AC Milan: The light shines brighter

AC MILAN may have lost both of their UEFA Champions League games, but things are looking better off the field for the Rossoneri after some grim financial results in recent years.

Milan were beaten 3-2 at Liverpool and capitulated at home against Atlético Madrid in their first two Champions League group fixtures, but they could easily have ended with maximum points. They led in both games and were only beaten by Atléti with a last-gasp penalty. They have done enough so far to suggest they have very positive momentum.

They are in a tough section, with Porto still to play, so even securing third place will be a major challenge. Meanwhile, in Serie A, Milan have made a strong start to the season, winning five of their first six games and now sit in second place, two points behind resurgent Napoli. 

Milan’s owners, Florida-based Elliott Management, took the club over in 2018 and were presented with a loss-making giant with a glorious domestic and European heritage. But the club had fallen way behind Juventus and was struggling to keep pace with San Siro stablemates Inter. Last season, they finished in second place behind Inter.

Elliott are part of a growing trend of alternative investors moving into football as an asset class with potential. Hedge funds and private equity firms have been lending money, buying media rights and purchasing stakes in clubs of all sizes. 

Clubs desperate for cash have been welcoming these new investors with open arms. Milan are one of nine clubs owned by US investors in Serie A, all of whom are attracted by the league’s historic potential and possible new TV deal. There is a significant degree of risk involved here, as Serie A has often struggled to attract global brands. However, overseas money is exactly what Italian football needed to become more competitive.

There was better news for Milan in the preliminary viewing of their financial performance for 2020-21. After two seasons of calamitous financial reporting, Milan have halved their losses, with 2020-21 coming in at € 96.4 million, a considerable achievement given their 2019-20 loss was € 192.4 million and 2018-19 was € 142.5 million. They are still running at an unacceptable deficit, but they are moving very much in the right direction.

Milan have stemmed the flow of losses to some extent, but they are still some way off being able to compete at the very highest level. They still trail behind Juventus and, to some extent, Inter. They are fortunate that they do not have any bank debt, but in 2019-20, their net debt was over € 100 million. Their wage bill in 2020 was in worrying territory, but as of today, it may be significantly lower after the departure of Gianluigi Donnarumma (PSG) and Hakan Çalhanoglu (Inter), both of whom left on free transfers. 

Elliott have a strategy that is essentially focused around younger players, although their highest wage earner is Zlatan Ibrahimovic, who is almost 40. The club is rumoured to be interested in Arsenal’s Alexandre Lacazette, but his wages (around € 9 million) would make him Milan’s biggest earner, which may not fit comfortably with Elliott’s approach. AC Milan’s squad, with an average of 24.9 years, is the youngest in Serie A. 

The return of Champions League football is part of Milan’s objective of becoming more profitable. Elliott Management have enough confidence in the current regime to allow € 70 million to be spent on strengthening the squad, including the loan acquisition of Brahim Díaz, the 22 year-old Spanish midfielder from Real Madrid. Díaz has started well, scoring three goals already in Serie A.

Both Milan clubs are hoping a new era will unfold once the long-awaited replacement for the iconic San Siro is constructed. AC Milan’s president, Paulo Scaroni, believes the new stadium will be ready by 2024 and work will commence in 2022. “I hope for a quick approval because two years have passed since the presentation of the project and things are already being done in Milan,” he told the Italian media. “Our goal is to have a Milan that generates cash; we are beginning to see it and have entered into 20 new partnerships.”

Photo: Valentina CC-BY-NC-ND 2.0

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