Wednesday, June 29, 2011

Palermo - Pretty In Pink?

After a promising start to the 2010/11 season, when their exciting young team appeared to be mounting a serious challenge for a Champions League place, Palermo hit the buffers in February, suffering what their irascible president Maurizio Zamparini called a “black-out”, as they lost six matches in a row, including a devastating 7-0 home defeat to a rampant Udinese. The campaign had been going so well with the youthful talents of the Argentine playmaker Javier Pastore and Slovenian midfielder Josip Ilicic to the fore, ably supported by the attacking full-backs Federico Balzaretti and Mattia Cassani.

Described as a “phenomenon” by no less an authority than Javier Zanetti, Pastore in particular elevated himself to genuine stardom with some world-class displays, enamouring himself to the fans by scoring a hat-trick against local rivals Catania. His former manager Delio Rossi said, “Javier is not the icing on the cake, he is the key ingredient”, after “El Flaco” (the skinny one) received the award for Serie A Young Footballer of the Year in 2010.

Nevertheless, the season finished on a high (of sorts), as the Rosanero defeated champions Milan to reach the Coppa Italia final, where they were unfortunate to lose 3-1 against Inter. Their disappointment was tempered by the fact that this was enough to secure qualification for the Europe League, as Inter already had a Champions League place. They also finished in a creditable eighth place in the league, though this left the fans feeling a little frustrated after the previous year, when the Sicilian club achieved its best ever position of fifth, only missing out on the Champions League by two points.

"Fabrizio Miccoli - captain courageous"

However, any displeasure from the fans was nothing compared to that expressed by the volcanic Zamparini, whose behaviour towards his managers last season was bizarre even by his own erratic standards. After the mauling by Udinese, he sacked Delio Rossi with a vicious parting shot, “He has ruined my Palermo. Rossi has destroyed this team.”

His replacement, the excitable Serse Cosmi, fared little better. He barely had time to adjust his baseball cap before being given the elbow after just four games, culminating in a 4-0 defeat in the derby match against Catania. Before that game, the president had told Cosmi not to pick the captain Fabrizio Miccoli, but Cosmi effectively sealed his fate by also not selecting Pastore.

In an abrupt volte face, Zamparini then brought back the humiliated Delio Rossi, commenting, “Rossi knows this team well and he’s the only one that can save us from this predicament.” If the fans thought that was the end to Zamparini’s eccentric deeds for the season, they would have been disillusioned when Palermo and Rossi parted company for the second time in four months, as former Chievo manager Stefano Pioli was appointed coach at the beginning of June in a bid to improve the team’s defence.

"Zamparini - listen to me"

Of course, Zamparini has few equals when it comes to hiring and firing managers. Given his penchant for granting managers more than one bite at the cherry, it is difficult to calculate exactly how many he has employed since he bought Palermo in 2002. By my calculations, the total now amounts to 20, though some names appear on the list more than once, including Francesco Guidolin, who held the coaching position no fewer than four times between 2004 and 2008. Yes, that would be the same Guidolin who has just led Udinese to the Champions League. As the inimitable James Richardson once put it, Zamparini is “a man responsible for producing more pink slips than Victoria’s Secret.”

There’s never a dull moment with El Presidente, but his outspoken, interfering approach has been a destabilising influence at the club, undermining managers and players alike. While the money he has put into Palermo undoubtedly gives him the right to have his say, it would surely be better for the club if his criticisms were made in private rather than in front of the TV cameras, as is his habit. In fairness, the “Venetian” is not completely blind to his ways, “I know I’m not an easy president. I have many faults and among these is the lack of patience.”

However, as the saying goes, there are two sides to every story. While the president may sometimes put his foot in his mouth, Palermo fans should be grateful to him for also putting his hand in his pocket. After he sold Venezia football club in 2002, Zamparini purchased Palermo from former Roma chairman Franco Sensi for a reported €20 million, discovering a club with shaky finances, low gate receipts and no sponsor.

