American Pallotta out to turn AS Roma into a 21st-century empire
AS Roma's big ambitions (contd.)
James Pallotta, a 55-year-old investor from Boston, stood in a hotel elevator next to Junior Tallo, a 20-year old forward from Ivory Coast wearing earbuds, and asked the younger man what he was listening to.
Tallo replied, but his thick accent left Pallotta confused for a second. The American billionaire leaned in, took a glance at the player's iPod and said, "Oh, Lil Wayne." Pallotta then seamlessly offered up a lyric from the rapper's hit, 'Love Me.'
"I went to see Jay-Z on Sunday night," Pallotta continued. "I'll send you my playlist."
Speaking to SI.com a few moments later, AS Roma's majority owner and president explained his effort to bond with the young Ivorian.
"It's a team. You're a family. It's not indentured servitude," Pallotta said. "What a lot of people lose sight of with these teams, is that they're kids. And not only are they kids, but they just moved from Brazil or Croatia or Argentina, and they're in Rome. You have to mentor them and have them feel that they're a part of the family."
A first-generation American reared by Italian parents in Boston's famous North End, which he called "the most Italian section in the United States," Pallotta is accustomed to straddling cultures. Now he's straddling continents. He is the only foreign owner in Serie A, and that's taken some getting used to in a country so proud and protective of both its identity and its calcio.
Last week, in fact, Italian Football Federation president Giancarlo Abete was quoted saying that while interest from foreign investors was flattering, "It makes us sad, as I'd love for all the legendary families who made Italian football great to remain in charge of their teams."
But it's a global sport, and Pallotta's path to success requires abandoning past provincialism. Roma typically has featured a cosmopolitan roster (a French coach with a Spanish name currently manages a team comprising players from up to a dozen different countries on four continents) but like many of its Serie A rivals, it was slower to embrace soccer's post-modern trappings.
At the highest echelon of the European game, a global brand no longer is a luxury. It's a necessity.
"Unless you get into the 21st century in terms of a stadium, social media, branding, sponsorships, all that type of stuff, you're never going to compete at those top levels. You're just not," Pallotta said. "It's just a fact of life in sports."
So 1,500 years after the empire fell, Rome is feeling the itch. Pallotta wants more than the Scudetto. He wants AS Roma to conquer the world and his native U.S. -- once a soccer backwater -- represents a pivotal component of that strategy. The Giallorossi have forged partnerships with well-known American companies like Disney and Nike, are making inroads into youth development and just completed a second consecutive summer tour of the U.S. and Canada, which included an appearance in the July 31 MLS All-Star game. And they're just getting started.
This isn't Pallotta's first foray into sports ownership. In 2002 he purchased a small stake in his beloved Boston Celtics, which at that point was in the midst of the longest championship drought in team history.
Now a co-managing director at Pallotta's investment, management and marketing firm, Raptor Group, Sean Barror used to work on corporate sales and business development for the NBA franchise.
"When Jim's group bought in, the team was a bit of a shambles. Strong brand, good fan base but had fallen on hard times," Barror told SI.com. "From a business standpoint, our mantra for the first there years was that we had to raise the floor before we raised the ceiling. You have to build the right foundation around your business before your realize its true value."
The Celtics were champions in 2008 and nearly won again two years later.
"We've been quietly raising the floor [at Roma]," said Barror, who now handles the club's marketing and sponsorship deals from Raptor's Boston office. "When we have that success on the pitch, we anticipate the ceiling will be that much higher."
Success on the pitch hasn't come easy, despite Roma's relative popularity. Since three area clubs united to form Associazione Sportiva Roma in 1927 it has claimed just three Serie A titles (one in the past 30 years) and one continental trophy -- a predecessor to the UEFA Europa League called the Inter-Cities Fairs Cup back in 1961. The Giallorossi have been consistently competitive, winning nine Coppa Italia titles, finishing as Serie A runner-up 11 times and falling to Liverpool on penalty kicks in the 1984 European Cup final. But for the most part, they've played a distant second fiddle to the powerhouse clubs from Milan and Torino in both silverware and support (not to mention the big-name European giants from England and Spain). To Romans, that's frustrating. To Pallotta, it represented a classic buy-low opportunity.
"I think Roma is the most undervalued sports team and brand in the world," he said. "If we do it right, Roma is worth multi-billions with the whole thing we want to put together. It's an incredible opportunity."
The club no longer is considered one of the sport's most valuable by Forbes, which revised its list of the top 20 soccer teams in April. Real Madrid leads the way at $3.3 billion and Newcastle United, valued at $263 million, is 20th.
That's a steep climb, but Pallotta has experience building value. He rose from modest means to create and then manage an investment portfolio worth some $12 billion. Several years ago, as he began moving beyond hedge funds and diversifying his business, Pallotta developed an interest in Roma after financier George Soros launched a bid for the club. It eventually fell through. Pallotta wasn't much of a soccer fan, but he found the relatively low price and the potential power of Roma's brand "kind of interesting".
