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 any landlord. In Milan, Internazionale Milano (Inter), and Associazione Calcio Milan (A.C. Milan) recently purchased the San Siro, including the surrounding land, for €197 million from the Municipality. They plan a new 71,500-seat stadium by 2031 in a deal dotted by foreign investment and lending.
The money unlocks financial stability, since clubs are less performance reliant. For instance, SSC Napoli’s failure to qualify for European competition in 2024 turned a €91.2 million profit into a €21.4 million loss, despite record attendance and a domestic title (Napoli is also exploring building a privately-owned stadium). For private credit firms, risk can be managed further through covenants around logical benchmarks like attendance.
This idea isn’t new. Half of Serie A clubs are foreign owned, compared to zero in 2011. And yet, deal volume and prices trail comparable leagues, indicating untapped opportunity. The Premier League has doubled Serie A deals since 2020, and revenue multiples are twice its average, thanks to a gulf in operating profitability. Down pyramid, Serie B has 40% foreign investors, and Serie C has just 10%.
Outside soccer, Lega Basket Serie A (men’s basketball) attendance was its highest since 1992. Yet, it also needs infrastructure improvements, and has limited foreign investment, notwithstanding recent acquisitions of Napoli Basket and Pallacanestro Trieste. NBA Europe may sell expansion teams in Rome and Milan, though given the cost — up to $1 billion — and potential NBA pathway, expect higher competition for clubs despite no established local connection.
Women’s pro sports are untapped as well. This last year, Lega Pallavolo Serie A Femminile, the volleyball league, grew 10% in attendance, 83% in viewership and returned record revenue. But, other than a joint marketing venture, there is zero external investment on recent record. Compare that to the more fractured and less-watched U.S. volleyball market, where LOVB (arguably mainly a youth sports ecosystem) and Major League Volleyball have received more recent — and far more significant — capital investment.
Regardless of sport, good partners will bring more than money; lessons from other infrastructure projects, corporate talent, and connections within media rights and distribution are other benefits. In the U.S., Serie A football ratings are growing significantly on Paramount+ with excellent production and studio shows, but that deal is up after next summer’s Men’s World Cup.
There are still reasons to be cautious.
Investing in Italy means absorbing inherent risks like tax evasion, bribery, money laundering, falsified accounts and ties to organized crime, as Juventus and Fiorentina have experienced. The recent “plusvalenze” scandal, where clubs are alleged to have colluded to inflate player-transfer values for gains-boosting purposes, is a more current concern that could run aground of both league regulations and Italian law.
In that vein, Transparency International scored Italy a 54 on its Corruption Perception Index (100 being highly clean, 0 being highly corrupt), 52nd out of 180 countries. But since 2015, Italy grades as the most improved European country, buoyed by measures like an e-procurement database for government contracts. Helpful, because bridging infrastructure gaps in Italy requires government touchpoints on bids, approvals, permits and sales.
The consequences of a problem can be significant, especially if discovered post-acquisition, because of the concept of “Successor Liability.” There are also performance impacts; after all, you cannot relegate, dock points or impose penalties on the former owner. Yes, there are representations and warranties, but good luck with the time, cost and publicity of enforcement.
To address this risk, and from professional experience, investors have gotten smarter in pre-deal diligence. Rather than rely on the summary-level financial data filed with Italian regulators, requests like the general ledger — hopefully, there is only one per entity — and bank statements are now more common, as is an artificial intelligence-based analysis of that information.
There are other risks. Supporters groups exert influence and can be change resistant. But, expanded revenue streams make their beloved clubs healthier and the match-day experience more comfortable for everyone. And yes, typical construction timelines might exceed the six-year time horizon private capital prefers for individual deals. However, the Italian government recently established accelerated construction pathways to eliminate red tape and expedite the process.
If all of these risks can be effectively mitigated, the business case is straightforward. The Italian sporting infrastructure — the interest, tradition and passion — is there, as is the demand from all stakeholders for better physical infrastructure. All that is missing is money, effort and expertise to underwrite these projects.
It’s coming.
Jesse Silvertown is principal at Hesperus, a forensic and M&A diligence firm based in New York. Prior, he was the first CFO at a consumer company, and an executive and forensics sector chair at Ernst & Young, focused on high-profile matters in sports, media, and entertainment across a 15-year career.
