Latest / Bloomberg Intelligence / Houlihan Lokey's Russo on Growing Appeal of Soccer in US(Audio)

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Houlihan Lokey's Russo on Growing Appeal of Soccer in US(Audio) · Bloomberg Intelligence

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  Speaker 1: business splash. This is taking stock with Gadley and grim
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  Speaker 1: Box on Bloomberg Radio. I want to buy a European
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  Speaker 1: soccer team. Well get in line. Chinese companies have agreed
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  Speaker 1: to pay at least four hundred million euros over the
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  Speaker 1: next two years for a c Milan formerly owned by
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  Speaker 1: Silvio Berlisconi, and the sale comes as Chinese investment in
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  Speaker 1: European football has grown rapidly. Last month, Chinese retail group
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  Speaker 1: Sooning Holdings paid about three hundred million dollars for a
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  Speaker 1: seventy stake in inter Milan, another soccer soccer team. Why
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  Speaker 1: has this interest so popular? Let's find out from Chris Russo,
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  Speaker 1: managing director in the tech, media and telecom group of
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  Speaker 1: Hulahan Loki, and he joins us in studio. Chris, thanks
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  Speaker 1: for coming in, Thank you for having me. So why
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  Speaker 1: would anyone pay four hundred million euros or three hundred
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  Speaker 1: million dollars for a European soccer team. Well, I think
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  Speaker 1: what you've been seeing over the last couple of years
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  Speaker 1: is the economics of these teams get a lot better.
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  Speaker 1: Part of that is because of new TV right steals
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  Speaker 1: that are really becoming a big, large, compelling revenue streams
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  Speaker 1: for these teams, especially in the ep L and some
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  Speaker 1: of the other major territories. I think what you're also
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  Speaker 1: seeing is that Europe is where the action is right
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  Speaker 1: now in terms of teams being available. When you think
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  Speaker 1: about the United States, there really aren't that many pro
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  Speaker 1: teams that have sold in the past couple of years,
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  Speaker 1: So Europe is really the opportunity that people are looking at. Well,
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  Speaker 1: do people those still look at European teams and maybe
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  Speaker 1: South American teams as the place to get the premier
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  Speaker 1: soccer teams because they've been doing it for so long,
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  Speaker 1: right and and I think that's one of the reasons
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  Speaker 1: why the sports more popular. There's so many people who
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  Speaker 1: come in the United States to live they're watching this
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  Speaker 1: sport on top of all the kids that's played now
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  Speaker 1: for so long, and become soccer fans to a certain extent. Well, well,
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  Speaker 1: clearly in other parts of the world soccer has been
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  Speaker 1: popular for longer, but now what you see happening in
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  Speaker 1: the United States is more and more young fans are
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  Speaker 1: becoming English Premier League ands La Liga fans, etcetera. But
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  Speaker 1: you're also seeing a lot of strength in Major League
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  Speaker 1: Soccer as well, where franchise fees have gone from about
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  Speaker 1: ten million dollars to a hundred million dollars over the
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  Speaker 1: last ten years. So I think both in terms of
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  Speaker 1: the U S teams and the international teams, there's been
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  Speaker 1: a lot of growth. Tell us about some of the
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  Speaker 1: US investors who have been purchasing these European and English
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  Speaker 1: soccer teams. Sure, I recently Josh Harris, who's ahead of
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  Speaker 1: Apollo Investments, invested in Crystal Palace. UH. Jason Levian, who
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  Speaker 1: owns a d C United, just bought Swansea City. UH.
