How seamless in-stadia engagements can revive the fortunes of Milan’s San Siro…

The San Siro remains one of the most iconic and majestic sporting venues in the world, but now AC Milan and Inter Milan face some big decisions for its future on whether to renovate the stadium or build a new arena.

It’s a hugely political issue as the San Siro, officially renamed the Giuseppe Meazza Stadium in 1980, is owned by the Municipality of Milan with the two clubs paying an equal annual fee to play there, overall it’s a situation that impersonates tenants renting a house.

The local government in Milan  take responsibility for the cost of any improvements, while the clubs manage the stadium.

If the clubs propose improvements which are accepted , then the cost of this is subtracted from the rental fee, this is done partially or for the whole cost of any maintenance or improvements.

Although public ownership has often resulted in a lack of investment in stadiums, with little incentive for clubs to invest in them, a longstanding problem in Italian football.

In November last year, AC and Inter Milan announced that they had signed a Memorandum of Understanding that revealed both parties are willing to work together on a new modern state-of-the-art stadium.

The clubs believe that a shared stadium is in their best interests, and are looking to renovate the San Siro that would reduce capacity and introduce more commercial space.

Alternatively, as has been discussed with the Mayor of Milan last year, there is the option of redevelopment of an area around the San Siro.

Currently its unclear what is desired by both clubs, according to the Municipality of Milan, a spokesperson said:  “At this moment in time, we have not been presented with plans for a new stadium project, we hope that Inter and Milan will soon present it to the Municipality.”

“We only know that the two clubs want to realize the new stadium in the San Siro district, but we don’t know yet if they want to upgrade the San Siro or to build a new stadium.”

The powers that be at AC Milan and Inter Milan are now left with difficult choices to make, over what would be the most successful option that is open to them.

Modernising the San Siro in reducing the capacity would be very expensive, despite the history and charm of the stadium as its stands, the structure is very limiting from a construction point of view.

It’s practically impossible to create more internal and covered space, because it’s a landmark building. There is not even enough leg room for supporters who sit at the stadium between the rows of seats.

In contrast, for example the Emirates Stadium is lower and has plenty of available space for commercial activities.

Also, any construction would have to be completed in the summertime, as there is no alternative stadium in Milan, and it’s the type of project that can overrun as witnessed at Tottenham this season.

In terms of hospitality services, what is on offer is relatively poor, with no space for amenities such as sit down fine dining. Both clubs seem determined to remain partners, whichever decision is made on the fate of the San Siro.

The actual usage of any stadium with only one football match taking place is minimal, only about one per cent in fact of total time available, so from the point of asset utilization sharing a stadium does makes sense.

However going it alone would have its advantages for two famous football clubs on a global scale that are steeped in history and success, with ten European Cup and Champions League victories between them.

Owning your own stadium enables a club to personalise it to greater effect than the shared option, and two clubs can have different ideas on how to utilise commercial space.

It’s a situation that is made more difficult as in Milan businesses choose to pay for hospitality for one club or another, effectively meaning that AC and Inter Milan are in competition, regardless of whether a prospective client is a fan of one club or the other.

Alternating games for both clubs is also cumbersome, as it requires a make-over each week, and for games in midweek such as Champions League fixtures.

Naming rights is one of the most lucrative avenues of sponsorship revenue,  alongside technical and shirt sponsorship.

Any potential sponsorship partners willing to pay for the naming rights, are likely to find themselves at loggerheads with existing sponsorship partners at either club.

Furthermore, the value you can get for the naming rights is limited when compared to where there is one owner of a stadium, as it’s difficult to alternate the name used for San Siro, and of any fee for the naming rights for both clubs would have to be evenly split.

David Wright, managing director of Soccerex, a football industry events and market insight solutions company, reflected: “The San Siro is a stand out football venue, so I can understand the desire to renovate, but as Juventus have shown with their move to the Juventus Stadium (now the Allianz Stadium), from the Stadio Delle Alpi, that moving to a new home, one geared to modern commercial reality of football, can bring significant financial benefits. “

“Juventus have experienced this not just through the Allianz naming rights deal, but also through improved ticket and hospitality sales.”

Fan engagement using new technologies can also play a key part in advancing the hospitality sector of a new stadium.

“This ranges from the use of specific stadium mobile apps to RFID technology that can improve the retail and catering experiences, all of which can be used to better understand each fans match day experience, and allow the clubs to better service their needs going forward.” Wright added.

“Another consideration is the wifi infrastructure, something that is integral to the fan’s digital experience, this can be factored into designs, another advantage of going for a new build.”

If the Milan clubs decided to go ahead with their own new stadiums, the capital to pay for construction can be funded by project finance, with the debts not being placed on the clubs’ books.

It would be a financially viable project as AC Milan and Inter Milan are two of the best supported clubs in Italy, and this season have attracted average gates of just over 54,000, and just under 61,000 respectively.

Although such a long term decision can be hard to carry out due to the sometimes drastic changing nature of football.

For example with the ownership of a club, as we have seen with AC Milan as United States based hedge fund Elliott Management assumed control of the club in July last year, after Chinese businessman Li Hongyong failed to pay back loans from the hedge fund after buying the club from Silvio Berlusconi.

Whichever choice is made, the football world will be hoping that in one way or another, the majesty of the San Siro is preserved.