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Serie A sale hits choppy water

Serie A was once at the top of Europe's leagues, but it has fallen behind in terms of revenue.  Hence the search for radical and innovative solutions that in effect involve selling the league to investors.

No one can fault the determination of CVC Capital Partners, the Luxembourg-based private equity group, that has been trying for most of 2020 to buy a stake in Serie A.   By May, CVC’s dealmakers were in exclusive talks over a €2.2bn deal for a 20 per cent stake in a company that would manage the broadcasting rights in Italy’s top football league.

It was close to making history, with the first-ever sale of a football league itself, rather than its clubs. But then things got complicated.   Rival private equity groups Advent International and Bain Capital came along with competing offers, prompting accusations that club bosses had leaked information on CVC’s bid in order to drum up competition. 

The rival offers matter because of the electoral minefield you have to navigate to win the deal. First, bidders must persuade 14 of the league’s 20 clubs to vote for the principle of selling a stake in a media-rights company to a private equity firm — as opposed to either doing nothing or supporting an alternative plan in which the clubs would own the new company themselves funded by debt. 

Then, in a second round, private equity groups must get 15 of the 20 to vote for their bid over their opponents’ offers.  With three buyout groups in the race, securing the required majority in the second stage looked especially tough. 

This is where the determination comes in. To narrow down the field and strengthen its position, CVC not only upped its price (valuing the tournament at €13bn, up from €11bn) but it has taken the unexpected step of teaming up with Advent — a firm it doesn’t have much history of working with — despite the bad blood over the leak allegations.

It might not be enough. The handful of clubs that oppose a deal only need to win over a few others to create a veto block.

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