Despite the fact that AC Milan are in a battle to win the Scudetto with city rivals Inter, the media headlines continue to be dominated by the news of a probable takeover by Investcorp.
After four years in the hands of American fund Elliott Management during which there has been a rise from mediocrity to competing for trophies plus a simultaneous improvement in the accounts, many are apprehensive about the idea of changing owners again.
What does it mean? Why are Investcorp so interested in Milan? What are their plans for the future? We spoke to Il Sole 24 Ore journalist and financial expert Marco Bellinazzo about all things to do with the takeover…
What is the background of Investcorp’s interest in Milan and when did the talks with Elliott start?
“The interest of Investcorp and the Bahraini fund is part of the more generalised interest that the Middle Eastern world has in football, which has been included in the Vision 2030 projects as a tool to diversify the economic projects and social models of these countries. In the last ten years, not surprisingly, over six billion in investments in European football have come from those countries.”
How much credit do Elliott deserve for their work to improve the club’s financial health and make it attractive to potential buyers?
“The work done by Elliott is certainly an important and positive work compared to the previous era. With the arrival of the Singer family, AC Milan’s financial situation has clearly improved: there is a debt of just over 100 million; the club is finding an economic balance, the losses between 2020 and 2021 have in fact been halved and will be reduced again at the end of this financial year. All this has undoubtedly made Milan an attractive asset also due to the strength of the historic Rossoneri brand.”
As you said yourself, it seems that the interest of the new fund is more oriented towards success on the field as well as improving the balance sheet. To make a comparison Investcorp (or rather the shareholder Mubadala) has an attitude closer to that of Elliott or the great Arab owners of European clubs such as PSG and Manchester City?
“The attitude of the Bahraini fund is a bit halfway between that of sovereign funds that state-control clubs like PSG and Manchester City and that of a hedge fund like Elliott that aims for an economic return, say in the time span of 3-5 years.
“It is no coincidence that for Investcorp we are talking about an investment with a time horizon of ten years which obviously aims at an economic return but also at an enhancement in terms of sports and image, i.e. winning things.
“This is a fundamental element for Investcorp’s shareholder fund, namely Mubadala, which signed an agreement with the sovereign fund of Bahrain no later than December 2021 and which wanted to invest in sport as a soft-power tool for the reaffirmation of the image of the kingdom in the Western economy.”
There is talk of Investcorp aggressive on the market immediately since the summer, what should Milan fans expect? A €250m market like that of Yonghong Li or something different?
“The market is difficult to predict but it will certainly be aimed at strengthening the club and bringing it back to the top in Europe as well, so not just participating in the Champions League but also reaching important positions right away.
“It is therefore likely that there will be important signings but always taking into account the accounts and the balance between income and expenses without burdening too much on costs, that is, on salaries.”
In addition to Mubadala, which you mentioned, Goldman Sachs are also involved in the acquisition of Milan by Investcorp. Can it be said that these two figures represent a guarantee for the good outcome of the operation?
“All the parties involved have important advisors, American financial institutions and this is certainly a guarantee at least on the seriousness of the deal and in any case also represents an important element on the success of the operation.”
Switching from one fund to another is not so usual, would you have expected a sale to an ‘industrial property’ by Elliott?
“The most probable transition until a couple of years ago was between a fund and an industrial-type property, but in the last two years with the pandemic, the interest of investment funds in the Middle East on sports of both of Anglo-Saxon or American origin has become more and more pressing.
“Funds have a lot of liquidity to invest and football at certain levels can offer attractive returns, both monetary and non-monetary. Today it is almost normal, therefore, to see important clubs move from one fund to another.”
There was talk of the meeting scheduled between Investcorp and UEFA in Nyon. What will they say and how much margin will the new owner have in order to increase the technical level of the team without affecting Financial Fair Play?
“AC Milan, like all the top European clubs affected by the pandemic, will be called upon to revise its cost level in the coming years according to the level of revenues.
“From this point of view we say that, fortunately for Investcorp, we are in a phase of regime change of Financial Fair Play with a new financial sustainability system that will allow for a gradual adjustment within three years.
“From this point of view, therefore, Investcorp will have the space to invest and grow the club, much more space than it would have had if the old FFP rules remained in force.”