Milan patron Gerry Cardinale admits Italian football ramps up the need for owners to consider themselves ‘partners’ with the fans, but they won’t be pleased with his suggestion winning makes ‘competition less interesting.’
The American businessman, the chief of RedBird, spoke at the Bloomberg Qatar Economic Forum this afternoon.
He discussed the overall state of football in Europe, where numerous foreign investors have swooped in to purchase clubs. So how would Cardinale describe that situation?
“In one word, ‘bubble.’ But ‘bubble’ doesn’t fully do it justice, there are large pieces of intellectual property that inherently hold a lot of value, with an incredible amount of capital, ‘new’ capital, chasing after them,” said Cardinale.
“When many people think of investing in sports, they refer to buying a team, and that, in my opinion, is the most complicated part of doing business in this ecosystem. There are many imaginative ways to invest in this world without acquiring, both majority and minority, teams: you have to focus on monetizing the intellectual property that revolves around and that these teams represent.”
Cardinale learning about Milan fan power
The businessman has already stated that he was surprised by just how much the fans play a part in the process with European football, and that this is ramped up even more when it comes to Italy.
He learned that the hard way last month when the club backed away from hiring Julen Lopetegui because of protests from the supporters.
“Our ‘partners’ in AC Milan are the fans, and I take this very seriously. In America, team and club owners don’t have this kind of ‘partnership’, but in European football, it’s something you have to take seriously. In Italian football, you have to take it very seriously, and I do,” continued Cardinale.
“There is an opportunity here, at least in our investment thesis, to professionalise the way these things are managed. It’s no longer about ‘hobbies for the wealthy,’ now you see institutional capital being attracted to these situations because they are multibillion-dollar entertainment activities for live events.
“You have to strike a balance. Fans obviously want to win all the time. The irony in sports is that if you win every year, you make the competition less interesting. The human element and its unpredictability are what make these things so valuable. But in any case, it’s obvious that you always aim to win the championship, to go as far as possible in the competition.”
The watchword for football now is sustainability and no longer can fans expect new owners to simply pump money into the coffers, especially if it means breaching Financial Fair Play rules.
However, the Milan fans won’t be pleased with Cardinale suggesting domination of trophies makes football boring.
“You have to find a balance between the short-term goal of winning every year and the long-term goal of sustainability and consistency in reducing volatility and performance variation. These things shouldn’t just lead to income, that would be lazy, but instead, they should increase cash flow, which is a positive thing. Reinvest the cash flow to improve the team and win.
“It’s a virtuous circle, no different from what happens in any other business. It’s just that here, sometimes emotion takes over, and it’s here that the best thing we can do to manage this resource for Italy and for the fans is to ensure we prepare it for long-term success.
“Then obviously we want to win every year. That’s the interesting part. We have never been a majority shareholder in such a large sports entity before. We have certainly revolved around them, like with the Yankees or the Cowboys, but this is part of the learning process,” concluded Cardinale.