How AC Milan Became One Of America's Favorite Football Clubs

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Friends,

The United States is the world's biggest and most lucrative sports market.

Most American sports fans dedicate their time and money to the Big Four Sports Leagues — the NFL, NBA, MLB, and NHL. And it shows, with these four sports leagues collectively bringing in more than $45 billion in revenue last year alone.

Big Four American Sports Leagues By Revenue (2022)

• NFL: $19 billion

• MLB: $10.8 billion

• NBA: $10 billion

• NHL: $5.7 billion

And international sports leagues have started to recognize the financial opportunity in America.

Take Formula 1, for instance. Liberty Media purchased the business for $4.4 billion in 2016. They then implemented a plan specifically designed to grow the sport in North America, giving ESPN the broadcasting rights for free and adding several US-based races. And now the world’s fastest sports league trades at a $17.3 billion market cap.

Formula 1 Market Capitalization

• 2016: $4.4 billion

• 2023: $17.3 billion

Still, the most interesting sport to watch going forward is soccer (or football!).

That’s because many American owners have recognized the opportunity to increase revenue abroad — these clubs have way more fans than American sports teams but make significantly less money. And more than half of Premier League teams now have American ownership, including Arsenal, Chelsea, Liverpool, and Manchester United.

But when it comes to soccer specifically, no one is doing it better than AC Milan.

In August 2022, American investment firm RedBird Capital closed a $1.2 billion deal to buy AC Milan. The purchase also included a minority investment from the New York Yankees (more on that later) and Main Street Advisors, an investment advisory firm that counts celebrities like LeBron James and Drake as limited partners.

Many people were shocked at the price. Chelsea had sold for $3.2 billion just a few months earlier. But that was one of the Premier League’s “Big Six” clubs, and paying $1.2 billion for a Serie A club that needed a new stadium seemed unthinkable.

Big Five European Football Leagues 2022 Revenue

• Premier League: $7.2 billion

• La Liga: $3.7 billion

• Bundesliga: $3.5 billion

• Serie A: $2.6 billion

• Ligue 1: $2.3 billion

But less than a year after the acquisition, things are looking good for AC Milan.

RedBird founder Gerry Cardinale and new AC Milan CEO Giorgio Furlani created a virtuous cycle, expounding on the idea that revenues should fuel investments, which generate better performance, and, in turn, generate new revenue streams for the club.

For example, AC Milan signed a deal with Yankees Entertainment and Sports Network (YES Network) just one month after the acquisition. This enabled the Italian club to air hours of weekly AC Milan content in the #1 TV market in the United States, including full-match replays. And Yankees fans can also now purchase AC Milan merchandise at Yankee Stadium as part of the partnership.

AC Milan then signed on to participate in the 2023 Soccer Champions Tour, joining Arsenal, FC Barcelona, Juventus FC, Manchester United, and Real Madrid.

As part of the tour, AC Milan will play three friendlies in front of U.S. crowds, including matches at the Rose Bowl in Los Angeles and Allegiant Stadium in Las Vegas.

AC Milan 2023 Soccer Champions Tour Friendlies

• July 23, 2023: Real Madrid CF at the Rose Bowl in Los Angeles, California

• July 27, 2023: Juventus FC at Dignity Health Sports Park in Los Angeles, California

• August 1, 2023: FC Barcelona at Allegiant Stadium in Las Vegas

The Rose Bowl game alone is expected to have nearly 100,000 people in attendance.

AC Milan also recently completed the transfer of Christian Pulisic — arguably the most popular player on the U.S. men’s national team — for $22 million from Chelsea.

This is important because 1) Pulisic is a very good player who can help them win, and 2) his nationality and popularity will multiply AC Milan’s growth in the United States.

Christian Pulisic has over 9 million social media followers across Instagram, TikTok, and Twitter. He was one of the core reasons why Borussia Dortmund’s U.S. Twitter account skyrocketed from 30,000 followers in 2018 to the 2.4 million followers it has today. And after just one week at AC Milan, Pulisic is already financially making a difference to the club.

AC Milan received 46 million impressions and 17 million video views on their social media posts related to Pulisic’s arrival at the club. The team store saw a 266% increase in sales, with the quantity sold in the U.S. increasing from 9% of the total to 43%. And 90% of all customized “Pulisic” match jerseys were sold in the United States.

AC Milan Retail Stats (since Pulisic signing)

• +266% increase in sales compared to the previous day

• American buyers represented 43% of all sales (up from 9%)

• 90% of the customized “Pulisic” match jerseys were sold in the US

• Pulisic jerseys represented 45% of all match jerseys sold since the announcement

And Christian Pulisic himself also benefited from the announcement, gaining 45,000 followers on Instagram within 24 hours.

These business decisions have already had a positive impact on AC Milan, too.

AC Milan is expected to bring in more than $420 million in revenue this year. That would be a 40% increase from the club’s 2022 revenue of $299 million. And they should finish the year with roughly $90 million in operating income, up from $11 million last year.

And with AC Milan now focused on growing its American fanbase, this might just be the beginning. Sports are an integral part of almost every society, and international leagues are realizing they can multiply enterprise value by building global fanbases.

So keep an eye out for AC Milan. They have the partners in place to make it happen — and they are quickly becoming one of America’s most popular football clubs.

If you enjoyed this breakdown, please consider sharing it with your friends!

I hope everyone has a great day. We’ll talk on Friday.

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Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week.

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