The revenues that a new stadium would generate is one of the huge driving factors behind AC Milan’s insistence in building one, a report claims.
As reported by Calcio e Finanza, Milan’s financial recovery is expected to take a further step forward in 2022-23 with the latest projection suggesting losses should be cut from around €66.5m in the previous year to somewhere around €25m.
However, RedBird Capital are not satisfied because they see room for further improvement. Together with the television rights and the commercial aspect, a stadium is the third key asset for a football club aiming to establish itself at the highest levels of European football
Building a new stadium therefore remains the most urgent item on the agenda of Gerry Cardinale and the Milan leadership, because the only way to turn losses into profits is to increase future revenues further.
As per previous forecasts, the new stadium should bring incremental revenues (without considering ticket sales) equal to over €120m, a huge amount that is fundamental in the desire to keep up with the top clubs, from an economic, infrastructural point of view and a sporting point of view.
And the new, improved sponsorship deals brings in roughly 30M€ more revenue so if no surprises should come, Milan will make a profit next year.
One item that is never discussed is the amount of time it would take to see a return on investment for that stadium (putting aside resale equity). Assuming the stadium costs 1.2 billion euros, it would take 10 years to see a return on investment. This is very rough and obviously ignores loan interest, additional revenues such as naming rights and sponsorship opportunities, etc. I don’t see an investment firm necessarily holding onto the club that long as an investment so would imagine the idea is to use the value of the stadium to increase the overall value of the club. In other words, the new stadium while certainly helping generate revenue would serve the bigger purpose as a real estate investment.
Well said