"Josip Ilicic - plenty of heart"

Since those dark days, Zamparini has guided Palermo from the depths of Serie B to the upper reaches of Serie A, injecting further funds into the club. According to a letter that he sent to the fans earlier this year, he has invested €62.45 million, a figure backed up by the accounts. In fact, the total investment was actually higher, as €4.5 million has been repaid since 2006 when there was no further need for external funding to cover losses.

In total, Zamparini has therefore invested €82.45 million into Palermo, which might not be as much as, say, Massimo Moratti has spent on Inter, but it’s hardly an insignificant sum of money. Actually, as Zamparini has also provided a personal guarantee for the club’s debts of a further €21.65 million, you could say that he has risked well over €100 million on the Rosanero. In other words, he may well have a big mouth, but at least he’s put his money where his mouth is.

That said, his role as Palermo president has not exactly been harmful to the growth of his construction business in Sicily, which has focused on new commercial centres. In addition, it has provided a platform for his sizeable ego.

"Ezequiel Munoz - high five!"

In fairness, his achievements at Palermo do give him something to shout about, as the club has most definitely been on the rise since he took over. The club has not won any major honours in its history, though twice came close to victory in the Coppa Italia in the 70s. Indeed, in 1986 they were expelled by the football league due to financial problems, leading to a year without professional football in Palermo. The club then re-formed in Serie C2, immediately gaining promotion, though they spent most of the 90s between Serie C1 and Serie B.

However, a couple of years after Zamparini took control, Palermo were promoted to Serie A, 30 years after they had last played in the top tier. In their first season back they surprised many by finishing in an impressive sixth place, driven forward by Luca Toni’s goals, but since then they have regularly finished in the top ten, including fifth place three times (though one was due to the adjustments following the Calciopoli scandal).

In that period, not only have they managed to avoid relegation battles, but have qualified for Europe on five occasions. Their best run came in the UEFA Cup of 2005/06, when they lost in the last 16 to Schalke 04. The quality of that team was emphasised by Palermo providing no fewer than four players to Italy’s World Cup 2006 winning squad: Andrea Barzagli, Cristian Zaccardo, Simone Barone and Fabio Grosso, the man who scored the crucial first goal in the semi-final against Germany.

This is a pretty good record, considering Palermo’s relatively limited resources. In fact, Zamparini summed up the situation fairly well in the letter to the fans, “Palermo has in the last few years an equal balance between income and expenditure, despite the mounting expenses.” This is more or less true if we look at the profit and loss account of recent times. Although this show losses in four of the last six years, in the main they’re relatively small and the aggregate loss over the period is only €11 million, which is not too bad in the unforgiving world of football.

However, the last two years have highlighted a major issue for Palermo, namely the importance of player sales to the club’s business model. In 2009, they made a healthy profit of €18 million, which was entirely due to profit on player sales (“plusvalenze”) of €48 million. However, last season, when there was effectively no profit from player sales, the club swung to a loss of €17 million.

Zamparini went on to say that Palermo brought in “negative amounts of €10 million annually compared to revenue”, but it’s actually worse than that with the operating loss being even higher in the last four years: 2007 €19 million, 2008 €11 million, 2009 €26 million and 2010 €15 million. So, those who accuse the president of making money from the club are barking up the wrong tree. As he explained, “The club’s policy is not to make money, but to balance the budget, so it doesn’t fail.”

In fairness, if non-cash items are excluded, the EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) is invariably positive, so the club is not in desperate financial straits. In fact, in 2009 Palermo were the most profitable club in Serie A. Even with the large loss in 2010, the club still broke-even over the last two seasons with only four clubs performing better from a financial perspective: Catania, Napoli, Lazio and Livorno.

Palermo’s financial prudence was in stark contrast to many of the bigger clubs, who reported enormous losses. In the last two seasons, Inter led the way with an aggregate loss of €223 million, though this helped deliver the scudetto in 2009/10. The next highest loss came from their neighbours Milan, who finished third in the league, while the fourth highest loss of €24 million was from second placed Roma. With that backdrop, for Palermo to balance their books and still finish fifth in 2009/10 was a remarkable achievement.

