Former executive at Lega Nazionale Professionisti Serie A (Lega Serie A)
- Italian football league structure and Serie A’s positioning within European football leagues
- Regulatory considerations, corporate structure and revenue stream across media rights, sponsorships and licensing
- Team payout structure and risk of declining financial health of Italian clubs
- Distribution channels and partners across linear and streaming, highlighting potential for stake investments in revenue streams
- Risks associated with pushback by certain clubs on PE investment, drawing parallels with LaLiga
There’s a lot to discuss with Serie A and the whole industry, given the number of PE investments. We saw the case with La Liga, and Bundesliga came up for sale again recently. How do you view PE’s stake investment opportunities and what they’re going for currently? My understanding is that a majority of the investment in 2020 was driven because the leagues were financially depressed, as due to coronavirus they couldn’t have any tournaments. How has the situation evolved since?
As you mentioned, some of the clubs were happy to go ahead with PE deals and some were not. A PE firm took AC Milan private, I think in 2019, and has now sold that off to a private investment company. In addition to that case where PE directly targeted a major club, recently Juventus and Inter Milan were opposed to the situation of PE beginning to invest in the Serie A league. We saw something similar with FC Barcelona, Real Madrid and Athletic Bilbao and La Liga. Why do you think certain clubs are opposing PE investment in the leagues?
Can you walk through the European Super League? I understand there was significant pushback from a majority of stakeholders. Once that didn’t come through, we saw a PE firm invest in La Liga. What are the potential implications of a European Super League coming into fruition? How would that impact the health of the other regional European clubs?
A previous Forum Interview [see AC Milan & Italian Football Clubs – Revenue Streams & Turnaround Strategy – 31 August 2022] discussed the health of Italian clubs and it doesn’t appear to be particularly great, especially compared to German clubs that have a lot more financial prudence. Why do you sense the Italian clubs are opposed to giving up any of the rights? I assume that having a better management system would allow them to gain better payouts from higher media rights valuations, so if they’re not doing well financially right now, why are they opposed to this?
Regarding La Liga, particularly for FC Barcelona vs Real Madrid, FC Barcelona’s finances have been going haywire to say the least. The company is still making substantial losses and one of the methods by which it was trying to recoup and generate additional revenues was selling stake investments in the branding, content and even media rights divisions to other PE funds. Do you expect clubs such as Inter Milan and Juventus to also open up their different revenue streams for PE stake investments? Is that possible given these clubs’ structures?
Drawing a parallel between the Italian football league and Bundesliga, there is league one and league two, then in La Liga there is LaLiga Santander and LaLiga SmartBank. I understand there’s Serie A and Serie B. How much of the revenue for the overall league is coming from A vs B, and has that shifted at any point over the last few years?
Has there been any pushback to the payout you discussed? You noted 10%, 6% and 4% of revenue comes from Serie A, Serie B and Lega Pro, which is a substantial amount of money for the clubs or leagues that might be struggling. Have there been any attempts by any of the leagues to push this number down to something lower? Is it possible to do this, or is it already grandfathered into the contracts? What’s the likelihood of them lowering this number?
How do you assess Serie A’s popularity? We can break it down into viewership, fan engagement and general popularity. I understand that La Liga’s biggest market is Spain, despite having some opportunities to expand into LATAM markets. Does Serie A have any popularity outside of Italy in the other EU markets? How does it stack up vs La Liga or Bundesliga in this regard?
Regarding the structure of the leagues, I understand they don’t make any money from the match day sales as all the match day ticket sales go to the clubs. Looking at the Serie A matches across the clubs, how do you assess in-stadium audience viewership and ticket sales? Drawing a parallel to Bundesliga, that league has one of the highest levels of engagement and in-stadium presence because the tickets are priced really low. How does it look for Serie A vs Bundesliga and other clubs?
What is your view on stadium quality? How do the Italian stadiums compare to German or Spanish stadiums? How are they better- or lower-quality?
Serie A came up for PE investment in 2020. In 2021, the deal was collapsed because Juventus, Inter Milan and Lazio were opposing it. How does the centralisation of the media rights work in Serie A? Does the Serie A, the league in and of itself, have all the centralised rights for the audiovisual distribution for all the clubs, or do the clubs still own this? How does that work for Italian football leagues?
