AC Milan have officially exited the UEFA Settlement Agreement that they entered three years ago, it has been confirmed.
In September 2022, UEFA announced that it had entered into a ‘Settlement Agreement’ with several clubs – including Milan – for failing to comply with the break-even requirement under Financial Fair Play regulations for the monitoring period ending with the 2021-22 season.
What is a Settlement Agreement?
We know that Milan are now out of the agreement, but what was it? For this, the best port of call is to cite UEFA themselves. In their document outlining the regulations on their website, they write the following:
“The Settlement Agreement will provide the Club with a transitional pathway from the breakeven requirement under the CL&FFP (applicable up and until the 2022/23 season) to the football earnings rule (entering into force as from the 2023/24 season) as provided for, and defined, in the UEFA Club Licensing and Financial Sustainability Regulations – Edition 2022 (“CL&FS”) that entered into force on 1 June 2022 with the aim to improve the financial sustainability of European club football.
“The primary purpose of the Settlement Agreement consists of ensuring that the Club complies with the stability requirements (i.e. the football earnings rule), in the Monitoring Period assessed in the 2026/27 season (i.e. covering the reporting periods ending in 2024, 2025 and 2026).
“In other words, in the Monitoring Period assessed in the 2026/27 season, the Club must have an aggregate football earnings surplus, or an aggregate football earnings deficit within the acceptable deviation as provided for in the CL&FS.”
In other other words, the Settlement Agreement establishes a set of parameters that clubs who have had financial difficulties must aim to stay within, in order to then transition them towards respecting the regular FFP parameters.
The possible punishments range from having squad spots taken away for European competitions to having to pay fines, and ultimately remaining under the extra-watchful eye of UEFA by not exiting the Settlement.
The Rossoneri had agreed to a three-year agreement period, while also accepting a fine of €2m, with €13m conditional on compliance.
The settlement agreement was made taking into account the impact of the pandemic on the financial health of the clubs for the reporting periods ending in 2020, 2021 and 2022. The agreement signed with UEFA covers in order:
– The four reporting periods ending in 2022, 2023, 2024 and 2025;
– The four seasons 2022/23, 2023/24, 2024/25 and 2025/26.
With the closing of the balance sheet on Tuesday – pending official communications from the highest European football body – Milan have exited the Settlement Agreement regime.
The Rossoneri have passed the monitoring period in question with flying colours, recording three consecutive balance sheets in profit (two certified, one awaiting publication of the same this autumn).
Milan respected both the ‘Football Earning Rules’ and the ‘Squad Cost Rule’ which state that the monitored clubs must have a deficit of football earnings within the expected acceptable deviation (€5m). The deficit can however exceed this limit up to €60m if these losses are from equity capital.
The Diavolo, with the last two budgets in the black and with the third ready to close with a plus sign, are more than calm in this respect, as well as with regards to the ‘squad cost rule’ (costs of the squad must not exceed 70% of the revenues). Milan fall well within the parameters, with a percentage cost of around 60%.
What happens next?
Next season there will be no participation in the Champions League, and therefore the possibility of closing the next budget in the red increases, but inside the walls of Casa Milan there is no worry about that.
Why? The estimate for the next budget is a profit between €23-25m, thanks to the positive impact of the sales of Pierre Kalulu (pure capital gain) and Tijjani Reijnders (for a potential club-record fee). So, it should offset any loss next season.
As for 2025-26, however, we start from a potential shortfall of around €80m (Champions League prize money, TV rights and ticket sales) that Milan will still be able to cover by drawing on its net wirth, which is positive by €196m as of June 30 2024, with other possible sales.
Having ‘freed’ itself from the Settlement Agreement, will Milan have the freedom to spend how and when they want to? No, because they move on to the stand UEFA monitoring of finances, Financial Fair Play.
The assessment of the last three years will continue from year to year. The squad cost rule and the maximum deficit of €60m in the three years remain as fixed points from which not to deviate.
The ‘advantage’ is that of not having intermediate objectives to achieve as during the Settlement period and no guillotine hanging over Milan’s head, such as possible new fines or limitations on the number of players to be registered in the UEFA list.
Credit to the club for how they’ve handled this, both the current lot and the Elliot group, for fixing up the mess caused by the previous owners.
Fact. There was always a lot of free bashing of Elliot, but the truth is they saved the club from bankrupcy and brought it back to a healty position. Other clubs in Italy have a lot more to worry about than we do. In time this will pay off.
Elliot appear to have stepped in a second time to save Redbird from themselves.
With Furlani empowered to put in place the new sporting department under Tare.
Cancelling whatever the last system was under Ibrahimovic direction. Where he was supposed to be in charge (according to him) but wasn’t even an employee of the club.
And none of that should be surprising, these are money men after all. The next step is to get things right on the pitch.
there is some parts of the budget of AC Milan thst does not make much sense to me but overall my opinions that in Italy you absolutely need to be in the UCL.
Fans need to grasp the lose of not being in the top 4. This club is remaining in the green by such small margins and it is made up of player sales from previous seasons. I sincerely believe the sale of Tonali and Tiji is keeping this club healthy financially. If the club didn’t sell these two, the books would have shown a deficit.
When people say there is enough money to spend on 7 players, I think they are living in LaLa land. This club does not have that kind of money anymore. This club needs an insanely rich owner who has the pull to do the things the Qatari and Emirate owners have done with PSG and Man City respectively in order to get 7 players while taking a hit on sales.
Owners cannot put money into clubs in the same way as before so rich owners change nothing. What we really need are owners who have governmental influence. Without a new stadium, we’ll always be in this situation.
Owner‘s still can inject money into the club by getting theyr own Capital‘s as Sponsor Deals and that is easy!
With the abundance of information everywhere, some still wouldn’t aquire this knowledge.
Uberhulk is absolutely spot on on his comment. FFP is just hypocritical bulls*h*i*t, and will ever be, a fvckin smokescreen and a clownish show. Behind the scenes everything continues to be as it always was and the ruthless game of the most cruel and cynical financial capitalism continues to prevail, especially for those who have the ‘right’ connections.
What a farce what about city and psg, this is why some people I know stopped watching football the rules change according to the owners