Debt is poor fix for Italian soccer’s malaise

Serie A - Inter Milan v AC Milan
Soccer - Football - Serie A - Inter Milan v AC Milan - San Siro, Milan, Italy - February 5, 2023. Inter Milan’s Lautaro Martinez in action with AC Milan’s Pierre Kalulu. REUTERS/Alberto Lingria

LONDON, Feb 8 (Reuters Breakingviews) - Wall Street investment banks are hoping to score a goal in Italy. Top soccer league Serie A needs cash to revamp its ailing media rights business. Previous attempts to tap into private equity pockets foundered. For the 20 cash-strapped clubs of Italy’s top division, however, securing financing worth up to 1 billion euros may turn out to be a fleeting victory.

Serie A’s loss-making clubs have lost allure both at home and abroad. The division, which counts Lautaro Martínez and Paulo Dybala among its few world-class champions, made revenue of 2.5 billion euros in the 2020-2021 football season, nearly half the star-studded Premier League’s 5.5 billion euros, Deloitte data shows. That season Spain’s La Liga struck a media rights deal with sports investment veteran CVC Capital Partners, while Germany’s Bundesliga is now exploring a similar route. Both made more money than Serie A.

An accounting drama now engulfing Juventus FC (JUVE.MI) is further exacerbating the Italian league’s diminishing appeal. Its broadcasting revenue has dropped more than 20% to about 1.1 billion euros since 2018, sources familiar with the situation told Reuters Breakingviews. But a lack of debt and a low cost base make a financing deal appealing for lenders like JPMorgan (JPM.N) and Goldman Sachs (GS.N). A transaction would likely see a newly set-up media rights company issue a bond, backed by an estimated 2023 EBITDA of some 900 million euros, according to two sources.

Serie A is due to auction its TV licences for 2024-2027 before the summer. But it has consistently struggled to sell international rights. Meanwhile, proceeds from domestic licences risk shrinking further after subscriptions dropped 51% to some 2.2 million since 2015, according to two sources, hit by scandals and persistent network outages at TV rights holder DAZN.

Fresh cash would give Italy’s league some extra time. To make good use of the funds, however, Serie A needs to improve its governance and devise a winning strategy for its broadcasting business. The league was set up as a group of clubs with equal rights in approving – and stalling – decisions by qualified majority voting, irrespective of the team’s prominence. This was the case in 2021 when seven teams gave a red card to a 1.7 billion euro CVC-led investment. Club owners would be better off entrusting independent executives to look after media rights.

Without a deep reform of Serie A, gorging on debt looks like kicking the can down the road.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)


JPMorgan has offered to provide between 700 million euros and 1 billion euros in bank financing to Serie A clubs, Reuters reported on Jan. 26, citing people close to the matter.

Goldman Sachs has contacted Serie A’s top officials to express preliminary interest to act as a financing partner to develop Serie A’s media rights business, Bloomberg reported on Jan. 27, citing people familiar with the matter. Deutsche Bank and Citigroup have also come forward to finance Italy’s top soccer league, Reuters reported on Jan. 31. The 20 clubs that make up Serie A are expected to meet on Feb. 24 to discuss the lenders’ proposals.

U.S. investment firm Sixth Street is preparing a bid for a stake in the media and commercial rights business of Germany’s Bundesliga, the Financial Times reported on Feb. 6. The Deutsche Fussball Liga, which runs Germany’s football league, is due to discuss the media rights sale at a meeting on Feb. 9.

Editing by Lisa Jucca and Oliver Taslic

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