How much of Serie A’s total revenue is coming typically from the audiovisual and media rights vs sponsorships vs branding, licensing and merchandising? My understanding of how these leagues work is that a huge majority is coming from audiovisual and media rights, but leagues are trying to grow sponsorship and merchandising streams as well.
You mentioned that 90% of revenue comes from audiovisual rights. What are the typical domestic media valuation rights for Serie A?
What is the risk of 85% of the rights coming from Dazn? An interesting aspect of Dazn’s strategy is that it’s acquired rights to Bundesliga, La Liga and Serie A in the local regional markets, instead of Sky which is sticking with the EPL [English Premier League] rights in the UK. A key issue around Dazn is that it recently doubled its prices, the infrastructure is not particularly great to consistently allow for livestreaming of so many viewers and its profitability is an issue. I’m thinking about when Imagina collapsed in 2020 and Ligue de Professionnel lost substantial amounts of money from its exposure. What is the risk for Serie A now?
85% of the revenues are coming only from a streaming service, so non-linear, but my understanding is that in Italy there is a large part of the audience that is addressed primarily by traditional television. Who are the other broadcasters that Serie A is going to in the form of traditional linear television? Does the company have any more broadcasters? Could it go for MediaForEurope or any other players such as Mediaset Italia?
On the rights valuations and how they’re structured, my understanding is that they’re typically done on a three-year-long time frame. I believe the last cycle, at least for the EPL and La Liga, was 2022-25. What are the cycle time frames for Serie A? When is the next cycle coming in for bidding again?
Do you think Amazon is most likely to go ahead and bid for the remainder of Serie A? Do you sense Amazon will be a likely acquirer?
On the core markets for Serie A’s international viewership, let’s split it into the rest of the EU, APAC, LATAM and the Middle East markets and then the USA. How popular is Serie A in these other markets? Is it popular in them at all?
La Liga is a little more mature and has business development teams and sales teams that are then structured across different markets. Does Serie A have anything like this? When PE comes in to put in the money, how should they be looking at building out the international audiovisual rights teams and structuring this division?
How do you assess the quality of the audiovisual equipment that’s being utilised at Serie A? How much more investment is needed to increase that substantially?
Formula One did a really good job with its TV shows and the way it added personality to the characters. It was able to use that to drive a lot of audience engagement on digital platforms. La Liga tried to do this recently with LaLigaSportsTV and has become a bit more aggressive in that social space. How is Serie A looking at creating content beyond match-related content across digital platforms and content formats? Are there any initiatives in doing that currently?
You laid out the number of sponsors and I understand that sponsorships regarding leagues are a little challenging because most of the sponsors usually want to go for the club directly instead of sponsoring the league. Can you outline any of the complexities that come with drumming up sponsorships? How can PE help in improving the sponsorship revenue stream for Serie A?
You brought up some major names around the sponsorships such as Puma and EA Sports. These are international. How do you view the mix of sponsors for Serie A across domestic vs international?
What is a typical payout amount of the TV rights to the clubs? I understand there are tiers of clubs as well. How does Serie A look at paying out the winnings to the different clubs?
Has there been any pushback in how the payouts are being structured to the clubs? I assume some of the smaller clubs may push for more, or other clubs such as Inter Milan or Juventus would also try to argue for more.
Regarding the NFT realm, FC Barcelona sold 24.5% of Barca Studios, its content division and arm, to Orpheus and Socios. Bundesliga had a very interesting partnership with OneFootball and believes that partnership could help it bring up EUR 170m. Has Serie A begun to explore partnerships and relationships with what’s happening in the NFT and crypto spaces? I know you said we’re seeing more crypto sponsors come in, so how is the company trying to build out that space now?
Given that PE will be looking at investing in stakes and it seems it will primarily be in the international audiovisual rights space, what do both parties need to get right to make the ROI attractive? Could you link that to your point about the business historically being an association of clubs that’s shifting its structure? What are the different moving parts we need to nail before the business can scale appropriately?
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