Roma start line-up during the match Roma-Wolfsberger in the Olimpic stadium. Rome (Italy), December ... [+]
Ownership of the Italian soccer giants AS Roma may be changing sooner rather than later, but will still remain in American hands.
The Friedkin Group, a consortium run by U.S. billionaire Dan Friedkin, is reportedly about to purchase the majority share of AS Roma from current co-owner and chairman James Pallotta, Friedkin’s compatriot and executive board member of the NBA's Boston Celtics.
The deal is expected to be closed “before the New Year”, an unnamed legal executive at the Friedkin Group told ASRomapress last Friday.
Pallotta bought two-thirds of club shares for US$100m in 2011 and - according to La Repubblica - now values the Serie A club at more than US$1 billion.
American investment bank Goldman Sachs has been assisting with the acquisition, with due diligence said to be close to be finalized.
The Houston-based Friedkin Group has been reportedly interested in Roma for quite a while.
On November 20th, the rumor of a possible Friedkin takeover caused the trading of AS Roma to be suspended by the Italian stock exchange due to an excessive rally.
The Friedkin Group represents a huge opportunity for Roma, given that they have an even greater financial capability than the current owner.
According to Forbes' official profile, the group CEO Dan Friedkin is worth $4.2 billion in terms of personal fortune, as the owner of Gulf States Toyota - which sold $9 billion worth of Toyotas in 2018 alone.
From Pallotta’s perspective, this move makes a decent bit of sense. The Boston hedge fund manager would most likely net a hefty profit on the Giallorossi by selling to Friedkin.
Moreover - since taking over AS Roma in 2011 - the soccer club failed to win any major competition both in Italy and in Europe, managing to only get into the semi-final of the UEFA Champions League (Europe’s biggest soccer competition) in the 2017/2018 season.
Additionally, Pallotta will stop haggling with the Italian bureaucracy over the construction of a new stadium, which was planned to be finished by 2016 and is yet to receive the final approval by Rome mayor Virginia Raggi in order to begin the construction work.
From Freidkin’s perspective, investing in Roma could be a major opportunity to finally enter sports business, given that he reportedly showed interest in buying NBA’s Houston Rockets in the past.
However, it remains to be seen whether the businessman plans to keep hold of the team at this stage or is on the lookout for investment from potential partners interested in such a prestigious club, since Roma placed 15th among Europe’s top soccer team ranked by Deloitte in 2019.
ROME, ITALY - MAY 28: AS Roma President James Pallotta plays with the ball during the Serie A match ... [+]
In order to answer these questions, I interviewed Alberto Medici, financial consultant for Phoenix Capital Group and head of football analysis at Calcioefinanza, an Italian newspaper specialized in soccer finance.
Is the alleged US$1 billion price worth the investment for AS Roma or is it too expensive, as some critics observed?
Alberto Medici: The US$1 billion price includes a capital increase of US$167 million plus US$313 million of debt refinance, leaving the club net worth value at US$637 million, which is, by all means, higher than the price paid by Pallotta to purchase the club in 2011 (US$293 million).
The final price is certainly high given that over the 7 years of Pallotta’s ownership the Giallorossi struggled to make a profit, losing around US$250 million in total despite a gross revenue of around US$2 billion.
Is it also worth mentioning that around 29% of that US$2 billion comes from capital gains made by selling players (US$605 million).
TELLURIDE, CO - SEPTEMBER 01: Dan Friedkin attends the Telluride Film Festival 2019 attend on ... [+]
Do you think that under the new management AS Roma would have the potential for a quick turnaround when it comes to profitability?
Medici: It obviously does: the construction of the new stadium and an innovative brand strategy could do the trick.
The sponsorship deal with the Toyota Center in Houston, home of the NBA’s Houston Rockets, is definitely one of the group main assets when it comes to the construction of the new stadium.
Additionally, from the point of view of branding, the fame of Italy and especially of the city of Rome represent a great asset for a group that is also active in the luxury sector.
A picture shows a model of the Rome's new stadium project designed by US architect Dan Meis during a ... [+]
What are the biggest risks that the new management will have to face?
Medici: Beside the lack of progress with plans for a new stadium, the club needs to revamp its merchandising revenues focusing on improving its global brand, especially in emerging Asian markets.
While this might take some time, Friedkin will have to increasingly rely on players trading when it comes to short-term profit, jeopardizing the positive result achieved so far by the team new coach Paulo Fonseca.
The conversation has been edited and condensed for clarity.
