With Parma Calcio 1913’s failed promotion to Serie A, it is expected that the company will close the 2023 financial year with a loss of about €100 million. Since Krause took the helm on September 2020, in just 3 years and 4 months, the losses are expected to be in total €308 million.
In terms of company’s value is no better. Since Krause arrival, despite shareholder contributions and loans for a total of €306.7 million, the Parma Calcio 1913 closed the 2022 financial year with €116.8 million in debt, to which must be added €15.5 million potential liabilities (sureties), and with a meager net worth of only €13.4 million.
With another €100 million in losses expected for the 2023, which will have to be covered to ensure business continuity, Krause’s financial pledge in the Parma Calcio 1913 at the end of the year will rise to over €400 million.
The situation of serious imbalance in the company’s accounts was already compromised before Krause’s arrival. Just 3 months after Krause’s takeover, with the players’ market closed and without any extraordinary operation, Parma Calcio 1913 closed the accounts with €175 million in debt and a negative net worth of €-15.5 million, i.e. a real debt exposure of more than €190 million. Many unclear points regarding the hurried transfer of the company from the seven partners of Nuovo Inizio to Krause remain unanswered. One among all: the financial statements for the accounting year July 1, 2019 – June 30, 2020 have never been made public and have not been filed with the Companies Register.
The other companies held by Krause in Italy do not appear capable of generating adequate revenues, cash flow and profits to compensate for the serious imbalance in Parma Calcio 1913’s income statement.
The two wineries, Vietti and Enrico Serafino, and the hotel Casa di Langa, in the 2021 financial statements (the most recent available), registered a total of €20.4 million in revenues, that is the turnover of a small company, with €0.57 million losses (Vietti €1.1 million profit, Enrico Serafino €41.5 thousand profit, Casa di Langa €1.715 million loss).
In the United States, as a result of the sale of Kum & Go and Solar Transport, which represented the largest part of the Krause Group’s turnover, only a handful of minor businesses remain:
- Krause+, with apartments and commercial spaces spread across various and heterogeneous (by age and state of conservation) buildings in Des Moines;
- two farms, Teamwork Ranch and Dalla Terra Ranch, with a sheep breeding and a quail habitat;
- a semi-professional soccer team, the Des Moines Menace.
As far as is known, also in the USA nothing capable of generating revenues, cash flow and profits able to compensate for the heavy losses of Parma Calcio 1913, which by now devours €100 million a year.
Based on the publicly available data, it appears evident that Krause Group, without Kum & Go and Solar Transport, is unable to generate the business volume and cash flow needed to deal with the significant losses of the Parma soccer team. Even if Parma Calcio 1913 were promoted to Serie A, the economic performance statistics of the 20 teams playing in the Italian top tier League reveal that, on average, the companies each lose €50 million a year.
Just to have an example of an Italian soccer team managed in a way more tailored to the financial capabilities of its owner, we can look at the U.S. Cremonese. In the three seasons 2019-2020, 2020-2021 and 2021-2022 the U.S. Cremonese team played in Serie B and, at the end of the last one, they earned promotion to Serie A. Over those three years they incurred total losses of only €3.8 million. And the U.S. Cremonese is owned by the Arvedi family, who owns the Arvedi steelworks, an industrial group with €7.5 billion of annual turnover, nearly three times the revenues generated by Krause’s Kum & Go and Solar Transport, the two companies whose sale was recently announced.
Worthy of note is also visiting the Krause Group website, perhaps comparing it with that of the Arvedi group. On Krause’s website there are no economic data, not even the shadow of corporate reports or financial statements. You can only find catchy sentences like “people first”, “sustainability”, “revitalization”, “positive growth” and slogans like “everyone can live heathier and happier” or “we create environments to make everyone feel welcome and at home”.
Furthermore the real estate project of the new Tardini stadium, which would represent at least another €100 million of financial pledge for Krause, must be considered as it is closely linked to and directly dependent on the sporting and economic performance of the soccer team. If the Parma Calcio 1913 performs poorly also the most part of the revenues of the new stadium would be lost.
It is also important to underline that the Tardini stadium is a public asset, worth €55.6 million, owned by the Municipality of Parma, and in case of failure of the projected new soccer sports facility, the real estate assets built on the public area leased to the private concessionaire would be auctioned. This could involve the risk of private speculation with potential damage to the community.
In the light of all this, considering that the Parma Calcio 1913 devours €100 million in losses a year and nothing is known about Krause’s real financial standings, what are the Mayor and the City Council of Parma still waiting for to turn their attention to this increasingly unclear situation and request in advance the necessary information and guarantees of financial solidity and business continuity from the proponent of the new Tardini real estate project, making them public for a duty of transparency?
The Mayor and the Municipal Administration have a specific duty and responsibility to protect the public good and interest and must demonstrate a diligent and responsible approach in dealing with this matter, carefully considering the risks and preventing possible damages associated to the potential failure of the Parma Calcio 1913 and/or of the real estate project of the new stadium.