Soccer-Serie A to vote on selling stake to private consortium

Italy's top flight Serie A clubs will decide on Thursday whether to sell a stake in the league's key revenue driving media business to a private equity consortium.

The move would be the latest sign of growing private equity in sports leagues and clubs who are battling with revenue losses due to COVID-19 restrictions. Germany's Bundesliga, New Zealand rugby's All Blacks and international volleyball, amongst others, are also looking to such funds for investment. CVC Capital Partners, Advent International and the state-backed Italian fund FSI are bidding for a 10% stake in a new unit that will handle Serie A's broadcast rights.

The sale would need the support of 14 of the 20 Serie A clubs at Thursday's meeting in order to proceed. After months of negotiations, some clubs have continued to express reservations but the impact of COVID-19 has added urgency to the need for funds.

Weighed down by a combined debt burden of 4.3 billion euros, many clubs' finances are under strain with wage expenditure having topped a critical threshold of 70% of revenue in recent years. A priority will be to negotiate new broadcast rights deals from next season.

"Private equity investors have been looking to invest into sport business even before the pandemic, but COVID has given this process a boost, as many sports operators are in need for liquidity," Andrea Sartori, KPMG Global Head of Sports told Reuters. Serie A has struggled to match England's Premier League and Spain's La Liga in generating revenue from international broadcast rights deals but is seen as having the potential for growth.

"Funds are focussed on trying to measure the value of a real time proposition. Gambling on where growth might come from and when," said football finance expert Rob Wilson of Sheffield Hallam University. "Given the improvement in Italian football and its increased competitiveness in recent years, Serie A is more attractive. Their hope is that should drive value in TV money so generate a return."

The governance structure of the new entity would give the consortium major influence over the Serie A media business and they are expected to select the CEO, sources have said. "Private equity investors are buying out minority stake in Serie A's media business unit but they will have a decisive role in the governance. That's the price right holders have to pay to receive oxygen and keep their business running," said Sartori.

Foreign investors have rapidly moved into Italian football in the past few years with top teams such as Inter Milan, AC Milan, Fiorentina and AS Roma all owned by non-Italians. The Serie A sale, should it be approved, could be followed by a similar deal involving German Football League (DFL), which organises the Bundesliga.

The DFL is aiming to hold an auction this month for a 10-25% stake in a newly created company managing the broadcasting rights outside Germany. Investment bank Nomura is handling the deal and has registered expressions of interest from about 30 private equity firms including Bain, BC Partners, Blackstone, Bridgepoint, Carlyle, Cinven, CVC, KKR and Permira, people close to the matter said.

U.S. private equity firm Silver Lake is in advanced talks to acquire a minority stake in the commercial activities of New Zealand Rugby, home of the world-renowned All Blacks team. CVC has also invested in a number of rugby union competitions and has been looking to buy into the Six Nations tournament.

Earlier this week, the International Volleyball Federation (FIVB) announced an investment deal with CVC, which some media reports priced at $300 million. The deal has resulted in the creation of Volleyball World, a new commercial entity that will initially work with FIVB and subsequently target partnerships with leagues and federations around the world.

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