Foreigners rush to buy Italian football clubs

Rocco Commisso says he acquired ACF Fiorentina football club as “a way to give back to the sport and to the country where I was born”. The 71-year-old billionaire and founder of MediaCom – one of the largest cable TV companies in the United States – was born in Calabria, southern Italy. He moved to the United States at the age of 12, played college football and then, after decades of business success, sought to acquire a top-tier team in his homeland.

When Fiorentina, the Florence-based team that play in Serie A, Italy’s premier league, were for sale in 2019, Commisso rushed to strike a deal reportedly worth between 150 million and 200 million euros. dollars.

“The right price came and I made the investment in two weeks,” Commisso said at the recent FT Business of Sport US summit. He thinks Fiorentina should be more than just a personal trophy; he also wants it to be an asset that increases in value.

This goal is shared by other foreign investors who have invested in Italian football in recent years. The influx of foreign club owners is a new phenomenon in the country, especially compared to the English Premier League, the world’s most valuable domestic football competition, which has long welcomed outside money.

Of the 20 Serie A clubs, eight now have non-Italian owners. Six of them were acquired by American individuals or financial groups in the past three years alone.

Recent transactions include the acquisition of AC Milan by hedge fund Elliott Management in 2018; the acquisition of AS Roma by billionaire Dan Friedkin for 591 million euros; and the buyout of Genoa by the sports investment fund 777 Partners this year.

“I think this is one of the most exciting football leagues in the world today,” says Robert Platek, senior executive at MSD Capital, a group that has loaned money to European football clubs but which , in a personal capacity, acquired the small club. Spezia in February. “Italians are so passionate about their sport. More precisely, with Spezia, it was the region, the people and it was the outsider approach. “

Investors are drawn to Italian football by the league’s status as one of the “big five” European leagues, alongside those of England, Spain, Germany and France. They attract the biggest media rights and sponsorship contracts. Their competitions have international fan bases with continued growth in viewership in North America and Asia.

Commisso says the rush to acquire clubs in Italy is a matter of ‘supply and demand’, believing that there are more wealthy individuals looking to buy clubs than there are teams out. across Europe available for purchase.

“I think there are going to be more investors to buy more of these clubs that are available for sale,” he says.

Yet after rushing into Italian football, Commisso admits to being stuck with challenges unique to the country. Legacy of the construction involved to host the 1990 World Cup, many big clubs pay rent to play in crumbling public stadiums. Pitches are rarely full, in part because sometimes violent “ultra” fan groups dissuade families from attending games.

New owners seeking to fund the reconstruction of stadiums in cities like Milan and Rome have been held back by local political feuds. Commisso has sought to renovate Fiorentina’s stadium, Stadio Artemio Franchi, to earn more ticketing and hospitality revenue that could benefit the club in the long run, but its efforts have been blocked by the local authorities that own the stadium.

“One of the big negative points in Italy has been the infrastructure situation,” he says. “It is the inability of someone like me to be able to say: I want to build a new stadium so that I can bring – not only comfort to our fans – but raise more money through the investment in the stadium. It’s quite difficult to do in Italy.

The pandemic is causing new financial problems. Clubs across the continent have lost € 9 billion in revenue due to the loss of ticketing and broadcasting revenue, according to UEFA, the governing body of European football.

Most Italian clubs spend the majority of their income on player salaries and transfer fees, as do clubs across Europe

The resulting financial crisis was exacerbated in many heavily indebted Italian clubs, such as Inter Milan and Sampdoria, which had previously spent heavily on players. These clubs are among those being forced into emergency fundraisers, a clearance sale of their best footballers, or a search process for new club owners.

Meanwhile, the value of Serie A broadcast rights has plummeted, with media analysts suggesting traditional pay-TV companies have reached the limit of what they’re willing to pay for live sports.

In March, the league sold its national television contracts for more than 2.5 billion euros, in a deal led by DAZN, the sports streaming service. But the overall amount raised from the sale of the country’s TV rights covering the 2021-24 seasons is lower than the previous Serie A deal, worth around € 1 billion per season.

In March, the league said it expected a significant drop in the future value of its international TV contracts, currently worth $ 170 million for the season. This was mainly because Qatar-based broadcaster beIN Sports refused to renew their contract to broadcast matches in the Middle East, complaining that Serie A had not done enough to tackle show piracy.

“Our biggest problem is beIN,” said Luigi de Servio, Serie A general manager at the time. “BeIN was worth 50 percent of our [international TV rights] pack. ”A rapid influx of money to support the clubs was wanted by the league – but was not obtained.

Last year, Serie A negotiated a € 1.6 billion deal to sell 10% of its broadcast and commercial rights to a consortium comprising private equity groups CVC Capital Partners and Advent International and the group Italian investment fund Fondo FSI. But the deal appears to have been scrapped due to a lack of support among owners of rival clubs unwilling to relinquish control of the league’s operations, according to several people familiar with the talks.

Commisso is among those calling for better financial controls to limit spending. As is the case in Europe, most Italian clubs spend the majority of their income on player salaries and transfer fees.

There are few signs that such spending controls will be forthcoming. And little chance for a quick return on investment from private equity contenders or TV deals. Faced with difficult short-term growth prospects, new owners of overseas clubs will have to play for the long term.