AC Milan are heading for a profit in the 2022-23 financial year, but the plan is very much to continue with cost containment and sustainability.
La Gazzetta dello Sport (seen below) recall how RedBird Capital bought Rossoneri ten months ago with a cash payment of €600m and the remaining €600m guaranteed by the old owners Elliott Management through a vendor loan.
They put trust in Giorgio Furlani – who was recently promoted to CEO – and Stefano Cocirio who is the Chief Financial Officer. They had a tough job given Milan made a €195m loss in 2019-20 which went to €96m in 2020-21 and then to €66m in 2021-22.
An improvement took place through the organic growth of revenues, with the return to the Champions League and the recovery of the commercial sector (from €52m in 2019-20 to €83m in 2021-22).
Meanwhile Elliott injected substantial resources into the coffers thus avoiding the need to take out loans to increase the debt, so when the transfer of shares did take place Cardinale found himself in possession of a club with a financial debt of just €28m.
The journey in the Champions League to the semi-finals this season brought total revenues of €125m, including UEFA prizes, box office and sponsor bonuses.
The renewal of the deal with kit maker PUMA saw the income go from €14m per year to €30m, and revenues will exceed €350m this year, net of capital gains which have been almost negligible in the current year.
As for costs, €56m was invested on the market in the summer session (€35.5m for De Ketelaere) with a tolerable increase in depreciation and the wage bill.
There continues to be a ‘ceiling’ for the transfer fees paid out and the salaries paid to individuals to keep costs under control. It is clear that with management based on self-sufficiency and the precise desire of the shareholder not to contribute equity, in line with the settlement agreement signed with UEFA, the lever to be used is that of revenues.
The great challenge of Cardinale’s management is closely connected to the ability to bring Milan to a turnover of €500m. Renewals like the one with Emirates (€15m to €30m per year) will begin in 2023-24, but it will not be easy to replicate the Champions League path.
It will be a new stadium – if and when that is built – which will bring the most significant extra revenue, estimated at at least €80m per year.
In the meantime, it will be necessary to keep the squad at a high level to keep participating in the Champions League, have constant access to international markets and continue to grow sponsorships and advertising.
However, it will be necessary to raise money from the growth of talents in recent years too. Not to depend on capital gains, but to implement a dynamic and profitable management of player trading.
