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00:00Welcome on Classy ABC, Gerry Cardenelli, thanks for taking the time.
00:03Great to be here.
00:04So the moment has finally come and since the beginning you put the new stadium as a priority.
00:11What does this moment mean to you and for the project?
00:14Well look, it's been a long time coming.
00:16We've owned the club for four years and we really started this project four years ago
00:20because we knew that to bring AC Milan back to where we believe it should be,
00:25which is the top of Serie A, the top in European competition,
00:29it needs to transform everything that it touches.
00:32The live event, the experience for the fans, the infrastructure for the players,
00:37you know, this all needs to be renovated and rejuvenated for current time.
00:43And, you know, we have a tremendous amount of history and culture with San Siro
00:47that we're very respectful of.
00:49The goal is to really bring AC Milan back.
00:53If we want the stadium to be an homage to the history and the culture and the legacy of AC
00:59Milan
00:59as one of the best and biggest brands in sport, let alone football,
01:04then the infrastructure and the new San Siro needs to keep pace.
01:08And that's what this has been about from day one.
01:10Yeah, and the stadium is much more than a stadium as a part of the identity and history of Milan.
01:16How can you protect the heritage with bringing this into the future?
01:20You know, it's a great question. We think about that a lot.
01:22At the end of the day, you know, there's infrastructure,
01:24and then there's the programming of that infrastructure.
01:29There's hardware and there's software.
01:31The answer to your question ultimately really revolves around the software.
01:35The software is the people. It's the fan base.
01:38It's that electricity.
01:40That electricity that even as an American who does this for a living
01:44and has been around American sport at the highest level.
01:47You know, when you go to San Siro and you experience that with the fans,
01:52that is like nothing I've ever experienced.
01:54And I think any American coming over would say that.
01:57Now, as Americans, we can bring something to that here,
02:00but it only works if we're respectful of the heritage that you're talking about.
02:05And so we think a lot about it, and, you know, we want to engage, you know,
02:10with the community and understand better, you know, what is important.
02:13Obviously, there's a history here, and we're going to try to, you know,
02:15live up to the moniker for San Siro, right?
02:19It's the La Scala de Calcio.
02:21Well, Jerry, you say this is going to be a sports and entertainment platform.
02:26Where do you draw the line to clean this?
02:29Yeah, again, you know, sports and entertainment increasingly are intertwined.
02:35Why is that?
02:36Because sports rights and valuations have gone up so much
02:40that you need entertainment to be able to pay for the sport.
02:44But the reason why we're doing all of this
02:46is to get us back to a level playing field economically with the Premier League.
02:50I mean, the dirty secret of European football
02:53is that the Premier League is pulled away from the continent,
02:55and all of us on the continent are in the same position.
02:58And, you know, sports, by the way, is having this issue.
03:02It's not just European football.
03:04We have it in America.
03:05The big markets and the small markets,
03:07the wealthy teams and the non-wealthy teams,
03:09there's an increasing disparity.
03:11Meteorites escalation is driving that.
03:13And so entertainment is a very important part
03:16that will help if we embrace it properly.
03:18And we don't get confused about the importance of the sport
03:21versus the entertainment.
03:23We can harness the entertainment to help play for the sport.
03:25But what do you think that Italian football has to change
03:28to fill the gap with the Premier League?
03:31Will it be enough to have modern infrastructure?
03:33Or is it more cultural?
03:35Is it more...
03:36It's the whole thing.
03:37Let's start with the very simple statement.
03:39Italian football needs to change.
03:41And that's the entire flywheel of everything that it touches.
03:43and, you know, there's a tremendous amount of work to do.
03:49So, you know, we have a responsibility as AC Milan.
03:51We should be the pace car for change and innovation.
03:54Those words are scary to a lot of people.
03:57Change and innovation, harnessed properly, is a good thing.
04:00You know, what we're doing in Hollywood right now,
04:04you know, it's the same kind of concept.
