Italy's footballers carry hopes of new economy clothing firm

When the footballing pride of Italy, the Azzurri (Blues), line out to do battle at next month's Euro 2000 championships in Belgium and the Netherlands, they will have the support not only of 50 million Italian armchair fans but also of the directors and shareholders of a recently-floated new economy company that used to trade under a particularly old-fashioned title.

For the not insignificant sum of £6.8 million (€8.6 million) per annum, the Turin sportswear firm Kappa, formerly known as Magnifico Calzificio Torinese is the official sponsor and provider of the Italian Football Federation. At a reception this week at Rome's Olympic Stadium, the company unveiled the latest version of the splendid rich-blue shirt traditionally worn by Italy.

You might well ask what links the new economy has to the now well-established business of sportswear sponsorships and endorsements. The answer comes in the shape of the Kappa holding company, BasicNet, and its founder Mr Marco Boglione, one of a generation of dynamic, young (he is 43), computer-friendly Italian entrepreneurs who know more about "downloading" than about the infamous "salotto buono" (posh drawing room) of Italian bankers and financiers who allegedly used to shape the destiny of the Italian private sector.

Mr Boglione started in the business in 1976, joining Magnifico as a 19-year-old and becoming the company's marketing director by the early 1980s. By that time, too, the company no longer bore its somewhat outdated brand name, having become Kappa.

Owned by the Turin-based Vitale family, the company had a serious setback in 1951 when a production error led to the sale of a whole range of defective socks. To regain lost customers and credibility, then-owner Mr Davide Vitale had the smart idea of putting a label with the German word Kontroll (for quality control) on his socks.

Mr Vitale suspected that a German word would carry more weight with consumers than its Italian equivalent. He was right. The label caught on so effectively that the company name became known as Kappa which is the Italian word for the letter K.

By the mid-1990s, however, Kappa was in trouble. Mr Boglione, who in 1983 had founded his own company, Football Sport Merchandise, before going on to leave Kappa, stepped in to buy over his old employer from the liquidator. Mr Boglione was interested in more than Kappa's already well-established links with professional soccer. He also wanted to see the company move into the much bigger field of sports/leisure wear.

Two years later, he invited Mr Alessandro Benetton, son of Luciano of the celebrated leisure and knitwear "family" multinational, to buy into Kappa. Mr Benetton's company, Ventuno Investimenti, bought a 40 per cent share in the new Kappa holding company, Basic World.

From there, the Basic group has expanded to a point where Kappa now has sales worth $300 million (€336 million) in 70 countries (when Mr Boglione took over Kappa in 1994, it had revenues of just $28 million).

In a global context, it might seem that sponsorship of the Italian soccer team is an expensive luxury. Kappa marketing manager, Mr Andrea Carbonara, disagrees. "In a soccer-mad country like Italy, it doesn't get better than sponsorship of the national football team at a big tournament like Euro 2000."

Mr Carbonaro admits candidly that success for Italy, even a good run through to the semi-finals of the tournament, will mean increased sales and profits for Kappa this summer. He points out, however, that Kappa was keen to tie up with the Italian Football Federation for other than strictly commercial reasons.

The current contract with the football federation was signed in February of 1999 and it was done with an eye to the November launch on the Milan bourse of the Basic Group, now called BasicNet. If you want to convince Italian investors that you are in the very top flight of your trade, what better visiting card than that of the Azzurri, says Mr Carbonara.

The strategy sounds good but, ironically, it did not prevent BasicNet shares dropping a steep 33 per cent in value in their first five months of trading. In an interview with Italy Daily this week, Mr Boglione attributes that fall to media misinterpretation which suspected BasicNet to be a false Internet company, pretending to offer online trading and commerce, when in fact it was selling soccer shirts.

In the meantime, Kappa executives will be watching the football results closely and not just next month at Euro 2000. Next Sunday, the "old lady" of Italian soccer, Juventus, current Serie A league leaders, should wrap up a 26th Italian title. No prizes for guessing that Kappa is the Juventus sponsor.