Wall Street Interested to Italy’s Serie A Football League

Major global financial institutions and private equity powerhouses are turning their attention to Italy’s renowned football league, Serie A, in an effort to rescue its finances, which have been under strain for several years due to a lack of support.

Leading stars like Lautaro Martinez and Theo Hernandez, who play in Serie A, are attracting the attention of significant backers, including Goldman Sachs, JPMorgan Chase & Co, and Deutsche Bank, who have expressed interest in financing the league’s media business, as per insiders.

Additionally, Il Sole 24 Ore reported on Tuesday that other financial heavyweights, including Citigroup Inc., Apollo Global Management Inc., Carlyle Group Inc., and Searchlight Capital Partners, have also been associated with Serie A. This infusion of interest from high-profile investors marks a significant development for the football league, which has struggled to secure the financial backing it needs to grow and compete at the highest level.

By aligning with these key players in the financial industry, Serie A is poised to receive the backing it needs to revamp its finances and expand its reach. European football leagues are attracting investors who are keen to finance their media businesses to gain access to lucrative broadcasting revenues.

One of the most significant deals in late 2021 was when CVC Capital Partners, a Luxembourg-based private equity firm, invested €2 billion ($2.2 billion) in a newly-created company that gives it a share of the broadcast revenue of Spain’s LaLiga.

In exchange, clubs in Spain’s first and second divisions receive funds to invest in infrastructure, repay debt, and sign players. The Deutsche Fussball Liga GmbH, the professional football body of Germany, is also preparing to resume talks with private equity firms regarding the sale of a package of media rights.

According to Bloomberg, Serie A, the top professional football league in Italy, has received seven expressions of interest and will be meeting with potential bidders within the next two weeks. The league’s assembly will then receive a report from the executives on February 24. The Italian clubs have built up significant debt, including Inter Milan with €350 million of net financial debt, AS Roma with debts of €281.3 million at the end of the 2020/21 season, and Juventus with €153 million at the end of the 2021/22 season, according to Football Benchmark.

While Serie A was once the world’s leading football league, it has suffered from years of financial neglect. Revenue for the Covid-19 affected 2020/2021 season was approximately €2.5 billion, compared to the Premier League in England, which generated more than double. In 2021, a separate attempt to sell a $2 billion stake in a company that would house its media rights failed to win enough clubs’ support.

The investment attracted several suitors, including Advent International, CVC Capital Partners, and Italy’s FSI fund. Juventus Football Club SpA, one of Serie A’s most successful teams, was docked 15 points after an investigation into accounting practices, leading to another scandal for the league. The move by international banks and funds into Serie A could encourage Italian teams to buy more players abroad because of fiscal benefits, according to Marco Valdonio, a partner at the Maisto e Associati tax-law firm.

He said that Italian law, under certain conditions, allows a 50% tax cut on salary withholdings when clubs buy players from outside the country, which is of particular interest to private equity firms that typically focus on profit growth and cost-cutting.

This is especially true in the football world, where salaries are negotiated on a net basis, meaning the club bears the entire cost of withholding taxes. Later this year, the Italian league will launch an auction for broadcast rights to its next three seasons. DAZN Group Ltd won the rights to become the main domestic broadcaster for the league in 2021, outbidding Comcast Corp.’s Sky for a contract that includes about €2.5 billion in payments over its three-season lifespan.

Source: https://www.bloomberg.com/news/articles/2023-01-31/italy-s-serie-a-football-league-starts-to-lure-wall-street#xj4y7vzkg