However, as we have seen, the only way that Palermo can operate a self-sufficient model is through player sales. This has enabled them to restrict the club’s debt levels, while delivering enough profit to sustain their operations – also removing the need for Zamparini to further finance the club. In 2009, this was worth a massive €48 million, including the sales of prolific Brazilian striker Amauri to Juventus (profit €19 million), Barzagli (€9 million) and Zaccardo (€6 million) to Wolfsburg and Rinaudo to Napoli (€5 million).

In his letter to fans, Zamparini again stressed that the club had to rely on such activity to cover losses, citing the example of Edinson Cavani’s move to Napoli, which produced a juicy profit of €12 million (€17 million selling price less €5 million cost), though this was actually a paid loan (€5 million) with an option to buy (€12 million, payable over four years).

"Salvatore Sirigu - packs a punch"

It should be noted that the calculation of the profit made by Palermo will not always be as straightforward as selling price less cost, because sometimes the player’s previous club will also take a share of the gain, e.g. this was specifically noted in the accounts for the deal that took Danish defender Simon Kjaer to Wolfsburg in July 2010.

Nevertheless, this strategy clearly makes sense financially, not just for the profits made by selling the “assets”, but also because it keeps the wage bill at a reasonable level. This was explicitly mentioned in the club’s 2009 accounts, which outlined how they would sell the better known players, who were perhaps less motivated, and replace them with younger prospects – with lower wage expectations. Zamparini said that the idea was “to invest in youth with great quality”, a policy that means that Palermo has become “a factory of stars” according to La Repubblica with a production line of talent.

There is little doubt that the club’s scouting network has discovered some unpolished gems, such as the mercurial Pastore and the Slovenians Josip Ilicic and Armin Bacinovic. Ilicic was snapped up just four months after playing in the Slovenian second division following a brief interlude with Maribor and has made such a positive impression in Italy that La Gazzetta dello Sport was moved to describe him as “a ballerina with the physique of a boxer.” However, their signings have not always proved to be so successful with the likes of Jasmin Kurtic and Joao Pedro flattering to deceive.

"Abel Hernandez - canes it"

The main problem with this modus operandi is that it makes it very difficult for Palermo to progress to the next level. As Delio Rossi noted, “If Palermo want to build something truly important, they must keep players like Kjaer and Cavani.” Also, if a club opts for youth over experience, there will inevitably be dips in form. Youthful talent can be very exciting, but also inconsistent, as was seen last season when Palermo’s defence usually featured the 20-year-old Argentine Ezequiel Munoz.

If the players do flourish at Palermo, the club’s rigid wages policy means that it is virtually impossible to keep them, as they will find it very difficult to resist moving to clubs that can pay 3-4 times more salary. According to La Gazzetta’s annual survey of player wages, Pastore’s net salary is just €0.5 million, while Ilicic is on even less with €0.3 million.

Hence, it seems only a question of time before Palermo’s promising young players move on. As we have seen, this does fill the club’s coffers, but there is a risk that players might leave the club too soon, so they don’t receive top dollar for them. The profit made on Cavani was better than a smack in the face, but he is surely worth a lot more now than the €17 million Napoli paid for him.

Another question mark against Palermo’s buying and selling policy is how well it will work after the departure earlier this year of the much respected Sporting Director Walter Sabatini, who now holds a similar role at Roma.

If there were any doubts about the importance of player trading to Palermo’s business, they should be dispelled by the above graph. If profit on player sales is considered as “revenue”, its contribution has been striking in the past few years. In the financial annus mirabilis of 2009, the €48 million made on player sales was almost as much as the club’s entire turnover of €57 million. Put another way, in the four years between 2006 and 2009, the club’s profit from player sales of €92 million was more than the €91 million from gate receipts and commercial income combined.

