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Lazio have a sustainable business model

The authoritative Swiss Ramble reports on the latest set of accounts from Lazio. Their net financial debt rose €10m from €46m to €56m, as gross debt was up from €50m to €60m and cash was unchanged at €4m. Financial debt was just €10m in 2012.

Lazio have been steadily increasing their expenditure in the transfer market with average annual gross spend rising from €20m 2010-14 to €28m 2014-17 and €38m 2017-20. However, average sales have also grown to €46m in the last 3 years, leading to €8m net sales.

Although the €28m Lazio wages growth in the last two years is quite steep, it has still been outpaced by the “Big Three” in Italy (Juventus €66m, Inter €41m and Roma €39m), which means that the gap has further widened.

Revenue has grown by €24m (24%) in the last 2 years from €100m to €124m. The highest increase in this period came from commercial €13m, followed by broadcasting €8m and match day €3m.

Since 2016 Lazio have managed to grow revenue by a third. However, their €30m growth has been significantly outpaced by Inter €194m and Juventus €123m, and is also below Napoli €40m and Atalanta €37m. That said, they have closed the gap to Roma and Milan.

If Lazio do qualify for the Champions League, there will be a significant step-up in revenue. As an illustration, in 2018/19 the Italian clubs earned big money, as follows: Juventus €95m, Roma €58m, Napoli €50m and Inter €48m.

Even after the deterioration, Lazio's €4m pre-tax loss is actually one of the smallest in Italy. No fewer than nine clubs lost more than €15m, including Juventus €27m, Inter €40m and Milan €143m. Largest profits reported by Atalanta €35m, Sampdoria €19m and Sassuolo €13m.

The Swiss Ramble notes, 'Despite last year’s loss, by and large Lazio operate a sustainable business model, having reported profits in four of the last six years. Over that period, they have aggregated €54m of profits before tax, averaging €9m a season.'

However, it is clear that Lazio have become increasingly reliant on player sales. In the last three years, they averaged €40m a season from this activity, a significant increase over the €9m average of the preceding 7 seasons. 2019/20 will include sales of Neto & Jordao to Wolves.

Since 2016 Lazio have managed to grow revenue by a third. However, their €30m growth has been significantly outpaced by Inter €194m and Juventus €123m, and is also below Napoli €40m and Atalanta €37m. That said, they have closed the gap to Roma and Milan.

My comment, 'Increasing reliance on player sales is becoming a pattern across many clubs and its implications need further thought. It is a relatively volatile source of revenue and can be highly reliant on one or two sales. Players bought in the hope of generating a profit may get a serious injury.'

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