Why savvy sports investors are focused on Italy — and what can go wrong |
Despite a wave of coming exits, private capital in sports has a competition problem. Investment barriers are falling, more sports-focused funds are being raised, valuations are surging and allocators are seeking the safety of recurring cash flows amidst broader volatility.
Solving that problem starts in Italy.
Consider the growth in Serie A, the first division of Italian men’s soccer — calcio. Commercial revenue is up 9%, match-day attendance is up 5%, both of which nearly match the vaunted Premier League. And yet, Serie A’s match-day revenue was flat; it didn’t just trail the PL, it trailed every other major European league except one.
The issue? Old infrastructure, lacking the amenities of modern stadia. To wit, since 2007, only six Italian stadiums have been built or redeveloped, just a third of Germany’s tally and half of England’s. In fact, just five of the last 200 constructed European stadia are in Italy. It’s no surprise then that, for the next two seasons, zero revenue growth is estimated in Serie A.
Worse, state-of-the-art stadia are no longer enough. Elsewhere, they are anchors for large real estate developments. The lack of development here is a crisis, especially with Italy co-hosting the 2032 Men’s Euros.
But upgrading the infrastructure is easier said than accomplished. Who pays? Unlike most pro teams stateside, 90% of Serie A stadiums are government owned. Therein lies the pitch for external capital. Private funds can upgrade existing stadiums in exchange for concessions, such as more operational autonomy or additional revenue share. Such was the case with clubs Bologna and Fiorentina.
A different model is using capital infusions to build new, privately owned stadiums, free from the shackles of........