Private Equity Firms In Talks With Italy’s Soccer League Over a Stake in Media Rights Business
Italy’s Serie A soccer league is in discussions with private equity firms regarding the sale of a portfolio stake in its media rights business as it considers financing alternatives. Lazard, a financial consultancy company, is assisting in the search for a potential agreement that could net the league a multi-billion-pound investment for negotiated media rights. If broadcasters do not consent to a media rights deal, talks will occur with private equity firms over the sale of a 10-20% stake in the league’s media rights. The discussions with private equity firms will only take place if media firms such as Sky and DAZN do not agree on a price, according to insiders familiar with the matter. A group of investment firms is expected to be among the parties to a sale of media rights stakes, with talks with at least one lender also under way to help fund any deal.
Negotiations for a 5-year media rights deal with broadcasters starting in 2024, which goes hand in hand with a different set of negotiations, are in progress. The deadline for broadcasters to submit their proposals is next week, with those close to the Serie A soccer league expecting that proposals will fall short of the clubs’ targets and anticipate that price negotiations will continue into July.
Italian soccer clubs have long been hesitant to relinquish ownership of their local media rights. In 2021, an attempt led by private equity firm CVC to buy a minority stake in the media rights business for 1.6 billion euros was repudiated by clubs. Any deal, however, could be fraught with difficulties, even though financial investors continue to show interest in sports media rights. Italian clubs continue in desperate need of new funds because their revenues significantly lag behind those of other major European leagues such as the English Premier League and German Bundesliga.
Soccer Infrastructure Projects by Foreign Investors Could Benefit Media Rights Value
In a previous interview, Lorenzo Casini, president of Serie A, stated that foreign investors who acquired Italian clubs’ operations and committed to investing in soccer infrastructure, such as stadiums, could also benefit the media rights’ value, especially outside Italy. Additionally, CVC’s 2020 launch also included the creation and upkeep of stadiums throughout Italy through a new infrastructure fund, as well as a 20% stake in the media business.
La Liga of Spain and France’s Ligue 1 have concluded media rights deals with private equity firms following the coronavirus pandemic’s impact on their revenues. Private equity firms who operate within the soccer industry tend to buy significant ownership rights in the leagues in which they invest. They monetize the investments through commercial deals, such as selling sponsorships or broadcasting rights to the soccer clubs or media companies, or by asset sales in the future.
Summary
Private equity firms are in talks with Italy’s Serie A soccer league regarding the sale of a portfolio stake in its media rights business. The search for a potential agreement could result in the league receiving a multi-billion-pound investment for negotiated media rights. Negotiations for a 5-year media rights deal with broadcasters starting in 2024, which goes hand in hand with another set of negotiations, are underway. Any deal, however, could be challenging, with Italian clubs still in dire need of new funds as their revenues lag significantly behind those of other major European leagues.
Soccer Infrastructure Projects by Foreign Investors Could Benefit Media Rights Value
Any investment by foreign investors who have acquired Italian soccer clubs could benefit the media rights’ value, especially outside Italy. La Liga of Spain and France’s Ligue 1 have concluded media rights deals with private equity firms following the coronavirus pandemic’s impact on their revenues. Although private equity firms find it more challenging to invest in the soccer industry since they tend to buy significant ownership stakes in the leagues in which they invest, they monetize the investments through commercial deals. These include selling sponsorships or broadcasting rights to soccer clubs or media companies. Asset sales in the future also contribute to the funds’ monetization.
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Italy’s top soccer league has entered talks with private equity firms over the sale of a stake in its media rights business as it considers options for obtaining financing.
Serie A is working with advisers from Lazard on a possible deal, according to people familiar with the details.
The private equity owners could seek to buy a 10 to 20 per cent stake in the league’s media rights which could net Serie A a multi-billion pound investment, one of the people said.
This process goes hand in hand with a separate set of negotiations. Two other people close to the talks said Serie A would first negotiate a five-year media rights deal with broadcasters starting in 2024.
Talks with private equity firms will only go ahead if clubs cannot agree a price with them media companies like Sky and DAZN, tthe people said.
Next week is a deadline for broadcasters to submit their offers. Those close to Serie A expect the offers to fall short of the clubs’ target and anticipate price negotiations will extend into July.
“It’s early days, but we hope to finally agree on a price with the broadcasters,” said the owner of one of the football clubs. “In that case we won’t need any more funds.”
Only if those talks fail will Serie A start exploring other options, the people said.
A group of investment firms are expected to be among the parties to a sale of media rights stakes and discussions have begun with at least one lender who would help fund any deal, some people said.
Italian football clubs have long been reluctant to relinquish ownership of their media rights. An attempt led by private equity firm CVC to buy a minority stake in the media rights business for 1.6 billion euros he was rejected by clubs in 2021.
Any deal is likely to be fraught with complications, despite continued interest in sports media rights from financial investors.
Serie A has held talks with private equity firms on multiple occasions before, but opposition from individual clubs and their managers derailed the negotiations.
In a interview last year, Serie A president Lorenzo Casini said investments in football infrastructure, such as stadiums, by foreign investors who have taken over Italian clubs could also benefit the league’s media rights value, particularly outside Italy.
A CVC initial offering in late 2020 it also provided for the construction and maintenance of stadiums across Italy through a new infrastructure fund, as well as a 20% stake in the media business.
The Italian league, however, continues to be in dire need of fresh funds as its revenues continue to lag far behind other major European leagues such as the English Premier League and German Bundesliga.
The Bundesliga last month rejected an offer to sell a stake in the league’s media and commercial rights to private equity firms. Although most clubs voted in favor of the offer, the result fell short of the required two-thirds majority, derailing the funds’ second attempt to buy a stake in the coveted German soccer league media business.
Other European leagues such as Spain’s La Liga and France’s Ligue 1 have concluded media rights deals with private equity firms after the pandemic hit their revenues.
Serie A and Lazard declined to comment.
https://www.ft.com/content/82caac96-c744-4d30-9281-ea784c53bf8e
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