Serie A, B, and C teams are all in play as private equity firms join the “mad rush” to buy a dwindling number of assets.

In March, Italian football clubs Internazionale Milano (Inter Milan) and Associazione Calcio Milan (AC Milan) made a bold play: buying the legendary Stadio Meazza and its surrounding area, a real estate deal that’s due to wrap up in July.

After sharing the iconic San Siro since 1947, the two rivals are teaming up to build a sleek, sustainable new stadium that could redefine Milan’s football scene (soccer, to you Americans). The proposal includes a major urban regeneration project aimed at attracting global fans while offering new perks for locals. San Siro, after hosting the two football titans for over 75 years, appears to be getting the makeover it deserves.

Such talk of modernizing Italy’s old yet venerable sports facilities is nothing new. But what’s getting the ball rolling this time is major backing from US-based private equity (PE) investors. Inter’s recent takeover by Oaktree Capital, with a €47 million (about $51 million) investment; and AC Milan’s €1.2 billion acquisition by RedBird Capital in 2022, are setting the stage for a future that looks as grand as the legendary clubs themselves.

PE players, it seems, are changing the game of football one purchase at a time—and enjoying the tax benefits that come with it.

According to a report from PwC—one of the biggest accounting firms that advises on these matters—“sports organizations are turning to institutional investors to provide capital to finance growth projects, such as stadium renovations, transitions to direct-to-consumer business models, and international expansion.”

Those investors, for their part, see Italy’s football stadiums as thriving businesses with long-term potential. They’re asking how technology can transform them into smart, revenue-boosting venues. By leveraging existing expertise and portfolio assets, investors see opportunities to optimize sponsorship deals and naming rights and create synergies that add value.

“These are things that a lot of clubs aren’t doing right now,” says Eric Andalman, an attorney at Hogan Lovells who specializes in sports, entertainment and project development. “All the investors that come in here are looking at those sorts of opportunities and different ways to revolutionize the club.”

In Italy, PE-backed football clubs now have sufficient cash to not only build new stadiums but deduct operational costs, player wages, and stadium upgrades as business expenses. Infrastructure investments like stadium renovations may qualify for incentives such as “super-depreciation” deductions, which allow businesses to claim larger, accelerated depreciation on assets, reduce taxable income, and provide immediate savings.

This encourages investment in capital improvements, PwC argues. There are also tax credits related to sports sponsorships, which may benefit firms involved in the development of football stadiums through advertising partnerships.

To Hellas And Back

Oaktree and RedBird aren’t the only PE players eyeing new stadiums. In January, Texas-based Presidio Investors swooped in to acquire Hellas Verona FC at a reported €130 million valuation.

There’s potential for the football club to earn even more if it keeps its feet in Serie A and doesn’t get relegated to Serie B—a major blow for any team. Why? Because it would result in a significant revenue drop, especially from TV deals, sponsorships, and matchday income. Key players often leave for top-tier clubs, weakening the team’s chances of a comeback. Fan engagement and sponsorships also suffer, and the club faces difficulty securing promotion back to Serie A, jeopardizing growth and stability.

For Hellas, this scenario almost became a reality on several occasions. At last check, the club is languishing in 14th place among Italy’s top-flight teams. For frustrated fans, the hope is that Presidio can infuse more than just hope into the club’s future. There’s the potential to generate cashflow and deepen the bench with new talent.

“For private equity, the story is very different, because they typically adopt a more structured approach. They try to emphasize long-term growth,” says Paola Barometro, a partner in the corporate finance practice at Hogan Lovells.

Financial sponsors like Presidio, which Barometro and Andalman advised on the Hellas deal, put great emphasis on growing revenues through licensing, marketing, and monetizing the fan base.

“Now, at least in Italy, we have a very interesting mix of investors that I think also bring different management styles and are creating a dynamic environment,” she adds. Ten years ago, this was unheard of.

“Just to give you a sense of the trend in Italy; In 2011, all of the Serie A clubs were owned by Italian individuals or companies,” she notes. “So, the trend now is very, very different.”

In 2020, US billionaire Dan Friedkin took the reins of Associazione Sportiva Roma from previous owner James Pallotta. The Friedkin Group fueled the financial revival with a mix of smart commercial deals and a solid Serie A finish.

Hellas Verona’s new PE owners are hoping to mimic that magic. And, like Roma, Hellas does not currently have its own stadium.

Roma shares Stadio Olimpico with Società Sportiva Lazio. And while Roma has long had plans to build its own dedicated facility, the project has faced numerous delays and complications, including political issues, zoning problems, and financial hurdles.

Over just a few short months, Hellas Verona had better luck. Its current home, Stadio Marcantonio Bentegodi, was opened in 1963 and last renovated ahead of the 1990 World Cup. The fact that the city of Verona’s mayor, Damiano Tommasi, is a former Hellas Verona infielder helped get things moving. Now American investors once again appear ready to revitalize one of Italy’s historic venues.

“Mad Rush”

The trend isn’t exclusive to Italy. The future of England’s Premier League recently got a whole lot more American, too.

“We’re up to 10 now,” says Marc Trottier, partner at law firm Bryan Cave Leighton Paisner in London, noting how half of the league’s teams are now under majority US ownership. “The growth and value of the clubs has been phenomenal over the last few years.”

Among the standouts are Arsenal, Chelsea, Liverpool, Manchester United and Everton, which is “a phenomenal asset,” Trottier says. After Friedkin bought it in December, the club is planning a “beautiful new stadium” at Bramley-Moore Dock.

While UK clubs command heftier price tags, Italy presents dealmakers with a more affordable entry point. With too many buyers and a scarcity of assets, that’s an issue.

Coincidentally, 10 teams in Serie A are owned by North American entities, too. In addition to Inter Milan, AC Milan, Roma, and Hellas Verona, North American proprietors also own Parma, Venezia, ACF Fiorentina, and Bologna (owned by Canadian and Club de Foot Montréal president Joey Saputo).

“There’s a mad rush,” Trottier says. “There are only so many soccer teams you can buy. There are the lower-league clubs as well; but there’s only so much you can invest, and people are worried about missing these deals.”

Rumors abound concerning other clubs in Serie A and even lower divisions. Clubs in Serie B, Italy’s second-tier league, are ripe for investment because of their potential for promotion into Serie A. An upgrade would lead to a significant boost in television rights, sponsorship deals, and matchday revenues.

While Serie C clubs may not offer the immediate financial rewards of Serie A or Serie B, they provide a low-cost entry point for investors looking to build long-term value.

“There are several teams that are potentially for sale if they get the right offer,” says Salvo Arena, a leading member of the M&A practice specializing in sports finance at Chiomenti, a Rome law firm. These lower-league teams “are a little bit cheaper, but you have a big upside.”

For now, the trend toward US ownership in Italian football “will remain hot,” Arena predicts. With Presidio Investors’ acquisition of Hellas Verona as the latest example, more firms are expected to follow suit.

“There’s very high interest and right now the Amercians are the ones who are buying,” Arena says. “There’s no reluctance on that. I receive so many calls from Serie A, B, and C teams. All the owners ask, ‘You know someone who wants to buy my team?’”