In 2011, fellow Bostonian Tom DiBenedetto cobbled together a consortium to buy out the Sensi family, which had controlled AS Roma since the early 1990s. Pallotta, perhaps feeling the tug of his Italian roots, joined in as a "passive investor" as DiBenedetto and his colleagues put up a reported $89 million for two-thirds of the club. UniCredit, an Italian bank, held the remainder.
Last year, when it was time for a capital injection, Pallotta assumed a controlling stake and became Roma's president. He told SI.com that his group has spent around $160 million to acquire its share and pay off debt, contracts and other legacy costs. It eventually intends to buy out UniCredit and take 100 percent of the club.
Meanwhile, Pallotta, Raptor and his fellow investors already have started to leverage Rome's branding potential. To borrow Barror's appropriate play on words, they're all firm believers that the capital, along with Serie A, is due a soccer "renaissance."
Said Pallotta, "Thirty million-plus tourists, thousands of years of history, as passionate a fan base as there is, I think, anywhere. It's a great, undervalued opportunity to create, with a new stadium, over time, one of the great teams in the world."
The most visible and symbolic change this season is the club's new logo. The traditional 'ASR' monogram, which featured below the famous image of the Capitoline Wolf, is no more. In its place is the word 'ROMA', in a font that appears chiseled out of marble, along with the club's founding year.
"Most people around the world you speak to don't either understand what AS stands for and second, a lot of people would actually say to me 'How is AC Roma doing?'," Pallotta explained.
Milan casts a long shadow.
"It's Rome that you're branding," he said. "Having 'Roma' there expands the brand potential exponentially."
Naturally, the alteration prompted protests. Posters reading "No Al Nuovo Stemma" -- "No to the new logo" -- were plastered around the club's Trigoria training facility last month.
Rome isn't the sort of city that turns its back on tradition. But the old way of doing things is part of the reason the club hasn't reached its potential. That devotion to the way it's always been, and the accompanying inertia, has resulted in Serie A's fall from the summit. The circuit was ranked Europe's best throughout the 1990s. Last year it slipped to fourth in the UEFA table, losing a Champions League spot in the process. Accusations (or even proof) of match fixing and incidents of violence and racism now seem to hit the headlines as frequently as a final score.
"I think it's just a question of in many cases, not keeping up with the times. In effect, not keeping up with what's going on in sports," Pallotta said.
Barror claimed that Serie A's slide, "Is a direct result of lacking commitment to infrastructure projects in the last 20 years."
Juventus is the only Serie A club that owns its stadium. It is one of two Italian teams (AC Milan is the other) that was among the world's top 10 in revenue generation in 2011-12, according to Deloitte. But in match-day turnover, Milan and Juve rank ninth and 10th, respectively, among that top 10. They each earned around a quarter of what Real Madrid, Barcelona, Manchester United and Arsenal pulled in.
Italian stadiums aren't lucrative. They lack modern, revenue-generating amenities. They're also not safe, which has added to the list of deterrents.
"You put people in cages, they're going to act like animals. That's just how it works," Barror said. "You don't have proper egress and entrance and access, ways into the stadium, dealing with the away side and home side, security, how you screen people coming through. It's very haphazard."
Roma will shift the paradigm. It's been sharing the cavernous Stadio Olimpico with rival SS Lazio for 60 years. But soon the awkward bedfellows will part ways. Pallotta has led an effort to build a privately financed facility seating around 60,000 spectators at Tor di Valle, located near the Tiber River about halfway between downtown Rome and the airport in Fiumicino. The club hopes to open the stadium in 2016 and the president said he envisions an adjacent retail and entertainment complex -- another very American amenity -- that will transform the surrounding area. His model is L.A. Live, which has profoundly altered the cityscape near the Staples Center.
Roma's home-front initiatives also include a ramp-up in its social media presence, which Pallotta described as yet another critical element of the modern sports industry. From Tumblr and Instagram to the online vote on the club's third jersey and the tens of thousands of surveys the team has conducted regarding the new stadium, "There's no question that what we're doing now in social media most teams weren't or haven't been doing."
Pallotta is an investor in Bedrocket Media Ventures, a New York firm that helped Major League Soccer launch its KickTV YouTube channel. He hopes to turn the club's analog television property into a similar sort of platform, which will spread the brand far beyond Milan or Madrid. Meanwhile, Roma is forging relationships with sports concerns and potential partners throughout the world through Raptor's marketing and technology consulting business.
While Roma's fans are learning to adapt, the players have taken notice. Speaking before the All-Star game, which Roma won easily, 3-1, over the MLS select squad, midfielder Michael Bradley lauded management's vision.
"The first thing that you see from Mr. Pallotta and the America owners is their enthusiasm, their drive, their commitment to build something ... to grow something that can really be something special in the world of European football," the Roma and U.S. star said here in Kansas City. "As players, you want to play at a club where there's big ambition. You want to be at place where everybody -- from the other players, the coaches, the members of the club, the president -- are all striving to build something. They're all striving to win something. So I think every one of us recognizes that and we're all excited to be a part."
Along with Pallotta, Bradley is the most obvious bridge between Roma and the U.S. and if the 26-year-old's career trajectory remains consistent, he very well may help the Giallorossi return to the Champions League.
