Don’t we all love finance? If our recent confessional on the last episode of Across the Romaverse didn’t make it clear enough, we do our best to pretend like we understand the ins-and-outs of what it takes to run a multi-billion euro operation in today’s footballing world. Which is why I find myself buried among the financial pages at the close of the Italian stock market today, waiting for Calcio e Finanza to report that The Friedkin Group’s initial public offer has almost entirely been rejected by Roma’s current shareholders.
With the deadline on accepting the Friedkin IPO having officially expired today, Roma’s club owners have only absorbed a further 1.674% of public shares into their grasp, now making the Friedkin Group the 88.2% majority shareholder of A.S. Roma; still some way off the amount of control they’d need to take Roma private and wave goodbye to public press releases for good. But for the notoriously reticent Friedkins, all is not lost, as there was always a Plan B written there way back in the summer.
Eeking Out the Percentages
When the Friedkins first became the majority shareholder of A.S. Roma, they paid a handsome sum directly to James Pallotta in order to relieve him of 83.3% private shares in the club, plus 3.3% of public A.S. Roma shares that Pallotta’s group owned on the stock market. That meant a 86.6% majority share for The Friedkin Group straight out of the gate, but the Friedkins wasted no time in letting the Italian Consob (the market watchdog) know there were bigger ambitions.
The Friedkins openly explored the idea of taking Roma off the stock market entirely, in a move that would leave the club’s owners free to make whatever moves they wanted without having to declare the nitty gritty details in public. For that final piece of the takeover to come true, Dan Friedkin needed to reach at least a 95% majority shareholding in order to force the hand of the Borsa Italiana in de-listing the club’s shares. Friedkin’s Plan A was to offer Roma’s public shareholders the very same price—€0.1165 a share—that James Pallotta had accepted for handing over his piece of the club, all the way back in the summer.
That’s a price that, earlier today, I assume you could accept over your mobile phone, if you happen to trade in A.S. Roma shares on somewhere like eToro (not a plug - I have never used a trading app. You get better odds in poker). But there was one problem with Friedkin’s Plan A: Their €0.1165-per-share offer was lower than any price at which Roma have been historically traded on the market, ever since the club first went public at the turn of the millennium.
If you’d received that price on your mobile app, you’d have been in good company if you’d had mandato i Friedkin a quel paese, just like most shareholders did to the Friedkins’ initial public offer today.
What Next for the Friedkin Group’s Bid to Go Private?
The Friedkins had made it known that they had a second road to go down, should today’s events have transpired exactly like they have done. Roma’s owners will now look at the option of merging the Italian side of A.S. Roma’s company structure (remember that the top-level company still resides, as it did in James Pallotta’s time, in Delaware) with another privately-owned company within The Friedkin Group’s portfolio.
The merger option only makes sense—in the Friedkins’ own written words—if the costs of doing so prove less expensive than the offer needed to convince Roma’s public shareholders to hand over what’s left of the club on the stock market. So it could be that Dan Friedkin simply raises his offer to buy the shares on the Borsa, but a merger has to be a real consideration by now.
The end result of a merger would be that Roma’s public shareholders see their 11.8% collective ownership in the club decrease, and the Friedkins would have walked an alternate road to the 95% ownership target they have in their sights.
Roma, as a competitive football club, could really do with that target being achieved now more than ever.
With football clubs hemorrhaging money and expenses all over the panorama of the sport right now, and with Roma itself having declared the second-worst annual losses ever to historically befall any Serie A club this past 2019/20 season, we don’t need to spell out how the Friedkins being able to move in silence, without having to make public to competitors every little detail of their cash injections into the club, would benefit Roma’s survival and competitiveness on all fronts.