One of the things that the financial authorities are looking into regarding AC Milan is the sale price in 2022, when the club moved from Elliott Management’s hands to those of RedBird Capital.
La Gazzetta dello Sport (seen below) have provided a comprehensive round-up of what we know so far regarding the investigation, as well as what was uncovered regarding a structure in place for PIF (or another fund) to invest.
The paper go back to the spring of 2022 when the Rossoneri were about to be bought by Investcorp, a Bahraini fund that relaunched Gucci in the 1990s. Then came RedBird’s surprise blitz.
When the closing of the operation was officially announced on 31 August 2022, two circumstances stood out: the valuation given to the Rossoneri club, i.e. €1.2bn, and the €550m vendor loan granted by Elliott to RedBird which, before concluding the deal, managed assets of $6bn (now $10bn).
It is true that Milan had been reorganised, with EBITDA in positive territory and financial debts substantially eliminated, but the price of the transaction still expressed a multiple of revenues higher than 4.5, at the level of the richest clubs in the world despite large assets were missing.
It is no coincidence that the algorithm of the consultancy firm Football Benchmark assigned, at that time, an enterprise value of €578m to Milan. On the other hand, almost half of the official value of the transaction was generated by a loan from the same seller, at an interest rate of 7% per annum which will have to be repaid by RedBird by 2025.
Against this financing Elliott secured the pledge on 99.93% of the shares sold to Acm Bidco (the Dutch vehicle used by Gerry Cardinale to take over AC Milan), ‘as a guaranteed credit, under the contract called Pledge Agreement over Shares’.
According to a statement from June 2022, the agreement provided for Elliott to maintain a minority financial stake in the club. Subsequently, once the closing took place, it was clarified that the transfer of shares concerned the entire package held by Elliott.
However, one of the clauses envisaged to act as a guarantee the loan came about: the maintenance of Elliott’s own representatives on the board of directors.
So in September 2022, when the new board took office, Gordon Singer – the son of Elliott’s founder, Paul – took their place, as well as Giorgio Furlani and Stefano Cocirio who have been for years the portfolio manager and associate portfolio manager of Elliott respectively. Roles they then left.
Cardinale told the Financial Times about their importance: “I have enormous respect for Paul and Gordon Singer. I told them, ‘When we do this thing, I want you to continue to be involved and then we’ll put you in a different part of the capital structure’.
“We took two of their best men of their own free will. I did not do it. They raised their hands. We examined them together with everyone else and, surprise of surprises, they are excellent, both as CEO and as CFO.”
Now, after some time, Elliott points out that there is only one representative left on the Rossoneri board of directors, because Furlani and Cocirio have become employees of Milan. Therefore, only Gordon Singer remains, but his presence is by no means marginal.
Having been involved in the Rossoneri since the beginning of Elliott’s adventure, he is a highly listened to advisor who Cardinale certainly consults for all strategic decisions.
It should be remembered too that Paolo Scaroni – president of Milan since 2018 and deputy chairman of Rothschild at the time when the bank was advisor to Li Yonghong – was recently appointed president of RedBird International by Cardinale.
