2MG Media | Bogarelli bounces back with big ambitions

  • 2MG seeks to secure private investment to fund major sports projects
  • Evolving media markets are providing fresh opportunities for premium rights-holders
  • ‘Different vision’ from that of Wanda Group contributed to Bogarelli’s departure from Infront

It is not an overstatement to say that Italian football is bankrolled by one company: the Infront Sports & Media agency, through its Infront Italy division. 

As media-rights adviser to the 20 clubs that make up Serie A, the agency guarantees €5.94bn ($6.89bn) over the six seasons from 2015-16 to 2020-21. It pays a further fee for the archive media rights to most Serie A clubs, which it then sells on to broadcasters. It has marketing rights deals with 14 clubs in Serie A and six in Serie B, in which it pays anything from €1m per season to €30m. The agency also advises the football federation on the sale of national team sponsorship rights, paying a minimum guarantee of €57m over the four seasons from 2014-15 to 2017-18. 

The man who led that investment strategy – Marco Bogarelli, the former president of Infront Italy – has found himself presented in the Italian media over the years as, at best, a Svengali figure pulling all of Calcio’s commercial strings, and at worst, a kind of sports marketing Mafioso with conflicts of interest at every turn.   

In the year between April 2016 and 2017, Bogarelli’s critics were having a field day. In April 2016, the Italian antitrust authority fined Infront €9.05m for ‘distorting competition’ in the sale of Serie A media rights for the period 2015-18. This April, the Milan prosecutor’s office called for Bogarelli and Infront colleague Giuseppe Ciocchetti to be arrested for their alleged part in a criminal conspiracy, following an investigation into the same auction.  

In November, when the two left Infront – their contracts terminated by “mutual agreement” with the agency – a career at the forefront of the industry appeared to be heading in an ignominious direction. However, in December 2016, a Lazio court overturned the antitrust ruling and quashed the fine. And in June this year, the Milan Review Tribunal ruled the men had no criminal case to answer.

“From there I was able to begin a new life in a sense,” Bogarelli tells SportBusiness International in the crowded non-exhibitors lounge at Sportel Monaco in October. The tribunal sentence helped enormously, he says, because “it re-established the things as they were, not how they had been presented by some sections of the media. That was an important moment. The ‘disintegration’ of the evidence was the word used by the judge, dismantling any hypothesis of criminal activity. It was strong language.”

New life begins

Most people will associate Bogarelli with two companies: Media Partners, the Milan-based agency he co-founded in 1995, and Infront, the Swiss agency which bought a majority stake in Media Partners in 2006. To see him listed as a Sportel delegate under the company name 2MG Media takes some getting used to. 

“At 2MG, I am engaged in the same thing I have been engaged in all my life: media and marketing,” he says. 

That will be any kind of media, including film and TV, but given his background there will inevitably be “lots of sport.” Initially, the big European markets will be his quarry, as he looks to build up a portfolio of clients which so far includes the third Italian football division, Serie C, a “French media group” and “a few” others that he says it’s too soon to identify.

2MG was founded in March, with Bogarelli holding 70 per cent of the company and Ciocchetti the remaining 30 per cent. They kept it below the radar because of the Milan investigation. Now Bogarelli’s in Monaco, very much open for business.

He is well aware that as a consultant at Sportel he is in good company, but insists that 2MG is nothing like the competition. “As an adviser, I have always brought financial resources,” he says. “An adviser which is just a cost… there’s a thousand of those; one that guarantees earnings is different. If you are a cost, but also a source of income, you’re different.” 

PICTURE: Bogarelli spearheaded the 'Infront/Serie A model' (Getty Images)

Changing market 

Showing people the money, not just the insight and ideas, is the company’s calling card. For want of a snappier term, it might be called the ‘Infront/Serie A model’, which was unique in the industry when Bogarelli pitched it to Serie A in 2008. He is convinced that with recent changes in technology, consumer behaviour and media market evolution, there has never been a better time for premium rights-holders to maximise the value of their assets while hedging against financial risk. 

“The value of the top sports properties continues to increase,” he argues, “even if there are those who maintain the market is reaching maturity. At the same time that the value has been growing, the way of doing business has changed. In the past, a content owner might have just two or three clients, the gatekeepers. But the days of gatekeepers are over. 

“Nowadays, you don’t need the network to be in touch with a consumer. You can provide content and goods directly to consumers, who choose the when and the how and can interrupt the service whenever they want. You can cut out costs that were the outcome of 20 years of working in a certain way”. 