The other striking point from the revenue trend is how little growth there has been over the past few years. In fact, since the television contract was improved in 2007, revenue has hardly grown at all, rising just 5% from €57 million to €60 million.

The reason why Palermo focus so much on making money from player sales is immediately apparent when you look at how small their revenue is. Although it is the eighth highest in Italy at €58 million (excluding player loans), it is miles behind the leading clubs. Last season, three clubs earned over €200 million (Inter €225 million, Milan €208 million and Juventus €205 million), which is at least €150 million more, while Roma generated €123 million. More worryingly for the Rosanero, their obvious competitors for European qualification (Fiorentina, Napoli and Lazio) all have significantly higher turnover.

This really places into perspective the magnitude of Palermo’s task in attempting to challenge the game’s elite. Back in 2007 Zamparini already bemoaned this fact, “The Champions League places will almost certainly go to the clubs taking the lion’s share of the TV rights like Milan, Inter, Juve and Roma. Every other club is an outsider who might just grab fourth place one time in five.”

This goes some way towards explaining Zamparini’s seemingly continual quest for a better coach, “I look for quality. This is necessary to keep Palermo at the current levels just behind the 3-4 big teams.” Whether this lack of stability is the best path to success is highly debatable, but the results have been better than might be expected considering Palermo’s budget.

Palermo’s revenue mix is fairly typical of the majority of Italian clubs with only 12% coming from match day income and an unduly high reliance on television money, though their 58% share is far from the highest in Serie A with ten other clubs having a bigger dependency. In fact, Palermo’s performance is remarkably consistent across all revenue streams: eighth best for TV and commercial income, ninth best for match day.

At this point, I should explain that the revenue figures used in my Serie A Money League are lower than those used in the club’s own books. The reason for the difference is that Italian accounts report gross revenue, while I have shown net income, as this is consistent with the approach used in other countries. Therefore, I have excluded the following: (a) gate receipts given to visiting clubs €1.3 million; (b) TV income given to visiting clubs €6.1 million; (c) revenue from player loans €1.4 million; (d) profit from player sales €1.2 million. Adding the €10 million adjustments to the €58.5 million in my analysis gives the €68.5 million reported in Italy.

As we were saying, television is very important to Palermo’s finances, contributing a net €34 million of revenue a season. In fact, the last time that the club’s revenue meaningfully rose was due to the introduction of the new TV contract in 2007, but even that was greeted with anger by Zamparini, as Palermo received a smaller percentage than before, only increasing their money because the total deal was higher: “They should be ashamed. Once again they want to favour the big clubs at the expense of the others.”

When you look at the €90-100 million that Juventus, Milan and Inter have been earning from their individual deals, you can see that he might have a point. These vast differences have meant that the playing field in Italy has been anything but level, but years of protest finally led to a new collective agreement being implemented at the beginning of this season. We know that the total money guaranteed by exclusive media rights partner Infront Sports will be approximately 20% higher than before at over €1 billion a year, but it is still not certain what the impact will be on each club’s revenue.

There is a complicated distribution formula, which should still favour the bigger clubs, though there is likely to be a reduction at the top end. Under the new regulations, 40% will be divided equally among the 20 Serie A clubs; 30% is based on past results (5% last season, 15% last 5 years, 10% from 1946 to the sixth season before last); and 30% is based on the population of the club’s city (5%) and the number of fans (25%).

"Armin Bacinovic - the other Slovenian"

So, the larger clubs will lose out from the new arrangement, but the mid-tier clubs like Palermo should benefit. There is still a question over how the number of fans (worth 25% of the deal) will be calculated, leading to a major dispute between the larger clubs (represented by Milan, Inter, Juventus, Roma and Napoli) and the smaller clubs (represented by Palermo, Udinese, Parma, Sampdoria and Catania), even over which market research companies to use.

