Serie sets limit on private equity investment

Serie A sets 15% limit on private equity investment

Italy’s top tier football league, Serie A have placed a 15 per cent limit on any potential private equity investment in the league.

News of the introduction of the cap was revealed in a letter from Paolo Dal Pino, Serie A president, to seven of the interested parties believed to be – Bain Capital, CVC Capital Partners, TPG Capital, General Athletic, Wanda-Infront, Apollo Global Management, and Advent International. It has also been reported that Blackstone are prepared to loan €100 million (US$114.5 million) to Serie A to help with any financial damages caused by COVID-19.

July 24 was initially set as the deadline for any proposed investment, as Paolo Dal Pino’s letter clarified the bidding criteria. A stipulation within the criteria states that the offer must include “terms and conditions for the establishment of the partnership…for the minority shareholding to be sold by Lega Serie [A], up to a maximum limit of 15 per cent of the capital.”

The letter also states that proposals require a legal assessment confirming the terms and conditions of the bid comply with Italy’s Melandri Law, which governs the collective selling of media rights in Italy. In addition, firms who may be interested have to outline “the structure relative to the governance of the partnership as well as the veto mechanisms on any matters reserved for the shareholders’ meeting and the board of directors”. It is believed that Serie A clubs are against the proposed investment into the league, which aims to solve the €500 million (US$572.6 million) financial impact of COVID-19 on clubs and involves teams losing out on competition media rights and revenues.

Reports have suggested that the solution is to place investment into a completely new

company which will be used to control Serie A itself, ringfencing the share of the league that is owned by the clubs. This comes as the latest twist in Serie A’s investment saga.

A joint investment proposal from private equity houses CVC, Advent and FSI, and one led by a separate consortium consisting of Bain Capital and NB Renaissance Partners are reported to be leading the running to drive the next stage of Italian Serie A’s commercial development

The two proposals are understood to be among six to eight binding bids submitted ahead of an August 28 deadline set by the league. The league deems the two proposals, which each involve separate consortiums taking a shareholding in the league, as the most worthy of consideration, according to Italian publication Sole 24 Ore. The remaining bids are thought to be a mix of financing and securitisation proposals that don’t seek to take an equity position.

CVC Capital Partners and Advent International have joined forces to offer €1.3 billion for a 10 per cent share in a new company. The combined bit values the league at €13 billion, which is a considerable improvement the earlier valuations at €11 billion, after the initial bid from CVC for 20 per cent. If the improved bid is successful, CVC would hold 50 per cent of the minority stake, with Advent holding a 40 per cent share, and the final 10 per cent owned by Italian private equity firm Fondo FSI. The bid would see the firms control 50 per cent of the board managing the league’s commercial affairs, with the 20 teams controlling the remaining 50 per cent. An independent chair will hold the deciding vote. The second bid from Bain Capital and NB Renaissance is though to be structured along similar lines, with the consortium seeking a 10 per cent stake in the new media rights company for €1.3 billion.