Bogarelli views legacy pay-television platforms as “elephantine” businesses. “In the past, to be in pay-TV, you had to be simultaneously broadcaster, producer, distributor of channels, buyer of rights, seller of advertising – too many hats. You end up with lots of staff and big fixed costs”. 

These huge fixed costs are one reason why rights-holders don’t secure the true value of their content, he suggests. He points out that while Italy’s two major pay-television platforms, Sky Italia and Mediaset Premium, have a combined turnover of about €3.5bn ($4.1bn), they only pay €945m per season for Serie A, the ‘killer application’ which keeps both businesses afloat. 

He is convinced that by operating its own channel and distributing it non-exclusively across all platforms, Serie A would be far better off. “I’m not saying they would get all of that €3.5bn, but certainly a lot more,” he says. “When the broadcast market is no longer paying you a premium, it makes sense to take control of your own destiny. Once, you had just one or two platforms to sell to, now they are everywhere. If you wander around Sportel, one in three people you meet has an OTT platform.”

PICTURE: Marco Bogarelli when he was at Infront (Getty Images)

Finding funding 

A Serie A channel is one project that 2MG will not be working on just now, however. Bogarelli has a non-compete pact with Infront until the end of this year, by which time the rights for the 2018-21 cycle will almost certainly have been sold. But he doesn’t rule out doing similar projects with other football leagues. 

“What a content producer needs is to be in a position in the long term not to have to take commercial risk,” he says. “A federation or league has to guarantee its members certain amounts of money. They have costs which must be covered. If a club signs a player, it’s on a contract for four or five years. A league can’t be entrepreneurial. You could earn €500m or you could lose €50m. You can’t afford that.”

That’s where the financial markets come in. “Money is cheaper than ever,” he says. “There is an excess of liquidity. I know many people that want to invest, at every level.” 

These putative investors include wealthy families, pension funds and private equity houses. “We bring the content owner into contact with the world of finance,” he adds. “It means creating a product that is appetising for the financial markets, so they are prepared to take a calculated risk on the earnings potential of the property.”

With a major league or tournament, the projected income that would need to be underwritten could be €1bn or €1.5bn per season, he points out. “Over 10 years, that’s €15bn,” he explains. “Where’s the sports marketing agency that will guarantee €15bn? But the financial markets can guarantee it, either through one major entity or several smaller ones.”  

PICTURE: Marco Bogarelli (Getty Images)

Differing visions

Despite his evident enthusiasm for the adventure ahead, it’s hard to escape the feeling that Bogarelli never wanted to leave Infront Italy. So had it not been for the criminal investigation, would he still be there, presiding over the current Serie A rights sales process? For the first time in the afternoon, a question is met with a pause. And a wry smile. 

“Look… with the benefit of hindsight,” he continues, “there were three different situations which contributed. For two years or more, a large part of the media was attacking me and it had become quite complicated. I also had a different strategic vision from that of the major shareholder [China’s Wanda Group, which bought Infront in 2015]. And I felt that the role of adviser needed a new paradigm. These three things pushed me to make that decision.”

Calling the shots, without answering to a board, will appeal to Bogarelli, who says he has “always been an entrepreneur at heart”. He points out, however, that in the early days of Infront, he was given pretty much free rein over the Italian operation, which held a large portfolio of skiing rights that Media Partners had built up. That freedom was largely due to the late Robert Louis-Dreyfus, who led Infront’s takeover of Media Partners and recognised something of a kindred spirit in Bogarelli.  

After private equity house Bridgepoint Capital bought Infront in 2011 for €600m, things became a little more “bureaucratic” but even then, Bogarelli insists, he was more of a businessman than a manager. Four years later, with Infront Italy now contributing over €250m to the company’s €800m turnover, Wanda paid Bridgepoint $1.2bn for Infront. The deal came in China’s “great moment of splendour” in the sports industry, Bogarelli says. Government intervention since then has replaced untrammelled expansion with something much more cautious and calculated. 

Nevertheless, if it is not the Chinese, someone else will be looking to invest in top sport, because media companies increasingly have to have it to survive, and Bogarelli will be on the lookout for ways to get into that value chain. So where will his new advisory paradigm take him next? In Italy, the smart money says it will be close to home. That Serie A non-compete pact with Infront has less than two months to run. Watch this space.  

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