This issue is specifically mentioned in the latest accounts as an important factor in Palermo’s future finances. The club has estimated that they will receive €34.5 million under the new arrangement, which would be a slight increase on the current €33.2 million (assuming that the allocations for away games have been excluded from this calculation). Although on the face of it that would not be too bad, it would hurt them relative to other mid-level clubs, as figures in La Repubblica suggest that the increase at other clubs would be much larger: Lazio €13 million, Udinese €10 million and Napoli €8.5 million.

Of course, the leading clubs’ TV money is also boosted by distributions from the Champions League. In the 2009/10 season Inter benefited to the tune of €49 million as winners of the competition, but the other three Italian qualifiers all received over €20 million. Palermo’s ventures into the far less lucrative UEFA Cup and Europa League have not produced similar riches, raising only €2.3 million for the three years 2006 to 2008, though they would also have received higher gate receipts (e.g. €0.8 million in 2007) and uplifts on sponsorship deals.

Even though Palermo’s match day income of €7 million is on the low side, they are a well supported club with their 2010/11 average attendance of 25,738 being the sixth highest in Italy, only behind Inter, Milan, Napoli, Roma and Lazio, teams from much larger cities.

That said, the crowds have fallen since the 2004/05 average of 33,000. In the same period, season ticket sales have declined from 24,900 to 16,900, leading to the inevitable comment from Zamparini, “I would have expected at least 23,000 after the money I have spent.”

The club attributes the decrease to a number of factors: initially, the old, uncomfortable stadium allied to the threat of violence, football scandals and the exponential growth in matches televised live. In recent times, the economic crisis has hit supporters’ disposable income, especially in a region that is far from wealthy. There’s also the interesting phenomenon that many Sicilians support Juventus, as they have relatives working for Fiat in Turin. For the same reason, Palermo always have a good following of away fans at games in the north of Italy.

"Tutto lo stadio"

Palermo currently play their homes games at the Stadio Renzo Barbera, named after the club’s legendary chairman of the 1970s, which has a capacity of 36,349. Like almost every other Italian club, Palermo do not own their ground, but instead pay rent to the local council (€0.5 million last year), which means among other things that they have been unwilling to invest in modernising the infrastructure. Similarly, very little has been spent by the council, which is not exactly flush with cash.

A few years ago, Zamparini announced plans to build a new stadium, which he described as “necessary” for the club’s future prospects, but nothing concrete has happened since. In fairness, Italy’s failure to win the bids for the Euros in 2012 and 2016 have put a spanner in the works, as this would have brought in much needed revenue and government subsidies. Nevertheless, the president maintains that he would like to “make a gift of a new stadium to the city of Palermo.”

In October 2010, he said that the project was ready to go, even on the financial level (estimated cost €70-100 million), but described the bureaucracy around the approval process as “exasperating”. Nevertheless, he believed that construction would start within two years, though the council thought that his timings were “optimistic”. The new stadium would actually have a lower capacity (around 30,000), but would be a modern facility in a new commercial centre, capable of hosting many other events like the Veltins Arena in Gelsenkirchen.

Palermo’s commercial revenue has been on a rising trend, more than doubling from €8.4 million in 2005 to €17.8 million in 2010. This is partly due to an innovative leaseback deal for the club’s brand made in 2006 with Locat SpA, which brought in a gain of €30 million, booked as €3.3 million revenue each year until 2015, when the club can re-acquire the brand for a nominal fee.

Following ten years with Lotto, in 2010 the club switched to Legea as their kit supplier in a two-year deal worth €0.95 million in the first year and €1.1 million in the second. Other Italian clubs receive higher sums than Palermo: Inter – Nike €18 million, Milan – Adidas €13 million, Juventus – Nike €12 million, Roma – Kappa €5 million and Napoli – Macron €4.7 million.

After two spells without a shirt sponsor (2006-08 and 2008-09), the club finally secured a deal with online gaming company Betshop, though the company broke the agreement after one of Palermo’s players failed a drug test, leading to them being replaced by Eurobet in 2010. It is not clear how much this deal is worth, though it is unlikely to be much more than €1 million a season, which would again be a lot less than other Italian clubs: Milan – Emirates €12 million, Inter – Pirelli €9 million, Juventus – BetClic €8 million, Roma – Wind €7 million, Napoli – Acqua Lete €5.5 million and Fiorentina – Mazda €4 million.

