revenues compared with those of other markets, such as England, where the current TV rights deal for the English Premier League is worth \u00a37 billion (around Sw. Frs. 7.75 billion).<\/p>\n Thus, profitable trading in players is vital for Italian football clubs, which enables them to:<\/p>\n It is not surprising, therefore, that Italian football clubs increasingly seek capital gains when the sale price of their players exceeds the net accounting value of them at the time of their transfers.<\/p>\n The net accounting value of players is the difference between:<\/p>\n Italian football clubs are able to depreciate the cost of players\u2019 sports performance rights \u2013 which is considered an intangible asset under Article 2426 of the Italian Civil Code \u2013 on a regular basis over the entire duration of the players\u2019 contracts. For example, if a player is bought for \u20ac30 million (around Sw. Frs. 28.19 million) and signs a five-year deal, the club may depreciate the purchase price by \u20ac6 million (around Sw. Frs. 5.63 million) for each financial year of the player\u2019s agreed term.<\/p>\n Restrictions on artificial capital gains under Italian law<\/strong><\/p>\n Several player transfers have been scrutinised by Italian criminal and sports authorities, as they were found to be structured to inflate artificially player values and enhance the financial affairs of Italian football clubs.<\/p>\n The authorities discovered that certain clubs unlawfully increased player values disproportionately in order to generate capital gains.<\/p>\n These transactions typically occurred when the transfer payment was not made entirely in cash, but through player exchanges or mixed deals in which part of the payment was made in cash and the other part through the transfer of another player\u2019s rights.<\/p>\n Engaging in such practices exposes clubs and their management to the risk of recording inaccurate accounting data in their financial statements and thereby contravening Article 2423 of the Italian Civil Code, which requires that \u201cthe financial statements shall be realised with clarity and shall give a true and fair view of the company\u2019s financial position and results of operations for the relevant financial year<\/em>.\u201d<\/p>\n Furthermore, the deliberate recording of inaccurate accounting data, including so-called artificial capital gains, also falls under Italian criminal law provisions such as:<\/p>\n Artificial capital gains under the FIGC Justice Code<\/strong><\/p>\n Furthermore, artificial capital gains are also sanctioned under Italian sports law, especially in football \u2013 the professional sport most vulnerable to such fraudulent practices.<\/p>\n Article 31 of the FIGC Justice Code sanctions violations of sports provisions concerning management and economics that may include, depending upon the severity of the violations:<\/p>\n – fines;<\/p>\n – points deductions;<\/p>\n – relegation;<\/p>\n – exclusion from relevant competitions and demotion to lower-tier championships; and\/or<\/p>\n – revocation of the title of Italian champion and\/or winner of the relevant championship\/competition.<\/p>\n The \u201cJuventus FC Case\u201d<\/strong><\/p>\n In recent years, the FIGC Prosecutor\u2019s Office has investigated many transactions involving major Italian football clubs accused of generating artificial capital gains.<\/p>\n However, only a few cases have resulted in sanctions, as the Italian courts have upheld the defendants\u2019 arguments that football is a free market where player values and prices are determined by free negotiations between clubs, thereby making it difficult to establish the fair values of players or prove the fraudulent intent of Italian football clubs.<\/p>\n The most recent case involved major proceedings against Juventus FC by the FIGC sports justice bodies which began in 2022 and eventually led to sanctions being imposed on its directors, and certain executives.<\/p>\n Initially, the FIGC justice bodies acquitted all the clubs and managers involved in the case, acknowledging that, whilst capital gains in financial statements should be based on certain evaluation criteria, there are no specific laws or sports rules that define criteria for evaluating players in football market transactions.<\/p>\n However, the case against Juventus FC was reopened by the FIGC Prosecutor\u2019s Office following investigations by the Public Prosecutor\u2019s Office at the Court of Turin. New documents and wiretaps provided evidence of the club\u2019s fraudulent conduct \u2013 specifically, that, according to the Prosecutor\u2019s Office, Juventus FC had established a systematic scheme of exchanging players with other clubs, including foreign clubs, in order to generate artificial capital gains and improve its financial results.<\/p>\n On the basis of this new evidence, the FIGC justice bodies confirmed the existence of the fraud and imposed a ten-point deduction on the club in the 2022-2023 Serie A championship. At the same time, most of the club\u2019s management received disqualifications ranging from several months to years.<\/p>\n\n
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