Italy’s Serie A, regarded as the world's top soccer league in the 1990s, has spent its latter years languishing behind the star-studded English Premier League and Spain’s LaLiga in the European hierarchy.
While the rest of Europe welcomed foreign ownership (and the capital it provided), Italy resisted – at first. Finding themselves unable to compete against teams backed by financial behemoths in the transfer market – and European competitions – Serie A's clubs soon changed tack.
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It didn’t take long for US investors to swoop in, helping to build Italian soccer back toward its former glory and increasing team valuations along the way.
Now, nine out of 20 Serie A teams have North American investors, and, barring Inter Milan’s Chinese ownership, the remaining clubs are all owned by Italian companies. The biggest US takeover saw private equity firm RedBird Capital acquire AC Milan and begin to wake a "sleeping giant."
The league has responded to the new investment by making efforts to grow its product stateside, with the opening of a US office at the start of 2022 to secure regional commercial partnerships and boost broadcast revenue. Media and marketing veteran Andy Mitchell was this week (May 2) announced as the managing director of Serie A in the US to lead these efforts.
Despite all this, the re-emergence of Serie A remains in its infancy. With the league's domestic media rights deal ($2.7 billion) lagging behind those of the Premier League ($6.5 billion) and LaLiga ($4.95 billion), some may wonder why Serie A is so appealing to American investors. To understand why, GlobalData Sport spoke to Theo Ajadi, manager of Deloitte’s sports mergers and acquisitions advisory practice.
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By GlobalDataWith the number of Italian teams on the annual Deloitte Football Money League dropping, why is US investment in Italian teams still increasing?
“As you've rightly pointed out, in our Money League there has been a reduction in the number of Italian teams, but, when you look at the recent investment in Italy, especially from the US, I would take a step back and say that US investors are investing across the entirety of Europe.
“In terms of investments in Italy specifically, the country offers a number of unique characteristics. There are obviously several strong brands in that league and there’s a thesis among US investors that European sport is undervalued currently, relative to the big sports in the US.
“Italy offers several opportunities and US investors are taking advantage of some they see as being attractive, not only in Italy but across Europe.”
What is it about Italian soccer specifically that is so attractive to US investors but seemingly less attractive to foreign investors from other countries?
“When you look at Italy as a whole, the strong area that it has at the moment is the domestic media rights value, which is similar across the big five European leagues.
“In terms of future growth, US investors, especially given the strong growth in the US media rights for Serie A, among other leagues, see other areas of growth potential in the future.
“If you look at the top teams in the division, they are obviously strong brands, and then across the lower tiers, there are potential opportunities to consolidate and grow in the league and take advantage of future growth potential. US investors see that as a potential route for increased valuations in the future.
“I don't necessarily think that other investors are not looking at the Italian market, it’s just that some of the opportunities that have come have been particularly interesting to US investors, who are finding the entire European landscape to be of particular interest.”
Why are Italian investors bidding to own Serie A teams less frequently?
“There have been some cases of investment across Italy by local investors. There are obviously strong ties, which you will see across several different sports from domestic investors.
“However, given the wealth of the US versus Italian entrepreneurs, there’s obviously likely to be a bigger pool of investors that are able to afford teams in this area. Whereas, maybe if you look at Serie B, and even lower down the pyramid, there will be a whole host of Italian investors that are still incumbents.
“But I think it’s a growing trend across Europe, especially with private equity groups. There are several from the US so you will likely see greater numbers of US investors, not only in Italy but across European soccer.”
Are there any other countries that are emerging as potential investors in clubs in Serie A?
“Sport is a very attractive commodity to many different types of investors from different territories, as seen in other leagues. I would imagine that in the future, there will be interest from nations outside of the US. Even recently, there have been investments across Italy that are not necessarily from the US. I am sure that will continue in the future.”
Why is there a lack of Middle Eastern investment in Serie A compared to other leagues?
“In terms of Middle East investment, they have a strong thesis in terms of where exactly they want to invest. As that evolves, we may see investment, or we may not. I don’t think there’s necessarily a strong reason why they have not gone into that market. It may just be that now they have other priorities which are more aligned to the direction of travel they want to go in.”
Why do you think they have prioritized other leagues over Serie A?
“We have obviously seen Middle East investment in some large brands, across other sports leagues. Maybe the opportunities that have arisen in those brands, the properties, the potential growth, or the potential brand value that they’ve seen in those markets are more aligned with where they want to go.
“However, that might change in the future, and it always depends on what opportunities are available, and how that aligns with their general strategy.”
Ajadi concluded that a key factor in why US investors may be interested in Serie A is due to its current lack of private equity investment at the league level, as seen with La Liga and France’s Ligue 1, and feels that this could potentially be a huge growth area for Serie A in future, which US investors may have identified.
Image: Marco Luzzani/Getty Images
