AC Milan Sold to Yonghang Li – First Impressions

Here we are. To be honest there was more than a moment of doubt, and before we all jump for joy, let’s contextualize what happened here. Silvio Berlusconi’s holding company Fininvest sold just over 99% of the shares of AC Milan to a holding company headed by Yonghang Li, a Chinese billionaire. Deliberately, this has been a clouded process, and staring through the murk has yielded more frustration than answers, with this consortium changing pieces over the past two years. You can find the how and the specifics in many places, and that’s not really why anyone reads me.

The why is fairly evident. Silvio was sick of losing money. The “passion” wasn’t there. Of course to Milan’s continual #1 fan, despite not continuing at the club, this passion never dissipated. It was always there, the means just became different. He can’t compete with oil money (he can). He can’t compete with these large transfer fees (he could have). It’s not particularly important whether or not he was right on his own financial might, because at nearly 80, Silvio is staring down the prospect of “what’s going to happen to the money when I die”, and as such, his children have had an increasing say in these finances.

Say your father collects model trains. Say you’re me, and you don’t give two shits about model trains. If my dad were to tell me he’s taking out a second mortgage on the house to invest in the new model year of trains, I’d use every tool in my power to make him pump the brakes. It’s not because trains don’t have value; it’s because trains don’t have value TO ME.

I understand why his kids didn’t want this drain on their future inheritance. Let’s be real, 6 billion is chicken shit compared to 9 billion. Since I’m guessing no one reading this has any real experience with that immense sort of wealth, let’s just say they did what they did, pressured how they pleased, and got the result they wanted.

I began with here we are. So where are we? When Silvio took over the club in the mid 80s, there were a handful of gems on the youth squad, massive debts, low morale, and a lack of a style. Li, despite this being near the low of the Berlusconi era, will inherit a side that has several pieces in place. Romagnoli is no Baresi, however he’s further in his development than Il Capitano was back then. Calabria is no Maldini, but De Sciglio is. Try saying that with a straight face.

Financials aren’t great, the club is leaking 80m a season, but this is not a permanent slide, and with the right sorts of short-term investments, this club isn’t a long ways away from revenue break even and further down the road profit. How exactly you get to that profit and what do you do to get there is going to be coming soon. If I remember to go through this you’ll even find a link here to that piece.

The plans for the club are slowly leaking out. Rumored listings on the HK stock exchange are back in play, although I’ve discussed this at length before, and the club is not sustainable enough to make break even requirements of listing, among several other notable shortcomings of those necessary qualities.

There is money tied up from the Rothchild’s (the most wealthy dynasty in the history of Earth – if you don’t believe this do some googling.), the American Elliot fund, Yonghong Li himself, and others who contributed to the previous deposits. Capital controls forced Li to oursource his financing, as the Bank of China wasn’t able to authorize the funds to make a huge scale purchase of Milan with the clamp down by Xi on foreign investment.

Bank of China wasn’t completely out of the picture, as it’s being reported they have interest in being Milan’s next sponsor once the contract with Emirates airline expires. In December of 2014, Barbara Berlusconi announced that they had renewed with Emirates for 5 more years. It will be interesting to see if Li attempts to push them out sooner, or whether this sponsorship will begin in the 19/20 season – which would affect Milan’s ability to make short-term transfers while staying FFP relevant.

There’s much more to come. We’re back baby.

 

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About Pete Acquaviva

Pete writes about Milan on this blog. Occasionally other things. You would know which of them it is if you've gotten this far.

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