04:06You know, the incumbents, a lot of times, don't want change.
04:09They don't want innovation.
04:11They don't wake up every day with a sense of urgency.
04:13And if you don't do that, then things like Netflix happens to Hollywood.
04:17And then things like the Premier League happens to the leagues on the continent.
04:20You know, and so our job, and the way we invest,
04:23is we go into these ecosystems and we innovate them.
04:26and the great opportunity and the privilege is to do it with something like AC Milan
04:31because, you know, we're very respectful of that and what it was.
04:35And the question is to get it back to what it was, but for the current time period.
04:40So repair these sectors that have been disrupted or...
04:43Innovate them.
04:44Innovate them.
04:45Innovate.
04:45Innovate.
04:46They became lazy.
04:47But does it make any financial sense?
04:49Meaning that, for example, you back Milan AC to positive for three years in a row,
04:54but then you posted a $24 million loss recently.
04:58And how do you state the financial status of Milan AC?
05:02You just injected $50 million in equity.
05:05There will be any needs of further injection of capital looking ahead.
05:09Yeah.
05:09What I would say on that is that, you know,
05:11we continue to be the owners of our financial health.
05:16You know, our decision this summer to go into the red
05:23was my decision because I took over the club personally the day after we fell out of Champions League.
05:30And I decided, having watched, you know, the way this was going for the last four years,
05:34that it was time for real change.
05:38And I wasn't prepared to make very fundamental changes in a very short period of time
05:43between the end of the season and the beginning of the transfer market,
05:46like happens with most clubs.
05:48I wasn't going to bring in a professional football organization
05:51and make this wholesale change in that short period of time.
05:54These are very important organizational design decisions.
05:57And I decided to jump in and do it myself.
06:00And with that, I also decided to retool the player side of the organization.
06:05And so we have a lot of great players that we kept and have embraced.
06:09We brought in a lot of other new players.
06:11We've lowered the average age of the team.
06:13The reality is, just like meteorites, that, you know,
06:17there's been tremendous, you know, inflation in terms of player wages.
06:21And, you know, we have to decide if we want to compete to win,
06:24then we're going to have to embrace that.
06:26And then this coming year, you know, we made a decision to, you know, go into the red,
06:30but we will very quickly come back if we put the right organization in place,
06:35if we handle ourselves well in both the buying and selling of players,
06:38and if we continue to keep pace on the off-the-field side of the business.
06:43I've been wholly focused right now on the playing side of the business, on the football side.
06:47But obviously, you know, we bring a lot of expertise and experience on the commercial side.
06:53When we bought the club in 2022, you know, it was doing around, you know, 280 of revenue.
06:59You know, we finished over 400.
07:01And we've done a lot.
07:02There's a lot more that we can be doing there.
07:04And obviously, the new stadium will help with that.
07:06Well, talking organization, and you just mentioned that you took it over personally,
07:11on the personal level.
07:12So your life has dramatically changed over the last few months.
07:15How do you feel about that?
07:16Are you feeling fine or what?
07:19Yeah, you know, I keep getting asked these questions about,
07:22are you having fun?
07:23Are you happy?
07:23And it's a conflicting answer.
07:27I'm happy when we win.
07:29And I have fun when we win.
07:31And we're not winning enough.
07:33So having said that, this has been the hardest thing that I've ever really done.
07:39And I love a challenge like that.
07:41And the implications for success here are monumental.
07:45And the ripple effect of that in the community here, in the country, in the league, in the
07:51rest of football, you know, is really profound.
07:55The stadium, just to use that as an example, what that will say to the world, to the rest
08:01of football, you know, is going to be, you know, really important.
08:05And particularly for Syria, particularly for Italy at a time when it hasn't been performing
08:10the way its heritage would suggest it should, for us to be able to take a lead globally in
08:16that kind of, you know, infrastructure and what it means for the future is really important.
