A huge blade is swinging above San Siro and no one knows where it will fall


If you ever walk down the memory lane to discern the causes that led to the fall of the giants, for sure, your eyes won’t miss the financial conundrums that keep waving frantically at you. The paucity of monetary strength is a common factor in any of the tales about deceased football clubs, and the AC Milan are no exception to the shortage of wealth.

The Serie A club takeover from Silvio Berlusconi to Yonghong Li has only completed thanks to a €303m loan from American hedge fund Elliott Management in April 2017, which has to be repaid in October.

A takeover that guarantees nothing

TeleLombardia had an interview with Paolo Scaroni, a member of the Milan Board of Directors who represents Elliott’s interests and is the Vice-President of Rothschild.

“I don’t know if Milan will find the money to refinance the debt. These are matters that (CEO Marco) Fassone and (patron) Li Yonghong are looking into. In theory, it is possible, but I couldn’t tell you at what stage we are,” said Scaroni at the time.

He also made it pretty clear that there is no chance for Elliott to stay in Milan as long term owner, they have other ideas for the club.

“I don’t think that (Elliott hedge fund chief) Gordon Singer wants to be the President of a football club. The loan had in it a series of guarantees, so if it was not repaid, Elliott would become owners of Milan to get back the money.”

AC Milan’s rating by Deloitte

Likely scenario

“The scenario that could happen is that the creditor Elliott sells Milan to get back the money. The remaining sum exceeding the credit owed would be given to Mr Li. The sale would be to the highest possible bidder. The majority shareholder is so far continuing to keep up with the promises made and increasing the capital as agreed in the 2017-18 budget, the plan for Milan from 2017 to 2022.“ said Scaroni and added:

“Within this plan, which has some hypothesized revenue as all plans do, there is the provision for an increase in Capital. Milan is working actively to attract sponsors of various types of China. They have hired many active people, but it’s early to draw conclusions. As part of the strategy of the Milan, majority shareholder is the need to attract sponsors from China.”

The future is in doubt for AC Milan

So, from the very beginning of this adventure, it was totally clear that this situation is not good for AC Milan but fans remained optimistic. Their optimism is based mostly on the amount of money Elliott invested in the club. Since their takeover, Elliot invested between 250 and 300 million euros in Milan’s squad and that fits well into the picture fans are trying to paint for themselves. Especially when it comes to Lucas Paqueta and Krszystof Piatek, two of the latest incoming transfers that already started to pay off on the field.

The one thing fans are forgetting is the nature of Elliott’s business model that is often, and for good reasons, called culturing. This “vulture fond“ as they call them in Argentina where they had their fingers in destroying nations economy doesn’t really care about Milan. They are here to raise the value and pass it on to the highest bid. And that’s the problem.

What’s next?

When Silvio Berlusconi went on a venture to sell AC Milan he was trying to make sure that the club is taken care off. Yong Hong Lee had to sign a contract in which it was specified that it was imperative for him to invest money right after he takes over. And he did. But the thing that happened later was just a downhill ride for the club. They only partly actually care about the club they are selling, that’s what’s missing from this deal that’s going to happen when Elliott sells Milan.

Every single thing they have done till now is in service of raising the club’s value to find someone willing to buy it and allow them to make a huge profit. And the fear is real, that when the time comes, Milan could be sold to some drunk millionaire of an NFL franchise owner that won’t give a damn about club’s sporting policy. Something that’s right now happening to Arsenal but in a somewhat lighter fashion.

Yes, AC Milan are looking better but not a club, but as a product. As a club they’re future is as questionable as it can be. A huge blade is swinging above San Siro and no one knows where it will fall.