AS Roma Hires Goldman Sachs To Find Buyer After Deal With Friedkin Collapses

James Pallotta’s deal to sell AS Roma to Daniel Friedkin has fallen through, according to a report yesterday in the Financial Times.

Friedkin, worth $4 billion, was going to pay about $850 millin (€750 million) for the Serie A team. The Financial Times says “AS Roma’s existing ownership group, which includes the club’s president James Pallotta, are working with bankers at Goldman Sachs
GSBD
as they seek fresh bids.”

A year ago we valued AS Roma at $622 million (€555 million), 16th most in the world among soccer teams.

Reports of Friedkin’s interest in the team surfaced in December, and preliminary contracts were reportedly signed in early March. But Serie A, like all sports in Italy, were shut down in early March due to the pandemic. Earlier this month Italy’s top-flight soccer league as given the go ahead to resume June 20.

The sale price of AS Roma could be significantly impacted by whether or not the team qualifies for the lucrative Champions League. The top four teams in Serie A make the Champions League (teams finishing fifth and sixth qualify for the far less rewarding UEFA Europa League tournament). AS Roma currently sits in fifth place, just three points behind Atalanta with 12 games remaining. The team played in the Champions League in 2018-19 after finishing third in the 2017-18 Serie A season.

According to an analysis by Swiss Ramble in November, Roma’s revenue before player sales fell to $264 million for the 2018-19 fiscal year, from $283 million the previous year. Operating income (in the sense of earnings before interest, taxes, depreciation and amortization) was negative $32 million in 2018-19, compared with $13 million the prior year. And net debt inched up to $247 million. Pallotta described as “a complete disaster”. They fell from 3rd to 6th in Serie A and exited the Champions League at the last 16 (compared to the semi-finals in 2017/18.

The long-term upside for a buyer of AS Roma would be a modern stadium. The team currently plays in the antiquated Stadio Olimpico, which it shares with its rival SS Lazio. Pallotta has unsuccessfully tried to build a new stadium for his team and does not think he can compete without one. “I’ve said it a million times before. If we want to consistently compete with the best teams in Europe, we need the stadium,” he wrote a year ago.

An individual buyer for AS Roma may not be necessary. Bloomberg reported two days ago that Bain Capital has made a $3.4 billion preliminary offer for about a 25% stake in Italy’s top soccer league, putting it into competition with rival private equity firm CVC Capital Partners.