Welcome back to Football Benchmark, and to Andrea Sartori, Global Head of Sports of KPMG. Hi Luca! Today, we will talk about a very topical issue, based on the data provided by KPMG, and on the latest news regarding San Siro stadium, the home of both AC Milan and Inter Milan – the question is whether to build a new stadium, or to renovate the current one. We will try to understand the key metrics, both the financial and the technical parameters of the current stadium. We will also try to understand, which is the better option: to renovate it or to build a completely new home ground. In order to understand how Inter and Milan should proceed, if they agree to work together in the future, too on their stadium, we should estimate the appropriate capacity. In order to do so, you have collected the historical attendance figures for both clubs from the past several years. You started from the 2002/2003 season. Exactly, we have taken into consideration the past 16 Serie A seasons, We can see that in the first part of this period (2002-2010), the average attendance was almost 57 000 spectators for Milan and 55 000 for Inter. We should also take into consideration that in this period, from the 2002/03 to the 2009/10 season (when Inter won the “triplete”), the two clubs of Milan won 6 out of 8 domestic championships. Then, in the following period (2010-2018), they both faced a massive decrease. Indeed, Milan’s average attendance decreased by 12 500 spectators, while Inter’s average decrease was 7 500 spectators less. It is also true that in the last season both clubs have registered positive results again, also because Inter joined the Champions League again and Milan had a positive season, after all. Yes, we can see that the worst time for both teams was the 2014/15 season, then they started to perform better, season by season. We have the figures until the previous season, but I think that they are performing well also in the current one. On the next slide, you have showcased how many matches they played in front of more than 60 000 spectators. The new San Siro is supposed to have a capacity of around 60 000 seats and so we want to try to understand how many sold-out matches the new stadium could host. Yes, we have analysed all the matches that Inter and Milan played in San Siro during those 16 seasons. Inter can boast more than 60 000 spectators at just one in every five home matches, while Milan at one match out of four. In other words, in total, during the period analysed, Milan played 75 games with more than 60 000 spectators, while Inter 64 matches. We can also spot a decrease from the first 8 seasons (until Inter’s “triplete”) to the next 8 years. The reason is that attendance is related to sporting performance, obviously. Usually, the ties attracting more than 60 000 spectators are the derby, and the ones against Juventus and Roma. We should also highlight a positive trend in the last season: Milan and Inter registered more than 60 000 spectators 5 and 6 times, respectively. So, better than the average, right? Exactly. Well, so 60 000 seats can be the adequate capacity? We have just seen the figures regarding the Serie A, now let’s see attendance at the Champions League matches. Maybe the Champions League matches are more appealing, aren’t they? Yes, this is true, but only in the case of very big matches. I was a little surprised when I saw this chart, because the averages are quite strange. Let’s see the three most successful seasons for both clubs: in these editions, Milan won the Champions League twice, and Inter once. It is quite interesting to note that for Milan the season with the highest average attendance was 2010/2011, when they bought Ibrahimovic and were later eliminated in the round of 16 against Tottenham. We can see that, in the case of Milan, the average attendances grew from 47 400 in the 2006/2007 season to 73 500 in 2010/2011. On the other hand, on average, Inter registered 55/56 000 spectators up to 65 000, when they won the “triplete”. So, we can say that a capacity of 60 000 can be reasonable for both Inter and Milan. Yes, also because when we build a new stadium, we should not consider the spikes, but estimate average attendance with 20% less then the best registered attendance. This is why we have showcased how many games would exceed the expected capacity of 60 000. Now, considering that Milan registered one out of four matches and Inter one out of five with more than 60 000 spectators in the last 16 seasons, I would say that the capacity is adequate. And this is also a reasonable capacity, if they may want to use the stadium to host concerts and other sports events. We emphasized many times the importance of the ownership of your stadium, especially with regards to matchday revenues. So, in the next infographic we compared the performances of some clubs with an owned stadium, with Inter and Milan. The difference between, for example, Paris Saint-Germain and the two clubs of Milan is huge. Not only from a revenue per seat point of view, but also if we consider the matchday revenues and the utilisation rates: both Italian clubs can improve a lot. Yes, for instance, if we consider the revenue per seat, as you said, PSG earn four times more than Inter and five times more than Milan. If we take matchday revenues, Barcelona are the club that earn most, also due to their stadium capacity. In fact, Barcelona’s matchday revenue in the past season was over EUR 164 M, while Inter and Milan earn EUR 37 and 35 M respectively. Does this include revenues from stadium museum tickets and merchandising? No, matchday revenues comprise of income from match tickets and the food and beverage sold during the game. The stadium museum revenues can be considered either as matchday or as commercial revenues. Let’s see now the utilisation rate, which is the percentage of spectators in relation to the capacity of the ground. Maybe, we should compare San Siro to the Juventus stadium. We can see here that Juventus, with a much smaller stadium (41 500 seats) than San Siro (80 000 seats), earn EUR 20 M more than Inter. We have also analysed the costs of building a new stadium, taking into consideration the latest stadia built with more than 30 000 seats. The ones labeled with the asterisk, have been built or renewed for major events, such as European and World competitions or the Olympic games. Also, we should say that in this chart we have not included the costs of land and external facilities. What we have included is just the cost to build or renew the stadium. So the costs regarding external facilities, such as the parking lots and the land is excluded as well. We can see that these stadia have an average capacity of almost 50 000 seats and the development cost per seat is around EUR 7 000. So, these figures can be used when planning a new San Siro? Well, the reported figures of the new San Siro are these: a capacity of 60 000 seats and a total cost of EUR 600 M. This amount, I suppose, also includes the external infrastructures. Now, if we consider that some of the figures we have showcased before refer to 5-6 years ago, I would say that, in the case of a new San Siro, the cost might be around EUR 8 000 per seat, plus the external infrastructures. Now, we arrived to the crux of the matter. Indeed, the fact that Inter and Milan could decide to build a new stadium together is something really unique, at least in Europe: it is really uncommon to see two clubs of the same city have a joint project for a common stadium. Let’s see the pros and cons of such a project. First I would say that this project is really meaningful. For two main reasons: first of all, these clubs have been sharing the same stadium for long. And this could be almost impossible, for example, in London with Chelsea and Tottenham. Then, the second main reason is that the number of supporters is really similar. Indeed, as we have seen, both clubs have registered almost the same average attendance in the previous 16 years in the Serie A. These two reasons are very important. And then there are also some pros related to the financial side of the operation. Indeed, they have the chance to share the building costs and the management costs, but both clubs have their own revenues. These are the pros. On the other hand, the cons are the following: the clubs would have to share the stadium naming rights. Then there are other kinds of limitation, for example, the stadium cannot have the colors of only one club, the clubs must make some compromises. Finally, the clubs could face more operational problems, because they would have to alternate management teams every week. In any case, I would say that the pros to build a shared stadium are more than the cons from an economic point of view, especially, if we consider the current financial situation of the two clubs. To sum up, I guess that KPMG has not taken a position yet about the possibility to renovate San Siro or to build a new stadium, Andrea, what do you prefer personally? Well, I would like to see San Siro renewed, from a romantic point of view, but I can understand why the two clubs would like to build a new home ground. Furthermore, having both the Inter and Milan museums in the same arena would be really attractive. Well, thank you so much, and thank you everyone for following us, Football Benchmark will be on air again next week!