Italian clubs set to float

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Italian football clubs have always prided themselves on producing some of Europe's most passionate fans. Now, one year after the Italian government allowed the formerly non-profit-making teams to make money, they are vying for an equally devoted following among international investors.

At least seven of the 18 top division Italian clubs said they want to sell shares on the London or Milan stock exchanges, using the cash to develop non-traditional sources of income such as merchandising and pay- per-view rights.

One of Rome's clubs, Lazio, is likely to be the first to list next year. It has already moved into financial markets, raising 50 billion lire (pounds 50m) last week in a global bond offering co-ordinated by Merrill Lynch.

"The fervour and demand for football products by the Italian people is hard to match anywhere else in Europe," said Guy Feld, a soccer industry analyst at UBS Securities in London. "As a result, the bankability of the top Italian football clubs should be excellent."

In their trek towards the stock market, Italian teams are following the trail of British football clubs such as Manchester United and Tottenham Hotspur.

Britain's experience, however, proved disappointing to investors. The Bloomberg Football Club Index of 20 companies that own or operate English and Scottish clubs lost 22 per cent of its value since the year began, as the FT-SE 100 gained 18.8 per cent.

Still, most Italian clubs that plan a stock listing target the London exchange, where investors are familiar with the industry and the quotation requirements are less onerous than in Milan.

The Italian borsa's new private owners, set to keep the teams at home, last week proposed to relax the exchange's rule that companies must show three consecutive years of profits before listing.

Few Italian clubs can meet the test, as until last November they were technically amateur organisations and barred from paying dividends to shareholders. Owned by big companies with deep pockets, such as former Prime Minister Silvio Berlusconi's Fininvest SpA, which controls AC Milan, many Italian clubs seeking a stock market listing continued racking up losses this year.

AC Milan's director, Massimo Campioli, said his club, which lost 27 billion lire in the year to June 1997, will choose the Italian stock exchange once it finally returns to profit. "That's where our fans are," Mr Campioli said.

Inter Milan, another Serie A club that wants to sell shares, lost 21.4 billion lire in 1997.

"Down the road, these clubs will come to the exchange, and some investors will buy the stock, if only because of the emotional appeal," said Pierfranco Colombo, fund manager at Ducato Gestioni in Milan. "But, first of all, the clubs must put their books in order."

Lazio, which ended fourth in last year's championship, came closer than most competitors in the race towards the stock listing, certifying its books in accordance with British accounting standards. The club, owned by dairy company Cirio, reported 1997 profit of 200 million lire.

"We are evaluating both exchanges, but even if we list in Milan, a large chunk of the shares will be reserved for London-based institutional investors who appreciate the sector," said Lazio's director, Giancarlo Guerra.

"We can count on 1.5 million fans and a broad regional base, which means a lucrative market for our products," he said.

One of Lazio's revenue sources, the season tickets that brought it 16 billion lire in fiscal 1997, has already been pledged to back up Lazio's brand-new bond issue. Lazio said it plans to use the proceeds from the bonds, sold this week to investors in Europe, the US and Japan, to refinance the old debts from the days when making a profit was just not one of its - or of any other Italian football club's - chief concerns.

q Additional reporting By Sabrina Cohen