08:21Are you planning to go ahead in keeping your hands on all the aspects of the business?
08:26Or do you feel like that the team, the organization needs another serious management like to manage
08:31the football, the head of football?
08:34Yeah, great question.
08:34I've made it very clear, two things.
08:36Number one, I'm never handing the keys over again.
08:40So I am always now going to be hands on.
08:42This is too important.
08:43And I can bring too much to it to not have that be the case.
08:47But the second thing is, is I'm going to do what I do for a living.
08:50You know, one of the things I do for a living is organizational design.
08:53And we are going to build a world class football organization.
08:56And given who we are, and given the heritage of AC Milan, we should be able to attract the
09:00best in the business.
09:02And that's what we're going to do.
09:03So we're going to do both.
09:04Do you already have a name or an IDL?
09:07Yeah, you know, it's not.
09:07Ready to sign?
09:08Yeah, I get that question a lot.
09:09It's not just about the name.
09:11You know, it's interesting.
09:12The commentary in football is always to scoop the name.
09:17And I would just say that it's about the design.
09:20It's about the project.
09:21It's about, you know, what are we building?
09:24All I can say on the names is, yes, I have names.
09:27But those names are only operational based on the organizational design.
09:33And that's what I'm focused on.
09:35You also have players name in your head.
09:38So are you becoming even more experts in terms of picking and choosing?
09:42Yeah, I mean, you know, if you told me a year ago I'd be spending time watching videos and dealing
09:48with scouts and our technical people on the football side, I'd be somewhat surprised.
09:53But, you know, it really has gotten under my skin.
09:55The learning curve has been huge.
09:57But, you know, again, if you look at, you know, what I've done with Redbird and what I've done in
10:02my career, you know, it is building organizations of world-class people.
10:06It's knowing how to negotiate, how to handle valuation, how to, you know, get people to march to the goal
10:13that you want to accomplish.
10:15That's what football is all about.
10:16That's what determines the success in football.
10:18It's very, it's no different than what we do, you know, in the corporate world.
10:22Okay, this is about doing things the right way.
10:25It's about building an organization.
10:26And it's not just about winning.
10:28It's not just about the name at the time.
10:30It's about doing it consistently.
10:31It's about an organization that can continue to evolve.
10:35And, you know, the world's not going to stop for you.
10:37The world's going to keep changing.
10:38The Premier League is going to keep getting stronger.
10:40And, you know, our job is to keep pace with that.
10:42Well, in the meantime, you play the key role in the architecture of these mega deals.
10:46There's 110 billion of Warner Bros. taken over by Paramount's skydance.
10:52What motivated you?
10:54And many big cap deals, well, basically they failed in the past among media groups.
10:59Why do you think this one can make sense?
11:01You've got skin in the game.
11:03A lot of skin in the game.
11:04Yeah, you know, a lot of the reactions you get is that, you know, all these big cap media deals
11:11have never worked out.
11:13And I would say that's, there's a real truth to that.
11:16But that's because the industrial logic of those deals, you know, wasn't there.
11:20When you look at what we've done, the partnership that we have with the Ellison family,
11:25what we've done together, starting with Skydance, then Paramount, then Warner Bros.,
11:30you know, we are transforming Hollywood, we're helping Hollywood compete with Silicon Valley.
11:36And the North Star of everything that we're doing is, once again, like football, it's about the consumer.
11:43You know, direct-to-consumer streaming and providing the best, you know, products to the consumer in the most cost
11:50-efficient way.
11:51Hollywood can't do that if they don't have scale.
11:55And this is one of those instances where scale is a virtue, but you have to also have the industrial
12:00logic behind the scale.
12:02You can't just buy things, right?
12:04Similarly with football, as we were talking about, you know, you just can't spend all this money on players.
12:08You've got to have a real organizational design.
12:10You know, the investment thesis that we have with Skydance is to really embrace technological disruption.