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  Speaker 1: There are a number of existing investors, the Malcolm Glazer
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  Speaker 1: family UH and Stan Cronkie. So they're about six Premier
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  Speaker 1: League teams now that are owned by Americans, And I
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  Speaker 1: think it's becoming viewed as a better investment again, in
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  Speaker 1: part because the economics are better, in part because there's
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  Speaker 1: a perception that there's even more growth ahead for soccer,
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  Speaker 1: both in the US and overseas. Overseas, I'm surprised because
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  Speaker 1: I would think that overseas it's already so hot, so
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  Speaker 1: strong in many country teas, that's really the only major
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  Speaker 1: sport you have. You don't have, you know, four or
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  Speaker 1: five like the United States stays. You know. I think
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  Speaker 1: that that in terms of maybe the rights fees in
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  Speaker 1: in Europe, those are are strong, but there are also
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  Speaker 1: opportunities to sell the product via TV and China in
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  Speaker 1: the developing world, in the US and South America. So
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  Speaker 1: a lot of the revenue streams are not not only
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  Speaker 1: being driven by what's happening in Europe, but by the
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  Speaker 1: TV distribution to other parts of the world. Well, I
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  Speaker 1: note that part of your experience the lengthy list, but
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  Speaker 1: part of your experiences the NFL Internet network. That's that
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  Speaker 1: business model. Tell us how that can apply to some
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  Speaker 1: of these teams. Well, I think what you're seeing with
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  Speaker 1: a lot of a lot of teams, especially the most
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  Speaker 1: popular ones, is they're looking at themselves as media brands
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  Speaker 1: onto themselves. So they're creating over the top networks, video
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  Speaker 1: networks that are reaching fans directly, not necessarily in their
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  Speaker 1: home territories, but in other parts of the world. So
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  Speaker 1: if you're Manchester United, you now have a way to
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  Speaker 1: deliver great video content two fans all over the world
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  Speaker 1: and be able to charge for that. So I think
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  Speaker 1: the dig revolution has really opened up a lot of
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  Speaker 1: new revenue streams for these global brands. You know, and
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  Speaker 1: yet there's still people who just can't bear to watch
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  Speaker 1: soccer live on you know in person or on television
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  Speaker 1: because there's not a scoring, it takes too long, etcetera, etcetera. Well,
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  Speaker 1: I think I think fans in the US especially are
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  Speaker 1: getting a lot more sophisticated in the way they watch
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  Speaker 1: the game and understand the beauty and excitement of a
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  Speaker 1: great corner kick or a great pass. And so I
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  Speaker 1: think as people get more involved in the sport, they
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  Speaker 1: become to they come to appreciate things other than just
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  Speaker 1: the score. And also the technology that is used in
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  Speaker 1: television to show the match has changed absolutely. There are
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  Speaker 1: are more interesting graphics and stats and data that make
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  Speaker 1: it more compelling. I think you're able to see more
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  Speaker 1: pregame and postgame information and recaps and highlights, so all
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  Speaker 1: of that enhanced experience really makes it more interesting for
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  Speaker 1: the fan. One of the aspects, of course, if this
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  Speaker 1: unique summer of soccer, as you like to call Chris Throe,
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  Speaker 1: So the Olympics later this summer are going to feature
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  Speaker 1: the powerhouse US women's soccer team. But are It seems
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  Speaker 1: like the money and the interest in these deals are
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  Speaker 1: still much more with men's soccer the women's Is it
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  Speaker 1: partly because there just isn't as much women's soccer around
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  Speaker 1: the world as as men's well in the United States
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  Speaker 1: that the women's U S women's team is very popular,
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  Speaker 1: draws huge ratings when when when the team plays in
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  Speaker 1: the Olympics of the World Cup. The the US women's
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  Speaker 1: leagues have not been as successful as I think people
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  Speaker 1: would have hoped, but I do think that that can
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  Speaker 1: happen over time, and I think certainly there are a
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  Speaker 1: lot of young girls who play soccer growing up who
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  Speaker 1: are becoming fans later, and I think there really are
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  Speaker 1: bright prospects for women's soccer going forward, even though I
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  Speaker 1: think they have a ways to go in terms of
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  Speaker 1: the commercial revenues that are generated. I just wonder if
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  Speaker 1: you have any thoughts just quickly about the Olympics that
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  Speaker 1: are gonna be taking place in Brazil. Is that gonna
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  Speaker 1: come off all? Right? Yeah? I I hope it will.
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  Speaker 1: I certainly read the same story as you do about
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  Speaker 1: some of the channel as they're having there about Zeka,
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  Speaker 1: et cetera. But I think once the game gets games
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  Speaker 1: get going and people focus on the stories and the competition. Um,
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  Speaker 1: my hope is that all all of that will be
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  Speaker 1: behind us. Well, we gotta hope for the athletes. We
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  Speaker 1: gotta hope for Brazil. They've had a lot of tough
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  Speaker 1: stuff this year, Chris Rope, so we hope that you
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  Speaker 1: will come back soon. Thank you very much for having me.
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  Speaker 1: He's a managing director in the Tech Media Telecom group
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  Speaker 1: Kula Han Loki. Here in New York City, I'm Calfe
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