http://www.brandfinance.com/knowledge_centre/reports/brand-finance-football-brands-2012

With thanks to Juan80 who posted a link to this in another thread. While I have done consulting, I'm not a finance guy by training, but the basics should be about right.

When you look at that brand report that puts us in the top 10 football brands in the world, shows us as having improved from an AA- to an AA+ rating, and states that our growth is 7%, you might think that this is all good news bears and that reports of Milan's mismanagement are overrated. In fact, what you'll find if you look under the hood is that our brand isn't doing as well as it should. Put simply, we're showing middling progress.

Accounting for inflation and amortization of high-value assets, 7% isn't that much growth. It's barely keeping up. The AA+ (very strong) rating doesn't mean much either. Inter is in a bigger hole and they have that rating too. What that means is simply that both the Milanese clubs have cultivated very strong brands over time. It is not a reflection of financial health. The parts of the table that are significant for our purposes are the EV and BV/EV columns. EV is pretty much the market value of the club. BV/EV is the relation of the brand to the club. For instance, based on that table, it appears Ajax's brand is overpowered with respect to their actual club. Our EV is only 1.2 billion, which is quite low for a club with our history. I'm honestly baffled that Tottenham is worth more. Even given White Hart Lane, they're not a global brand (that said, I root for them in the EPL). Anyways, the main point here (and made very clear in the report) is that broadcasting is king. The EPL clubs are doing extraordinary well because of the deal that the EPL got out of Sky and BT. After overseas rights are sorted, it will only improve. Serie A, on the other hand, has no great deal. And most Italian clubs do not own their own stadium, with which come revenue from restaurants, parking, events, naming and all sorts of things. Our EV was worth twice Madrid's ten years ago. Now it's less than half. We simply cannot claim that we haven't been mismanaged. You would have to keep in mind that the more debt clubs have, greater the EV, so Barca and Real's values are a little exaggerated. But the point remains that our assets are much lower in value than theirs and this was not the case 10 years ago.

How does a team build a brand? Winning, for one. Building a great team and making it to the latter stages of the CL. Local initiatives. Global marketing. Broadcasting rights. The bigger clubs have debt-financed their way to most of this already. Berlusconi, for all his faults, understands branding. The whole idea of splashing out on "champions" and marquee signings is necessary and has served us well overall, even if it also led to disasters like Dinho/Beckham. Buying squad players is not sexy enough but it is necessary.

What next? Do we focus on building stadia or do something else? Remember, Milan's average attendance last season was around 60%. Our season tickets sales are on their way to a record low. Even worse than last year. If we build a stadium, will they come? Of course, we have to assume that the terrible economic climate in Europe will be mostly done by the time we either build a new stadium or renovate San Siro. Low attendance is an endemic problem in Italy also. As Inter is facing the same calculus, they will have to make a similar choice quicker than us, leading me to believe we'll at least get San Siro. I don't know how potent Milan's local initiatives are but they probably need to be strengthened. As you probably know, within Milan, we're only the second most popular team. Global marketing is something we need to do better. We need a much stronger presence in Asia. Signing an Asian player would have helped with that, as would a whole host of other things. We have never done that. From what I understand, the Milan Glorie team is soon to play in Indonesia, so it's clear that management knows all this.

Basically, my recommendation is that Milan, as the best performing of the Serie A teams currently, should take a leading role in negotiating better broadcasting rights globally. That would require improving our global presence, which requires both better marketing and a more efficient and valuable squad. Overall, Galliani's done well in the last couple of years but correcting a decade of inadequate management will take time. We'll need to be patient. I wouldn't sell Ibra, Pato or Silva. Remember, paying down our debts is a negative (though how this interacts with FFP is more complicated). Ideally, what we need is more market capitalization, which can be achieved by getting an oil Sheikh to invest in us. We have a strong brand. We're a good investment to make.