Gerry Cardinale has admitted that he looked into investing in a USA sports franchise, but that the valuations are currently to high.
As Calcio e Finanza writes, Cardinale is the founder of private equity firm RedBird Capital Partners, which controls Serie A club AC Milan and Ligue 1 club Toulouse. He has said he is not currently interested in becoming a majority owner of a team in his homeland, arguing that franchise valuations were too high.
Read SempreMilan ad-free and get access to exclusive news. Click here for a free trial!
RedBird own Milan, having acquired it in 2022 at a valuation of €1.2bn. The company also holds stakes in Fenway Sports Group (FSG), the multi-sports organisation that owns the Boston Red Sox (baseball) and Premier League champions Liverpool, as well as the Alpine Formula 1 team.
Cardinale believes that there is currently an ‘asset bubble’ in sports, which has caused team valuations to skyrocket. According to the latest valuations from Forbes , the average value of a National Football League (NFL) company is now $5.7bn, while the San Francisco 49ers were reportedly valued at a record $8.5bn in a recent minority stake sale.
Meanwhile, Forbes estimates that the average value of a National Basketball Association (NBA) team is $4.4bn, while that of a Major League Baseball (MLB) franchise has risen to $2.6bn.
Cardinale comments
Speaking on a CNBC Sport podcast, Cardinale said that a ‘normalisation’ needs to happen and, in essence, that the bubble needs to pop.
“I think if you’re a student of history, you know that the fact that something is always going up is not a great criterion for making an investment,” he said.
“There needs to be some normalisation and a soft landing in what I see as a sort of asset bubble. But I can say very lucidly that there is an asset inflation bubble in sports right now, at least in terms of teams, and at the same time say that it remains a very good place to invest.
“It’s not just about getting into capital. It’s about supporting new monetisation models around the revenue generation flywheel tied to intellectual property.”
While acknowledging the NFL’s huge growth in TV rights value, Cardinale said the issue will be ‘the slope of the curve’ for future deals, while other leagues ‘could see a contraction’.
While RedBird are not currently approved by the NFL to invest in its franchises, Cardinale ruled out the idea of taking a minority stake in a US-based team, noting that he wants to ‘be involved, have a partnership, in the actual governance, in structuring the business plan’.
While confirming his interest in becoming a majority owner of a U.S. sports team, Cardinale suggested he is unlikely to close a deal any time soon.
“I don’t find the entry prices today attractive. That doesn’t mean in any way that I question the long-term sustainability of these investments.
“I don’t like the current entry prices, because the underlying business plans are not sufficient to justify them, and they are based on a certain assumption about the trajectory of media rights that no one has yet clarified.”
Last week, RedBird brought up 1000 days at the helm of Milan. In a feature we analysed the work they have done (or lack of, in some cases) in each sector they are responsible for. Meanwhile, Toulouse fans hit out at a lack of clarity over the weekend.
Why are they even asking this failure?
The only thing to be learned from him is how not to manage a sports team.
As many wise investors including W.Buffet say, “invest in what you know”. Jerrys knows nothing about European football which makes it a foolish investment by him and a disaster for us
Gerry is doing what he knows best…. He’s a fraud, charlatan and general pirate to name but a few.
The yanks have worked him out which is why he’s plundering European football clubs.
Sell AC Milan. You are destroying this legendary club