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September 30, 2022

Milan owner Cardinale keen to close Serie A’s media rights income gap to rival leagues

The RedBird founder believes the revenue discrepancy between the Italian top-flight and other major European leagues should be reduced.

By Tariq Saleh

Gerry Cardinale, the new owner of AC Milan, insists media rights revenue in Italian soccer’s top-flight Serie A should be closer to the English Premier League and Spain’s LaLiga.

Serie A’s current three-year domestic rights deal with global sports streaming service DAZN is worth €2.5 billion (now $2.4 billion).

In contrast, the Premier League’s deal with pay-TV broadcasters Sky and BT Sport, and retail giant Amazon for the 2022-25 cycle is worth £5.3 billion, while LaLiga’s new five-year agreement with telecoms firm Telefonica and DAZN is valued at €4.95 billion.

The top English and Spanish leagues also rake in significantly more for their international rights, with the Premier League’s overseas income expected to reach more than $10 billion in this cycle.

Cardinale believes the discrepancy does not reflect the product delivered by Serie A in comparison to its rivals.

Speaking at the Leaders business summit in London, he said: “I don’t think there should be a three-to-one differential between media revenues across the Premier League, LaLiga, and Serie A.

“If you look at the quality of football play in Serie A and the market value of players in the league, it’s on a level with LaLiga and yet there’s a two-to-one differential there in media revenue and three-to-one versus the Premier League, that should be improved. 

“I don’t look at a team without looking at the ecosystem that it’s in and I see a tremendous embedded value and value trajectory both for AC Milan and Serie A and the way we’re thinking about it is that our activities in building AC Milan back to where it was should have a derivative effect in helping raise everything for Serie A and that’s definitely something I’m focused on.”

US-based private equity firm RedBird Capital Partners, of which Cardinale is a founder and managing partner, acquired Milan from investment company Elliott Advisors in June for €1.2 billion.

Upon purchasing last season’s Serie A champions, the group stated its priority was to “work with the club’s sporting and management teams to continue Milan’s journey back to the summit of world soccer.”

Cardinale claims the Italian soccer giants are “under-monetized” in terms of their global following and has identified opportunities to elevate both the Milan and Serie A brand.

With a huge global fanbase, he is keen to match the team’s recent success on the pitch with clear growth plans off it to increase revenue.

Cardinale said: “Acquiring AC Milan is one of the most exciting things we’ve done. The club is a sleeping giant, if you look at its position globally as a brand in European football, it’s one of the big ones and it’s under-monetized.

“If you look at the differential in the Premier League and LaLiga with Serie A, there’s a tremendous opportunity here to further work our way into the money on AC Milan and Serie A in general.

“Our interest in AC Milan is really about the club as a brand and what we can do with it and it was also about Serie A and what we think the possibilities are for that as a league.”

Asked what the opportunities are, Cardinale replied: “It starts with running the team well. Elliott did a very good job over four years getting back to a level of cash-flow generation and professionalism. We can take it up a notch.

“One of the reasons why I asked Elliott to stay involved in some form is because they did a good job and there’s a value to continuity. As an investor in sports, I believe there’s a virtue in continuity if you have the right people in place and we have that here.

“There’s a tremendous amount that we can do to move AC Milan up to the level that it should be in terms of its brand and brand awareness. It’s one of the most popular teams in Southeast Asia. “

Elliott, which had owned Milan since 2018 having taken over a year after former Italian prime minister Silvio Berlusconi relinquished control of the club, has retained a “minority financial interest” in the club, as well as seats on the board of directors.

With RedBird’s takeover of Milan, nine of the 20 Serie A teams are now owned by foreign investors, with rivals Inter under the control of the Chinese corporation Suning Group.

The acquisition of one of Italy’s biggest clubs and reigning champions has strengthened RedBird’s growing sports portfolio.

The firm has stepped up its presence in the soccer market in recent years. Notably, it holds a stake in English Premier League giants Liverpool after acquiring a 10% share in the team’s owners Fenway Sports Group last year for around $750 million.

RedBird also acquired French club Toulouse in 2020.

But the purchase of Milan is arguably the group’s biggest move in sports which Cardinale revealed was the culmination of a five-year period where it scoured the European soccer market.

He said: “We were looking at that opportunity [buying Milan] for close to five years. We watched what Elliott did, they did a great job with that investment. We were going to school for five years on European football, we met with over 200 clubs across Europe over a five-year period.

“I had always been wary of European football because I didn’t understand it. If you’re an American and you invest the way we invest, and you look at an ecosystem that has a transfer market and relegation and attracts sovereigns and oligarchs, your knee-jerk reaction will be that there isn’t room for guys like us. Actually, that’s not the case at all, it’s really well set up for guys like us.”

Image: Marco Luzzani/Getty Images

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