Embattled Serie A clubs must change mindset to attract investors, Italy's top talent scout Roberto Ciccioli says

Roberto Ciccioli

 ROME – The Italian Insider interviewed Roberto Ciccioli, Head of Tax and Advisory Services at the ‘Consulting Centre’, a consultancy firm that supports football players and clubs in tax, legal, and corporate finance, and he is currently working on the takeover of two Italian football clubs.

 

 Italian Insider: The 21st century has seen wealthy individuals, investment funds, and nations all buying top European football clubs. But it seems that Italian football clubs, which in recent years haven’t performed well on the European stage, are not in demand like Premier League clubs. What is the problem with attracting investors to Serie A?

 Roberto Ciccioli: I think at this moment, the Premier League remains the El Dorado for the investors. But at the same time, Italian football remains better than the other leagues. For example, in Spain, some football clubs – excluding Barcelona, Real Madrid and Atletico Madrid – have less appeal than Italian football clubs on average. This pandemic period has also shown to all the key decision makers that the football system in Spain and France is still fragile. Italian football is and will continue to be attractive for some investors. Is there a problem of attracting investors? It depends on identifying which position they fall – first, second or third. Maybe we are second after the Premier League, or third after, say, Spain.

 

 II: What lies behind the current financial fragility?

 RC: When the pandemic period started, and broadcasters stopped paying their free for TV rights, this put several football clubs across different countries in a troubled situation. But this didn’t happen in Italy. We still have financial difficulties of course, but in the end, all the football clubs remained where they were relative to before the pandemic period. So, at this moment, even with the difficulties, Italian football remains attractive for investment. Of course, each investment depends also on the investor’s goal, if the investor wants to invest in profits, winning trophies, or publicity. But apart from England, Italy remains probably the best in this moment to invest in football. Of course, this point of view refers only to the football club currently playing in the Serie A, and maybe in the Serie B where there is also good interest from foreign investors, because from the third division the clubs are not profitable. From there it is probably better to invest in the UK.

 

 II: Are there any differences in the media, the fans, the football culture, that plays into significant differences for investors between the UK and Italy?

 RC: The Italian football situation is quite different from the UK. Most of the clubs need to be restructured in financial terms and in terms of IT and other managerial areas. This is currently not happening in some cases because the amount that the clubs have available for investing is allocated for investments in football players. We need to have a good level of club managers to reduce the cost for the players and to be able to allocate a part of this saved money to restructure the club. This would make the clubs financially safe, while restructuring TV rights and investing in digital services and new frontiers of the economy like blockchain.

 

 II: The businessman Rocco Commisso bought Fiorentina for 170 million in 2019. He recently said in an interview with The Financial Times that his club’s future projects had been hamstrung by media expectations and Italian government regulations, such as in the case of upgrading the Fiorentina stadium. Who can engender the necessary structural changes in modern Italian football? Are stadiums important or a distraction? Where does the power lie?

RC: Of course stadiums are [important]. Stadiums are assets. Consider that once you can put in place 360 degree cameras you will be able to engage the fans with a totally different vision of the football… Augmented Reality, Virtual Reality, Artificial Intelligence, the Metaverse… there are several more services a stadium can provide the fans. Of course, the bureaucracy and politicians create delays for each football club; but even so, in some cases, the owners who need to understand: if they want to build a stadium, they build a stadium… not an entirely different thing, like real estate, a hotel, or a trading centre.

 

 II: How much has the last two years of COVID lockdowns impacted investments in major assets like stadiums and these new technologies?

 RC: COVID has created financial problems. It has probably reduced revenues from advertising, ticketing, and merchandising by at least 20-30 per cent. But these components aren’t important compared to TV rights. [The problem is] that the clubs are not solid. They are risking too much by taking on too much debt.

 Take Inter Milan. They have a huge debt like Juventus. As of Jan. 30, 2021, Juventus financial statements show that they had debts of around 400 million and approved a capital increase of 400 million in the summer of 2021. This means they must cover a huge debt with revenues of around 400 million? It’s insane. This happens if someone thinks that to increase the value of the club, they must increase player wages because the fans request this as a strategy. But the correct strategy has been taken up by the middle clubs – Atalanta, Sassuolo – they take players for cheap through their scouting departments, invest in them, let them grow in a roster, then sell them. In order to grow steadily, the clubs need to work to identify the best players – three, four, five, six million euros; 10 million euros maximum – this in my opinion is the average amount Italian football clubs can really afford for the transfer fee of any football player. And then, if they are very good in terms of identifying the correct players, they will increase in value according to the results of the football club. 

 What is required is for football clubs to change their mentality. This is crucial and can come from the investors. New technologies and digital services can happen if we improve the base of the football system [via] the club managers, the employees, the players. The Premier League is an example for Italian football. There are several guidelines to increase the level: the first refers to the increase of the TV rights; the second, the need to increase the revenues arising from the stadiums (which is certainly related to the ownership of the stadium); the third refers to the new technologies I mentioned. Three guidelines. This could give the system the opportunity to reduce the gap with the Premier League. In my opinion, we start with the intent of increasing the value but not in terms of values of football players…in terms of the values of the clubs.

 

 II: Juventus have once again been in the news for financial misconduct allegations. Gazzetta dello Sport suggested that over 40 transfers are being investigated. What was the mistake they made in their transfer dealings?

 RC: Take Christiano Ronaldo. Cristiano was a problem for Juventus. Why? Because his salary cost them 60 million euros plus the purchase… so we are speaking about 85 million euros for each fiscal year. That’s more or less a fourth of the total revenues of Juventus related just to one single player. If Juventus had revenues of more than 500 million, probably they could have had him; but with 350-400 million it’s difficult to take these types of players. Same for AC Milan. Same for Inter Milan. This is just our level. At this moment the top Italian clubs can afford players of 12 million euros. 20 million euros maximum. And that’s only for the top clubs. Juventus tried to take players for free: paying only the agency fees, so that they have the top players, spending a lot in terms of salary, but saving their money by avoiding the transfer free. They made a mistake. They signed players with salaries of 10 million, 12 million euros. Some of these players didn’t play! Think of how many players they could have taken with the same results.

 

 II: What is the main risk now for a club like Juventus?

 RC: It is not the sporting penalties but the financial penalties that matter. If the criminal court proves an agreement with the other football clubs to put the transferred players at a value to avoid financial losses, that means they provided false financial statements. From here, the stakeholders might ask for the money they gave back, which could put Juventus in a troubled financial position even close to bankruptcy.

 

 II: What does Italian football have to do make progress in the sport?

 RC: To increase the revenues, we must increase the level of all the football clubs. But this can happen only with good club managers and good professionals who can identify the good players for the right price –one we can actually afford. We start from this assumption: we are currently not able to take the top players (the likes of De Bruyne, Messi, Halaand, etc) while preserving a solid financial situation. We are just not able to take on that type of player. What we are currently able to do is take good young players (as we did with Salah, Allison, etc). Then, if the whole Italian football system increases its value we will potentially have the opportunity to maintain top players into the rosters. We need to start from the base. If we continue investing in players of 20 or 30 million euros without a criterion, then we will continue to waste time and money. And if we are able to get financially solid, then we will avoid issues like those that arose from the scandals in the last month. 

 

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The Artemio Franchi Stadium has a 230-foot tall ‘Tower of Marathon’. Fiorentina owner Rocco Commisso called the stadium ‘the shittiest thing that’s ever been invented’ (Financial Times)

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