Given the club’s relatively low revenue, it is probably not too startling that they have strived to control their costs, especially the wage bill, which has only risen €3 million in the last two years to €38 million. The important wages to turnover ratio has been held in a narrow range of 55-65%, which might sound a bit too close to UEFA’s recommended maximum limit of 70% for comfort, but only six clubs in Serie A have a lower (better) ratio.

In the same way that Palermo have the eighth highest revenue in Italy, they also have the eight highest wage bill, though it looks utterly insignificant compared to those of the “big four”, who appear to be playing in a different league altogether: Inter €234 million, Milan €172 million, Juventus €138 million and Roma €101 million. However, the accounts did note that €1.9 million was included in other expenses for jobs that have been outsourced.

Only one Palermo player earns more than €1 million net, namely Miccoli, and he receives just €1.2 million. That is why Zamparini recently advised that there was no chance of Amauri returning to the club, as “his salary is too high for us.” Apparently, the Brazilian is now on more than €4 million, while Palermo could only afford €1 million.

In the past, Zamparini has argued against a salary cap, suggesting that this would only give rise to “under the table” deals, but he did propose to his fellow presidents that all clubs should cut salaries by at least 30%. Of course, he could probably reduce Palermo’s wage bill by a fair bit if he stopped firing managers…

Player amortisation has grown by 50% from €14 million in 2005 to €21 million in 2010, which is pretty high, considering that the revenue is only €60 million. For the non-accountants, I should explain that amortisation is the annual cost of writing-down a player’s purchase price, e.g. Kjaer was signed for €4 million on a five-year contract, but his transfer was only reflected in the profit and loss account via amortisation, which is booked evenly over the life of his contract, i.e. €0.8 million a year (€4 million divided by five years).

This increase implies that Palermo have been active in the transfer market, which is true, though that might surprise some. Although Palermo’s net transfer spend in the last eight years is only €34 million, due to the frequent player sales, the gross purchases have been relatively high at €178 million. In fact, Palermo have been a buying club in every year but 2008 and even then they splashed out €44 million on new players, which happened to be more than compensated by €62 million of sales.

Indeed, in the last two years, Palermo’s net spend of €16 million was only surpassed by five clubs in Serie A, though it is fair to say that this is partially due to a general slowing down of the transfer market, as the big guns became net sellers in an attempt to stem their losses.

In spite of this expenditure on new players, Palermo are in a very good debt position with only €4 million of bank loans and €8 million of loans from shareholders (essentially Zamparini). They have managed to more than halve gross debt from €25 million in 2005 to €12 million in 2010. This enviable position is a sign of the club’s self-sufficiency and is in marked contrast to Milan and Inter, who have large bank debts of €164 million and €71 million respectively.

Although they do owe other football clubs €28 million for outstanding transfer fees, this is almost entirely compensated by the €21 million owed to Palermo. Indeed, much of this represents transactions between the same clubs, e.g. Juventus owe Palermo €8 million, but Palermo also owe Juventus €4 million.

In fact, Palermo have one of the strongest balance sheets in Serie A with net assets of €22 million. Their position would be even better if a real values were to be applied to their players, who are shown at net book value of €56 million in the accounts, but are worth considerably more on the transfer market – probably around €150 million, if you consider that Pastore on his own might well fetch €50 million.

Palermo’s profits for the next couple of years seem assured. The 2010/11 accounts will benefit from the sales of Kjaer and Cavani, while the following financial year will almost certainly include the blockbuster sale of Pastore. All the usual suspects have made enquiries about the player that Zamparini called “the new Zidane”. In the last couple of days the president said that he had received an offer of €50 million and there was only a 10% chance that the Argentine magician would stay. Pastore cost Palermo less than €5 million, so this would produce a huge profit, but it should be noted that they reportedly have to give 50% of the sale price to his former club/agent.

