Thursday, November 20 th, 2014
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Man City, Liverpool and Chelsea are not alone anymore. Foreign patrons start falling in love with Italian football
After Roma and Inter, another Serie A club could soon have a foreign owner: Cagliari. Is this a new trend for Italian clubs, which have always been linked to wealthy, local families? Will this translate into a brighter future for the rossoblu?
by Stefano Garini
Cagliari could soon join Inter and Roma among the foreign owned Italian football clubs. Luca Silvestrone, an Italian businessman that identifies himself as “representative” of an American investment fund, said a few days ago that “the group already talked with Cellino and the price was considered fair. Cagliari is a healthy club. We are working already on a project for a new stadium”. Although it's still impossible to know what “group” we are talking about, the negotiation seems to have gone beyond rumors, entering a more operative phase. After three years in a crumbling stadium (and many home games played 1000 kilometers away in Trieste), Cagliari fans could soon start to hope for a better future.

 

However, let us start from the beginning: Mohamed Al Fayed began it all in 1997. After buying the world’s most famous department store, Harrods, he decided to own another piece of London, Fulham FC. But Roman Abramovich was the first real deal, the one who gave the market a genuine shock. What are we talking about? We’re talking about foreigners. Foreigners that for a reason or another decide to spend a good portion of their immense fortune to buy football clubs.

 

Unlike the Bundesliga (where all clubs must be owned by natives) the Italian legislation is in line with the majority of world and allows external shareholders, even though we’re not too used to the idea of foreign financiers in the Serie A, since it’s a relatively new era of our beloved league. When we think of the great and historical owners we can’t avoid having Angelo Moratti, Gianni and Umberto Agnelli, Silvio Berlusconi or Massimo Moratti’s faces in mind. Italian football has in fact accomplished its greatest international victories when prosperous patrons were ready to sign six, seven or maybe eight-figure checks to see their favourite players join the teams they possessed.

 

A recent study by the Italian Federcalcio has identified the following as the key motivations that push investors in owning a football club:

- Personal fulfilment: a model substantially based on the owner-benefactor, mainly driven by extra-economical incentives (prestige, social visibility, attachment to the team ecc.). Massimo Moratti surely is one of the most limpid examples, having spent more than 1,1 billion euros and accumulated debts for nearly another half a billion during his presidency at Inter FC. As we all know, the Calciopoli scandal stroke hard after the 2006 world cup in Germany, and the Agnelli family spent nearly 250 million between the 2007-2012 period to cover Juventus’ budget shortfalls of the time and (successfully) get the club back to raising trophies.


- Direct economical return: the football club understood as a profitable business that has to generate revenues and therefore return on investment. We have talked about the trading model of Udinese, but on a larger scale we can consider sports business as a very American way of seeing the game, thanks to their know-how in marketing and merchandising they inevitably are perceived as leaders in the sector. But the principle of accrual basis accounting has slowly started to also find its way in European clubs thanks to Uefa’s FFF, and the arrival of investors from the US (Stan Kroenke – Arsenal, Fenway Sports Group – Liverpool, Malcolm Grazer – Manchester United, James Pallotta – Roma).


- Indirect economical return: model based on an ownership moved by financial motivation that is not directly linked to football-related activity, but to other entrepreneurial projects in which the patron can benefit from the visibility and partnership opportunities a team can offer. (Silvio Berlusconi has always been under the spotlight thanks to his investments in AC Milan. Roman Abramovich - Chelsea).

 

Yet again, increasing our sight range and taking a look at the first division in Portugal, Holland, Scotland and the best 5 European leagues (England, Italy, Spain, Germany, France) we see that in 2011, 18 clubs out of 144 had a non-EU majority stakeholder, and that these selected eighteen contributed for approximately 20% of the total money generated by the leagues mentioned previously. O

 

Our pioneer is James Pallotta with his acquisition of AS Roma at the end of the 2010/2011 season and Erick Thohir was the second with his latest purchase, Inter FC. The American investors should therefore become the third in the Italian Serie A.

 

What should Cagliari supporters expect from the incoming American owners? Hard to say at this time, but its even harder to hypothesise investments like the ones we have witnessed in the past:

Club Salaries year before
property change
Salaries in
2013/2014
Change % Transfer market balance after 2 years
Chelsea 78,5 209,5 +167% -329,5
Inter 100 95 -5% ?
Man City 68,5 244,6 +257% -246,5
Roma 83 92,5 +12% -86,5
PSG 69,6 ? ? -243,5
*All figures are in millions of Euros.
*Official figures regarding PSG have not been released in the last two years, but we can approximate the current total salaries around 170-190M.

 

But beware, some may remember a beautiful little fable called Malaga FC, who used to play a splendid football in Spain and seriously gave a hard time to Borussia Dortmund in the Champions League 2012/2013 quarterfinals. Surprisingly, or maybe not, the Al Thani family was involved. After buying the club in 2010 they financed as we know and managed to accomplish great results for such a modest club, but as Shakespeare said: “All that glisters is not gold”.

 

The season following the epic game against BVB, Malaga was initially banned by UEFA to all European competitions for the following four years due to its debts and misregulations with the financial fair play. The sanction was later reduced to one season, but the club was obliged to sell some of its most promising talents (Isco, Santi Cazorla) and was excluded to the 2013/2014 Europa League. The Al Thani did not appreciate and seriously considered leaving the club at the mercy of events, full of debts and management problems. Threat that presently seems to have been withdrawn, but what if they really stop liking their toy?

 

Needless to say that the wind has changed and only a few exotic and passionate men can still afford to burn money on the field… but what wind will blow in Cagliari?

 

Thursday, March 27 th, 2014
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