But beyond Bradley are millions more Americans who Pallotta, Barror and their colleagues believe are crucial to the cause. This truly is modern football, where a storied European club representing one of the oldest, greatest cities in the world needs the U.S. to help fuel its ascent.
"Before we played Liverpool last year at Fenway Park, the day before we flew over we tweeted and said we were going to open up the stadium and 19,000 people showed up for practice," Pallotta said. "I think European football has tremendous growth opportunities in the United States. Crazy opportunities. Our surveys will say it all day long. College kids and that age group, a little younger through college to the late 20s, right at the top of the list of their viewing habits in sports, European football is right up there No. 1 or No. 2 in a lot of major cities."
The major English Premier League clubs and the Spanish duopoloy of Barcelona and Madrid remain the European game's big brands in the U.S. But through diligence, creativity and a few carefully crafted alliances, Raptor aims to position Roma alongside them.
"We understand that most fans are going to have their MLS team and that's great. That's good for us, that sort of connection with the sport. Then we're okay with being their second-favorite team," Barror said. "I think that's a great goal and I think any marketplace we go in, we have to have that same authenticity. What we don't want to do is the smash and grab -- play a friendly, grab our money and leave nothing behind."
The 10-year deal with Nike starts in the summer of 2014. Roma is "only one of four or five clubs that have the kind of structure in terms of the upsides that we have," with the apparel manufacturer, Pallotta said.
Barror explained it's "more than just a kit deal. We're actually in business together, creating a global retail and wholesale distribution network." That means Roma gear will be front and center from Indiana to Indonesia.
The wolf also will make an appearance at the Magic Kingdom. Last winter was the first of seven that Roma will spend in Orlando training at the ESPN Wide World of Sports Complex. Bradley and his teammates will train near and perhaps even among a legion of youth players participating in camps or the annual Disney Soccer Showcase. In the future, Roma's under-20 team might practice in Florida. Roma coaches could run camps or clinics. Meanwhile, T-shirts featuring Mickey Mouse smiling in front of a new stadium in Tor Di Valle surely will be on sale soon.
"How many people go through Disney World alone, like 50 million? It's a crazy number per year," Pallotta said. "If you have kids, first and foremost they're seeing Disney associated with Roma and our Nike relationship, you're kind of growing a lot of these fans early."
Barror said Orlando "will be the base camp for everything we do out of the Americas. ... The idea is to create a model there and then sort of replicate in different cities around the U.S. It's in the nascent stages. To have a youth soccer component, fan development and player development. The other part of that is creating camps, teams and academies that teach a certain brand of soccer and expose kids over here to AS Roma in the context of playing the sport, not just attending a match."
Back in Boston, Raptor's Alex Zecca already is digging deeper into American youth soccer's day-to-day. The securities trader and former college player is overseeing the partnership between Roma and Global Premier Soccer, an organization that runs teams, tournaments and camps for more than 100,000 players from Maine to Florida.
Eventually, GPS teams will wear Roma colors, GPS coaches will learn from their Roma counterparts and top players will be identified, groomed and perhaps invited to Italy to train. Meanwhile, Roma and GPS already have partnered on an initiative to bring year-round soccer to underprivileged urban areas where the sport has struggled to gain a foothold.
Zecca said that he intends to replicate Roma's relationship with GPS with other youth clubs around the country as well as in places like Brazil and South Africa.
"We're going to take them under our umbrella and there's no limit to how many we can do," said Zecca, a New Jersey native whose daughter Maria is a member of Italy's under-19 women's national team. "We're going to transport our philosophies, our ideals and our methods to these clubs, train the coaches and have a direct link right to our club, and we're going to do this all around the world."
At the moment, the Curva Sud supporters who create such clamor and color at the Olimpico surely couldn't care less about Disney or a program for needy kids in Massachusetts. They're restless. Roma is about to endure its third consecutive season without Champions League football and its second straight with no European competition at all. The new coach, Rudi Garcia, is the club's third manager since Pallotta took charge last year. Native son and Giallorossi talisman Francesco Totti is running out of time. He'll turn 37 next month.
"The fans get a little frustrated and I probably get more frustrated than anybody," Pallotta said. "I think I'm more competitive than the fans are. But I also understand that it's a project, like the Celtics, that takes time."
Roma is expected to compete immediately for a spot in Europe and may not be too far away from an assault on the Scudetto. But there's ample floor raising to do before it can challenge the likes of Barcelona and Bayern. So Pallotta and his team will keep one eye on the Serie A standings and the other on creating the sort of assets and connections that are the foundation of a 21st-century sports empire. Efforts in the new world already are bearing fruit.
"When we called a year and a half ago to MLS and said 'Hey, we'd love to be the All-Star opponent,' there was a little silence on the other end. I don't know the reason, but there was a little silence," Pallotta said.
MLS had invited an English Premier League club to participate in seven of the previous eight games (the eighth was Celtic FC). The message was clear -- if you weren't Premier League, you were off the radar.
"This year, the pleasant surprise was we were called about three months or so again," Pallotta said. "They said, "Hey, we'd love you to be the MLS opponent in KC,' and we were like, 'Done.'"