Investors spy an open goal with Italian soccer's reconstruction

Juventus' Cristiano Ronaldo heads the ball past AC Milan's Andrea Conti during an Italian Cup second leg soccer match between Juventus and AC Milan at the Allianz stadium, in Turin, Italy, Friday, June 12, 2020. The match was being played without spectators because of the coronavirus lockdown. (Spada/LaPresse via AP)

Italian soccer has fallen a long way from its heyday. Now, the chance to refurbish one of Europe’s top leagues to its former glory has attracted interest from a clutch of private equity firms who are betting on getting a bargain.

Private equity firms including Advent International and Bain Capital are considering bids for a stake in a league division that manages TV rights.

The Serie A league has hired Lazard as an adviser and bids are expected by July 25.

The winner has its work cut out. When Diego Maradona played for Napoli more than 30 years ago, the club’s San Paolo stadium was a centerpiece of Italian soccer. It was one of the venues for the FIFA World Cup in 1990.

But in a 2018 radio interview, the president of Napoli called the team’s colossal stadium “a toilet.” It’s been partially refurbished since, but illustrates the league’s need for investment.

Shutdowns from the Covid-19 pandemic have strained the league further, potentially making it a bargain for a bidder. After a three-month lockdown and with the threat of stadiums sitting empty for the rest of this season and the start of next -- depriving the sport of ticket sales, TV revenue and hospitality -- some teams are financially stretched. And accumulated debt is rising. The figure for the league is about €1.3bn for the 2018-2019 season, according to analysis of 18 out of 20 clubs by KPMG.

Serie A ranked fourth out of the five biggest European leagues by revenue in Deloitte’s annual review of soccer finance. Its revenues for the 2018-2019 season were less than half of the wealthier English Premier League at just under €2.5bn.

The key to turning the league around may be television rights, the fuel behind the Premier League’s financial performance. Payouts from the rights to broadcast matches remain relatively low and suffer from a lack of competition in Italy. Sky and streaming service DAZN carve out domestic rights to the live matches between themselves. England’s league made about €3.5bn from broadcasting rights in the 2018-2019 season compared to €1.46bn in Italy, according to Deloitte.

The chairman of AC Milan, Paolo Scaroni, said that there were lots of markets where Italian soccer could do better, naming India and China as examples.

“Serie A is not receiving the amount of money we should be,” Mr Scaroni said, and added that the offers from three private equity firms value the rights higher than what they’ve been getting for the last couple of years. “We are reviewing as a league all of our strategy because we need to improve the revenues coming from the Italian TV rights and international TV rights.”

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