In a swift and surprising series of events, the Percassi family is no longer the majority shareholder of Atalanta. It was confirmed by the club on Saturday that a 55% stake in the club was sold to a group of American investors headed by Bain Capital co-Chairman Stephen Pagliuca. Both Antonio and Luca Percassi will still keep their 45% share of Atalanta, and also stay on in their current respective positions of Chairman and CEO.
Official details on the finals are either still unknown or unavailable, but Gazzetto dello Sport is estimating the club’s valuation was set between 400 and 500 million euros. Quite the jump up from the low seven figure value the Percassis purchased their home club for back in 2010! It is impossible to criticize the Percassis for cashing in on their original investment. The organic growth experienced under the their ownership tenure is extremely rare in European football, especially for a club with historically regional ties rather than national or continental ones.
But the outstanding question lingering in supporters’ minds is indeed an interesting one. With the Percassis no longer running the show with full autonomy, will all of Atalanta’s recent success be erased? Apprehensions should be assuaged given that both Antonio and Luca will still hold their positions, and their 45% stake in the club is still the largest percentage of ownership for an individual stakeholder. But when the dominoes begin to fall, it is justifiable to be concerned if this is just the beginning of their exit strategy.
Learning More About Atalanta’s New Owner
Rather than trying to predict the unknown with the Percassis perhaps there is more to glean by learning more about Atalanta’s new owner Stephen Pagliuca and to see what business ideologies overlap between the Italians and the American. Having Bain Capital co-Chairman attached to your title does little to inspire confidence among the populous. Since Bain Capital’s formation in 1984, the venture capital firm has been synonymous with the leveraged buyout business model. By purchasing a company in dire straits for below market value and loading it up with debt to help it get back on track – ultimately leading to a slow rise in market value for an eventual lucrative cash out through a private sale or a public offering. Its an incredibly risky, but potentially lucrative endeavor.
Knowing Bain’s history in the leveraged market space, including Pagliuca’s, why wouldn’t Atalanta be any different? The first and easiest rebuttal to this question is ‘don’t flatter yourself!’ Atalanta is a valuable entity in the European football landscape, but the profit potential through buyouts available to new potential owners dwarfs in comparison to what venture capital can gain in manufacturing, IT, technology, or any other non-sporting industry. For scale, Bain was one of several key players in the leveraged buyout of HCA Healthcare. At $33 billion it was the largest ever buyout in US history, and it has more than doubled in value since the original buyout in 2006, with a $76 billion market cap as of this writing.
This is the most extreme leveraged buyout case, but the principle still applies. If Bain had any desire to continue its leveraged buyout practices in sports, it would be a fools errand to look in Serie A. May England (hello Glazers!), but not Italy. Why waste time with Italian football and potential profits in the hundreds of millions when it has the capital to play in the deep end?
Rather, Atalanta fits in as a diverse piece company that with a little bit of cash injection may continue to generate organic profits. In fact, a lot of Bain’s new investment is going this route. As startups continue to drive innovation in the business landscape – hoping to be bought out by the Amazons and Microsoft of the world – angel investing seems to be kicking leveraged buy outs to the wayside. In fact Pagliuca explicitly stated this in an older interview, suggesting that venture firms are seeking a broad array of brands to develop a strong profit generating portfolio. He stated:
There’s a misnomer about private equity industry based on the 30-year-old trend that we get into companies to fix them by cutting costs and making money. Today, most companies are pretty well run and so you have to go with a thesis on how you can fundamentally grow and transform these companies into a better-growing company.
https://economictimes.indiatimes.com/industry/banking/finance/private-equity-is-all-about-growth-now-not-cost-cutting-stephen-pagliuca/articleshow/66020237.cms
Look at that! Everyone knows that Atalanta is the one of the best run clubs in all of Europe. To get on the radar of an individual that has similar business principles is frankly not all that surprising. Given Pagliuca’s excellent 20-year history with the Boston Celtics, it suggests that sport is considered an investment engine – just not one with the growth potential of some other industries.
A Push Forward for Atalanta
Through all of this news, it is easy for me to liken Atalanta to a hot-commodity start-up. The Percassis essentially started from scratch to build Atalanta into one of the best squads in Italy. At this junction, there may not be too much else the Percassis would have been able to do to springboard Atalanta into the next tier of European elites.
Like when Disney bought Pixar for $7 billion over a decade ago, it was the perfect move of synergy. Pixar basically got a blank check to let its creativity run limitless, and Disney got a piece of the profit generated by Pixar’s brilliance. Important in all of this was Pixar got board members at Disney and the creative freedom with little oversight from the fun police that often exist at soulless corporations. With the Percassis still at the helm, the club philosophy still will be in place. Antonio and Luca will be the perfect bridge between the Italian and American system and continue to offer their sage advice on what works and doesn’t work in Italy. Pagliuca brings additional cash to allow the Percassis ideas to more prominently flourish, and perhaps he has a few tricks up his sleeves to improve on the already extreme profitability of the club.
Cautious optimism is coming from my camp now. Let’s make sure not to fall into the easy trap of American investors = bad. Atalanta didn’t need outside investment to save the club. Instead additional investment may propel them to unforeseen heights. It’ll be a heck of a ride regardless! As always, Forza Dea!!!