All of Palermo’s players appear to be in the shop window. Tottenham apparently had a €10 million bid for Uruguayan forward Abel Hernandez turned down, but his agent hinted that €20 million would be enough to secure a move. Similarly, Zamparini has confirmed that he would sell Italian international Mattia Cassani to Lazio if he receives a concrete offer.

Of course, this must be a dilemma for Palermo, as such sales weaken the squad and reduce the team’s chances of achieving the stated aim of qualifying for the Champions League, which would bring its own financial benefits. This may seem ridiculously ambitious for a club of this size, but bear in mind that they only missed out on qualification two years ago by the smallest of margins, while Udinese succeeded this season and they have even less money. Granted, the revised UEFA coefficients that reduced the number of Champions League places available to Italy from four to three won’t make this assignment any easier, but the principle remains the same.

Qualifying for the Europa League is a praiseworthy feat, but it’s a double-edged sword for clubs Like Palermo with little strength in depth. As they need to prioritise their resources on maintaining a challenge in the league, they often field under-strength sides in Europe, which leads to underwhelming performances.

"Happy days are here again"

Quite frankly, it’s not an entirely straightforward exercise predicting the future of Palermo when the president is a man of so many contradictions. Last October, he was talking about meeting an Arab prince (a personal friend obviously) in order to invite more investment, but just a month later he put the club up for sale, claiming he was fed up with poor refereeing decisions.

Even when looking to attract investment, Zamparini managed to contradict himself. One moment, he was saying that he did not understand why everyone was drawn to England and Italy should be able to “involve important foreign investors in our football”. The next minute, he professed himself amazed that new Roma owner Thomas Di Benedetto would want to “invest here or rather lose (money) in Italy.”

The latter seems closer to his genuine view, as he has also commented that “you rarely get rich in football.” Indeed, even if he did manage to locate a buyer for Palermo, with the greatest of respect it is difficult to see that anyone would pay the €80 million required for Zamparini to get his money back. Of course, a billionaire might always decide to buy the club as an expensive hobby, but they are few and far between.

"The last word has to go to Zamparini"

The reality is that Palermo’s strategy of selling their best young players is unlikely to end any time soon, as it is the only way they can hope to balance their books. To be candid, it could be argued that the much maligned Zamparini has actually performed minor miracles in keeping his club in the upper echelons of Italian football on such a limited budget.

Of course, the president hasn’t helped matters by placing Palermo in an almost constant state of flux with his countless managerial changes. Nor does he endear himself to the fans with his frequent, ill-advised comments, but they should probably also acknowledge him for the things he gets right, even through gritted teeth.


  1. Just couldn't wait for next stuff. I became addicted to your creations.. It's very refreshing to be able to read more regarding Italian football than corruption allegations(allow me this sarcasm as it's also the case of my country's league).
    Your research shows a healthy trend throughout Europe in pursuit for self-sufficiency as benefactors started to realize that otherwise the amounts of funding needed are gonna be snowballing year on year.
    I'm happy to see that clubs who started restructuring and cutting costs do not suffer sport wise as much. Thanks for great reading.
    Your Polish Fan

  2. Keep the italian posts coming! Excellent read...from a Serie A fan.

  3. Simply top-notch stuff once again and I cannot tell you how THRILLED I am that you chose to focus on Palermo.

    Thank you for the insight!

  4. I just love your blogs. I'm learning so much about finances in football from this blog, and it makes me understand the transfer market more.

  5. great article once again.

    just a note:Palermo were interested for Iličić and Bačinović even before Palermo - NK Maribor match. Delio Rossi even said that they dont want to face Maribor in qualifications, especially because of Iličić

  6. How does Palermo's model compare to similar teams like Udinese and Sampdoria?

  7. You write superb articles. I stole some of your chart/graph formats to put together a presentation to some fellow Everton fans after finding their shareholder report for 10/11 online...hope you don't mind! Keep up the excellent work.

