Well run Napoli punch above their weight

The recent sale of Khvicha Kvaratskhelia to Paris Saint-Germain for €70m once again highlighted Napoli’s ability to make big money from transfers. In the case of the exciting Georgian winger, this was exacerbated by the fact that his value in the books was only €2m, so the profit from the deal weighed in at a hefty €68m.

In fact, based on the reported fee, this was the fifth highest profit from a player sale ever made by an Italian club. This is nothing new for Napoli, who have no fewer than four of the top ten player trading profits, including the best of all with €86m from the sale of Gonzalo Higuain to Juventus in the 2016/17 season.

Given Napoli’s financial disadvantages compared to the traditional “big” Italian clubs, their consistently high finishes in Serie A have been pretty impressive, but the wheels came off last season, when they fell to 10th place, which was their lowest league position since 2008/09.

Napoli’s pre-tax profit in 2023/4 fell from €118m to €91m, though this was still a hugely impressive figure by anyone’s standards. The club said that the decrease was due to “sporting results that were largely lower than expected”, which led to revenue dropping by €23m (8%) from their record €280m to €257m. In addition, profit from player sales was down from €80m to €71m.

Napoli’s €91m pre-tax profit was in a class of its own in last season’s Serie A, more than twice as much as the next highest, namely Lazio’s €41m.  This was in stark contrast to the large losses posted elsewhere, especially by Juventus €196m, Roma €76m and Monza €67m, though a few Italian clubs have started to make decent money, e.g. Atalanta €21m and Milan €12m.

In the last two seasons Napoli have generated an incredible €209m of profits, which has helped them to generate €174m in the last ten years (pre-tax).   The contrast between Napoli’s approach and that of other leading Italian clubs is evident, as seen by the financial results over the last five years. In this time the Partenopei made a €46m profit, while the others all lost huge sums, ranging from €318m at Milan to €857m at Juventus.

To illustrate Napoli’s success off the pitch, they have now delivered the three highest profits ever reported in Italy: €118m in 2022/23, €101m in 2016/17 and €91m last season. In fact, they have generated no fewer than six of the top 20 profits in Serie A.

Nevertheless, it’s clear that player trading is very important to Napoli’s business model, as the periodical sale of some of their stars has boosted their finances.  As a result of astute recruitment and an ability to extract a good price for their deals, Napoli have made the highest profit from player sales in Italy in the last five years, with their €298m being just ahead of Juventus €294m and Atalanta €290m.

Even after last season’s fall, Napoli’s revenue has still grown by €40m (19%) from their pre-pandemic peak of €217m to €257m, very largely driven by a €39m increase in commercial.  However, the failure to qualify for Europe will have a material impact on this season’s revenue, as they earned €77m here in 2023/24, including gate receipts, which was equivalent to 30% of total income.

Napoli had the fourth highest revenue in Italy in 2023/24, but the gap to the top three remained well over €100m. Indeed, both Juventus €409m and Inter €407m were €150m higher.

The importance of Europe

It is imperative that Napoli qualify for Europe (ideally the Champions League) in order to boost broadcasting income, as Serie A TV rights are so low at €1.1bln. That is only above Ligue 1 in the “Big Five” leagues, but more importantly it is around half of La Liga and nearly €3 bln less than the Premier League’s mega deal.

Napoli earned €69m for reaching the Champions League last 16, which was actually the highest of the Italian representatives, ahead of both Inter €66m and Lazio €61m, even though they got to the same stage.

Napoli’s 2023/24 Champions League income comprised participation fee €15.6m, prize money €19.7m, UEFA coefficient €22.7m and (estimated) TV pool €11.4m.  One reason they earned more than Inter and Lazio was a larger slice of the TV pool, thanks to finishing higher in Serie A the previous season.

However, last season’s income was lower than the €78m they received in 2022/23, when they went one stage further in the Champions League, reaching the quarter-finals before being eliminated by Milan.

Europe TV money has been extremely important for Napoli, earning them an impressive €242m in the last five years. This is the third highest of Italian clubs, albeit a lot lower than Inter €340m and Juventus €310m.

Napoli’s €27m match day revenue is a fair way below the top four clubs, who all earned at least twice as much: Inter €75m, Milan €69m, Juventus €58m and Roma €55m. They were also slightly lower than Lazio’s €28m.  It was a similar story for attendances with Napoli’s average of 46,967 being the fourth highest in Serie A, but a lot less than the top three clubs: Inter 72,838, Milan 72,008 and Roma 62,970.

Little investment has been made into the stadium infrastructure with the Stadio Diego Armando Maradona (renamed from the San Paolo in December 2020 to honour the club legend) looking a bit worse for wear these days.  The club would like to buy the stadium, so they can renovate it, but the local council is only willing to grant a long-term lease. This makes it difficult to grow this revenue stream.

Napoli’s wages increased by €5m (5%) from €111m to €116m, which was a little surprising, as the club’s sporting results were not as good as the previous season, so performance-related bonuses were lower. In “the season of the managers”, their compensation was up from €7.2m to €8.8m.  Italian clubs have been getting to grips with their wage bills, but Napoli are one of only two clubs that has actually cut wages since before the pandemic, the other one being Juventus.

To really emphasise the extent of Napoli’s achievement when they won the league in 2022/23, their €111m wages were easily the lowest of any of the Serie A champions in recent years. The wage bill for the other winners range from €328m for Juventus in 2018/19 to €170m for Milan in 2021/22.

Napoli have spent a lot of money on bringing players to the Maradona. In fact, according to Transfermarkt, Napoli had the second highest gross transfer spend in Serie A in the last 5 years (up to the 2024 summer window) with €458m, only surpassed by Juventus €686m.

Napoli have not had to rely on owner funding, unlike many other leading Italian clubs, e.g. in the last six years Juventus received around €900m capital from their owners, while Roma and Milan also benefited in this way with €647m and €600m respectively.

Napoli are clearly a very well run club, having generated massive profits in each of the last two years, which has resulted in relatively low debt and a very high cash balance.

However, this financial success has been built on a couple of pillars, namely large profits from player sales and money from the Champions League. The second of these will be absent this season, as Napoli failed to qualify for Europe, which means that the club is forecasting an operating loss.

It is equally true that Napoli’s ability to combine good financial results with sporting success came to a grinding halt last season, when they plummeted down the league. As president De Laurentiis once noted, “If you don’t win, supporters don’t care if you are good in the balance sheet. For them, it’s better you go bankrupt. But you must win.”

So far, this season has been a lot better forNapoli, who are back at the top of the table with a fighting chance of winning the league. If they do get over the line (for the second time in three seasons), it would be very impressive, given the much smaller budget compared to their main Italian rivals.