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Making sense of Juan Cuadrado's three-year loan to Juventus

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Juan Cuadrado is just one of the headline-making 38 players sent out on loan this season by Chelsea, but the Colombian winger's deal with Juventus is hardly standard.  Chelsea simply called it a "three-year loan" but it's a fair bit more complicated than that as the drawn out negotiations indicated and as Juve's official announcement revealed.

"Juventus Football Club announces that the agreement with Chelsea Football Club Limited for the temporary acquisition, until June 30, 2019, of the registration rights of the player Juan Guillermo Cuadrado Bello has been finalised for an annual consideration of Euros 5 million (£4.25million)."

"Juventus has the right to definitively acquire the player, or will be obliged to do so subject to the achievement of certain given team results during the loan period, for a consideration of Euros 25 million (£21.2million), payable in three years, less the amounts of the loan fees actually paid."

"Furthermore, on achieving challenging team performances during the term of the contract of employment with the player, Juventus will pay to Chelsea FC additional contingent amounts up to Euros 4 million (£3.4million)."

-source: Juventus FC via Football 365

So let's try to break this down and make some sense of it.  Normally, our friend and financial expert / sports lawyer guru Jake Cohen would help us do this, but Jake's currently busy being awesome in real life, so all y'all are stuck with me.  Fortunately, Jake was gracious enough to send me a few notes via email, so this thing will still be useful.

Juan Cuadrado was signed for €30m in January 2015, signing a 4.5-year deal at around €100k (£85k) per week.  There are three years left on that contract, but given that this is a three-year loan, we've basically just sold Cuadrado.

Well, sort of.

The original transfer fee is amortized annually at €6.66m, which, assuming that Juventus are picking up 100 per cent of Cuadrado's wages, is the only hit against Chelsea's books at this point.  That FFP hit is reduced even further by the €5m annual loan fee (and part down-payment on a potential purchase), which brings down Chelsea's annual commitment to just €1.66m (£1.4m at current rates).

In simpler, non-annual terms, Chelsea's €30m sunk cost at the time of purchase has been slowly recovered.  Since that initial half-season at Stamford Bridge (which was also the only time that Chelsea were the team actually paying Cuadrado's €5m annual wages), Chelsea have collected  €1.5m in loan fees (for the 2015-16 season), with the agreement for at least €15m more.  Should Juve manage to activate the buy-out clause, that fee would grow to €25m.  Should the performance-related bonuses be activated, too, Chelsea would be due an additional €4m payment as well.  These four fees together make up €30m, but given FFP's annual nature, Chelsea would actually show a net positive on this item in future years should all the clauses in Cuadrado's contract be activated.

In the worst case, if no bonuses or buy-out clauses are activated, Chelsea would end up recovering only €16.5m of the initial €30m investment.  (Wages would still be a wash, since Juventus would be paying those regardless).  €13.5m (plus €2.5m in wages) for a half season of ineptitude is a fairly terrible transfer, but it's still better than the alternative of being stuck with Cuadrado's £10m+ yearly FFP hit for 4.5 years.

"From where I sit, it looks like a clever way for Chelsea to basically wash its hands of an ill-fated investment from the start, and of a player who, while a seemingly very nice guy and a productive player for Juventus last season (I saw him in-person in the Champions League against Manchester City and he was impressive), clearly had no future at Chelsea."

-Jake Cohen

Antonio Conte claimed that he had wanted to work with Cuadrado, but once push came to shove, the 28-year-old was not preferred to any of Hazard, Willian, Moses, or Pedro.  Being fifth-choice at Chelsea clearly didn't appeal to him, nor would be a particularly useful way to spend €100k per week.  As we've long maintained, a move to Juventus was the one that made sense for all parties involved, and while we would've certainly preferred a permanent transfer, this arrangement may have been the best we could do.

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