  8. @Anonymous (6:55),

    There are plenty of comparisons with other Serie A clubs in this article, e.g. profit, revenue, wages, etc.

    In addition, I've written already in detail about many other Italian clubs, which you can find by looking at the list on the left side of the blog. For example, here's the piece I wrote about Udinese:

  9. I've read this article through. Hail Zampirini.Like you said, it's almost like a small miracle that his small-sized club has survived in Serie A.

  10. Last year we had signed Chamakh and Kosc till July 1st. And they both performed well. And we all know about Squillaci.
    I'm quite dissapointed we haven't bought anyone this summer.Even gervinho doesn't look a huge improvement to me.
    Here are some of the most memorable Arsenal matches:

  11. Excellent Blog Rambler,

    I find it interesting that the only two years where they turned a profit after taxation were the same years where their average attendance did not exceed 25,000. Is there something to that, or is it merely a coincidence?

  12. I could not agree more with some of the comments so far. Thank you very much for writing about my small hometown club, that does not get much publicity and yet is doing ok among the well established Serie A clubs... It is nice to see clubs trying to become more self-sufficient, and I am excited about Juventus (even though I am an Inter fan) having their own rights to the new stadium and hopefully being a sign of things to come!

  13. to the Swiss Ramble: is there any way you could have a printer friendly version of this blog or future blogs?? I would love to be able to print some of these articles to compare and stuff like that....

  14. @Ruffiano,

    Thanks for the kind words.

    I've finally found a Print Friendly gadget for my posts. It seems to wrap text around the images, but otherwise it's not too bad.

  15. @Andrew,

    It's a coincidence. The main reason for profit in those two years is the high profit on player sales.

  16. Thanks Rambler, that's what I though... I also find it interesting is that their year of highest attendance in the last 5 happens to be Calciopoli, where they were closer to being relegated (21 points) than they were to qualifying for Champions League (24 points) before the readjustment took place.

  17. coming to winning ways at big stages seems the only viable option that Palermo have to improve their financial stature or bring their profit in competition with top 4 Italian side.

  18. It might sound stupid but u said clubs like Milan and Inter, who have large bank debts of €164 million and €71 million respectively. How do these clubs cater to such huge debt?? And seeing their spending every season the debt doesnt seem to decrease doesnt that effect the bank??

  19. Although on the face of it that would not be too bad, it would hurt them relative to other mid-level clubs, as figures in La Repubblica suggest that the increase at other clubs would be much larger: Lazio €13 million, Udinese €10 million and Napoli €8.5 million. What might be the reason that the increase in TV rights sale is higher for smaller clubs as compared to Palermo ??

  20. @Srijan,

    1. I'm not sure that Palermo will be able to make a major change in their model without the benefit of regular Champions League football, but to do that, they would need to retain their best players. It's a Catch-22.

    2. Essentially, the losses at Inter and Milan have been funded by the owners, which has restrained the bank debt to manageable levels. It will be interesting to see how that works in the era of FFP.

    3. I've not run the numbers for the new TV deal, but I explained how the allocation model should work in the article above, so presumably it is due to those variables.

  21. excellent read as always, I hope you will continue your Serie A analysis with one of Lazio and Genoa, taking the new TV Deal into account should be interesting

  22. Hi Swiss, congrats on the award well deserved.

    How do the Milan teams expect to cope with FFP regulations?

    Even with low(or zero) rate loans they still make massive losses and are kept afloat by their owners, are they worried about staying competitive with Barca, RM and the PL clubs who have 100m+ more in revenues?

  23. @John,

    Many thanks. Yes, the Milan teams will really struggle to reach break-even, though the FFP regulations do provide a "glide path" with phase implementation, acceptable deviations and also a little-known clause whereby wages for players signed before June 2010 are excluded from the calculation for the first 2 years (so long as club moving in right direction).

    Although they're a little old, I wrote about the issues and challenges facing Milan and Inter here:


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