12:17And our partnership with the Ellison family, with Oracle, with what we're going to be doing in making more content
12:24more efficiently
12:24is going to be really great for the consumer.
12:28It's going to be great for content creators.
12:31It's going to be great for theatrical exhibitors.
12:33Everybody in that value chain, when we were going through our Warner Bros. process,
12:38the argument that we made that ultimately prevailed is that this is going to help Hollywood come, you know, really
12:43compete.
12:45And, you know, with competition comes derivative benefits for the consumer and everybody else in the value chain.
12:50Well, in a nutshell, but AI is transforming everything, especially in the entertainment and Hollywood, not just that, and Silicon
12:57Valley.
12:59Don't you think there's too much hype?
13:01The financial markets are starting to be concerned about some excesses, excessive debt, excessive leverage, and so on.
13:09And you've got a lot of experience in financial markets.
13:13How do you feel about that?
13:14Look, there's a lot of excess everywhere.
13:18There's asset inflation in sports, meteorites escalation.
13:22You know, there's a huge euphoria going on right now with AI and technology and the potential.
13:27The good thing is, is that, you know, it's rooted in a lot of positives, but we're going to go
13:33through some over, you know, shooting, some corrections that are going to be needed.
13:37But if the base is there, and the base is you have to be able to pay for yourself, you
13:42have to have a real business plan.
13:44You know, if you look at what we've put together for Skydance, and we haven't really had a chance to
13:50articulate it,
13:51it's really tremendous cash flow generation to be able to pay for more content and the derivative benefit of that
13:57through the ecosystem.
13:58And so, you know, we, you know, don't forget, you know, we, the benefit of Paramount buying, coming together with
14:04Warner Brothers is, you know,
14:06if you just look at our linear cable business, everybody, nobody seems to want the linear cable business.
14:11Well, you know, on any given night, more people will watch CBS than Netflix.
14:16And so the power of putting free-to-air, which is a great thing to do for the community,
14:21to put free-to-air at that scale, what CBS has, together with streaming, and at the size that we
14:28have as one of the top streamers now in the world,
14:30you put that together, that is a very powerful combination in terms of what it can do for consumers.
14:36And, you know, when you, and so, you know, you have to have that kind of scale to be able
14:42to deal with the escalation
14:43and the asset inflation that you're talking about.
14:46You've got to be able to do both, and that's what the combination is allowing us to do.
14:49Well, Jack Cardinal, thanks for the conversation, but just to prop it up, let me close with what we started.
14:54The new stadium, after four years that you took over, Milan AC, looking back, how do you assess these four
15:00years?
15:01So what you got right, and which are the mistakes you wouldn't do again if you might start it all
15:08over?
15:08Yeah, you know, you always, the benefit of hindsight is always wonderful.
15:12If I had to do it all over again, I would have the knowledge that I have today four years
15:16ago.
15:17You know, four years ago, when we bought the club, it had just won the Scudetto, the Italian championship.
15:22And I thought that the football side of the house, you know, was really, was there and was fine.
15:29And I focused on things like the new stadium, and I focused on the commercial side.
15:33The reality is you have to do both, and you can't take for granted that, you know, both sides are
15:38in order.
15:40And so if I had to do it again, the learning curve has been steep.
15:43But, you know, I would have spent the amount of time that I'm spending now on the football side, I
15:48would have spent back then.
15:49But, you know, the benefit of the learning curve is that I really now understand what needs to be done.
15:54And the amount of time I've spent this summer in actually running the club myself means that I have a
16:00better opportunity
16:01in understanding which people to bring in for the new organization on the football side.
16:06Commercial stuff I can do in my sleep.
16:08The football side, there is art and science to that.
16:11And now I'm up the learning curve on that one.
16:14And so you put those two things together, and the sum of the parts should be greater than the whole.
16:18Thank you, exactly.
16:19It's good to be here.
16:20Thanks.
16:20Thanks.