Breakingviews - Italy’s top soccer league needs a kick in the culo

Soccer Football - Serie A - AS Roma v Juventus - Stadio Olimpico, Rome, Italy - September 27, 2020.

MILAN (Reuters Breakingviews) - Italy’s premier soccer league needs a kick in the rear. Once a global champion, Serie A currently languishes behind rivals in Europe on revenue and visibility. A 1.6 billion euro offer by sports-investment veteran CVC Capital Partners and a competing Bain Capital bid seek to boost sales by reforming an outdated media rights system. Club owners and Italian soccer at large would benefit.

Serie A is struggling to close a gap with peers across the continent. Its broadcasting revenue, increasingly critical as the pandemic keeps fans at home, totalled 1.46 billion euros in the 2018/2019 season, less than half the British Premier League’s draw and 20% below Spain’s La Liga. Top Italian clubs capture a third of the internet following of their rivals, social media platforms show.

The league’s convoluted structure means it cannot embrace the financial challenge alone. Each of its 20 teams counts the same in any decision, leading to a constant battle between club chieftains like Lazio owner Claudio Lotito and Juventus Chairman Andrea Agnelli. The association is also understaffed and heavily relies on intermediaries to seek media deals abroad.

That’s why consortiums led by private equity firms CVC and Bain are swooping in. CVC, which has worked on the deal for a year and has experience with Formula 1 and rugby, wants to hive off the media rights business into a new company, valued at 16 billion euros. The fund would take a 10% stake, but, crucially, control half of the entity’s board to minimise interclub squabbling. The plan envisages taking back control of media contracts for large countries and launching an online channel that could rival sports streaming service DAZN.

Latecomer Bain’s bid would value the new media company at just over 13 billion euros, but promises cash-strapped clubs a minimum of 300 million euros in dividends if certain conditions are met. And it seems to enjoy the backing of some Serie A old guards like TV-rights veteran Marco Bogarelli.

The new Serie A configuration would start with an EBITDA of 1.1 billion euros. If CVC can double that by 2027, as it pledges, the entity’s enterprise value could surpass 30 billion euros before a possible IPO.

Club owners like Lotito may resist losing power. But with more cash, clubs can hire better players and bring Italian soccer back to its glory.


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