Sunday August 27 2017
Fassone: 'Milan buys a calculated risk'

Milan CEO Marco Fassone explained investments are “a calculated risk” and “in the worst case scenario, in October next year, the owners of Milan would be” a hedge fund.

The Rossoneri had been under the control of Silvio Berlusconi for 30 years, but the takeover from Chinese businessman Yonghong Li was finally completed in April after numerous delays.

“I came into the project with some doubts at the beginning because I wanted to understand exactly what their vision was and why they wanted to make such a huge investment,” Fassone told the Observer.

“It was important for me as a European to understand what is the vision that Chinese entrepreneurs can have behind their dream. After month after month working with them, I started to understand their vision. It is a very exciting project.”

A Luxembourg-based holding company was created, Rossoneri Sport Investment, to complete the €740m takeover with the aid of a huge loan from American hedge fund Elliott Management.

President Yonghong Li flew in yesterday and will be at San Siro for tonight’s Serie A match against Cagliari, his first appearance since the 2-2 Milan Derby draw in April.

“We are probably the most international club in Italy – Juventus has more domestic titles but European football is in Milan’s DNA,” continued Fassone.

“We are pleased to have reached the Europa League because it represents an important step and it will be a priority for us this year to come back on to the international stage. But the natural home the club has to be in is the Champions League.

“That’s the target that our owners have given to us. They would like to be consistently part of the Champions League in the coming years. They know that on the sporting side and on the economic side, it changes the life of a club – especially in Italy because the revenues are really impressive.

“We are lucky because this is the first season that Italy will have four clubs who qualify [for 2018-19] so the target is difficult, but not impossible. It represents the minimum goal that we want to achieve. The club is a giant that’s been sleeping for two or three years, but it’s like a Ferrari that’s been kept in a garage – you need to let a Ferrari out on the track to be free.”

Some have questioned the business model behind the Milan takeover, specifically how they can balance Financial Fair Play parameters when spending over €200m on new players.

Above all, the concern is the €300m loan from Elliott, as repayment in full is due in October 2018 at interest rates of 11.5% and 7.5%.

Elliott is a ‘vulture fund’ that specialises in buying debt from struggling companies or even countries.

“We are already working to reimburse them and we will actually do this really early, possibly at the start of 2018. The level of interest Milan is paying on the €120m is high, of course, but not terrible.

“If you consider the debt that Inter or Roma contracted with Goldman Sachs when they were financing, which was about 6.5%, of course this is higher but it’s not something terrible. For Chinese people, when you see interest on loans in double digits, for them it’s completely normal.

“In a worst-case scenario, because a lot of fans and shareholders have been asking me this, it means that in October next year, the owners of Milan will be Elliott.

“This is really the worst case but, just to ensure, the future of the club is not in the fog. No, 99% we will go ahead with Mr Li and we hope our project will be successful. But in the worst case, be relaxed because Elliott are not ‘desperados’ – it is one of the biggest hedge funds in the world that could keep the club or resell it. They would have paid only €300m, which is a very low price, and they can make business, which is their job.

“As you can imagine, I have a plan A and a plan B. To UEFA, I have presented a more conservative plan which shows a progression even if the club is still out of the Champions League next season. In that case, my investment in the market cannot be high and we would also have to consider a sale of one of our top guys.

“But we also have a scenario that says: ‘Marco, what happens if the club doesn’t achieve the Champions League?’ The investors and I want to be there, but we are prepared if we don’t make it we will ensure that the club is protected.

“Before new business starts, you need a couple of years when you still lose money. This year and next year, we have forecasted more losses for the club and Mr Li is taking care of this. He has increased the capital and putting money in. The fans appreciate this man who is not so visible here, but is spending money.

“Don’t forget this is the most expensive investment that there has been in European football after the Manchester United takeover. They hope in two or three years maximum to make the club worth double what they paid for it. But to do that we have to perform on the pitch and off the pitch.

“It’s not an owner who is coming in just to make a speculation, like has happened with other clubs in Italy. This is one who wants to make the club great again and is investing with his own money.”

Considering the circumstances, the pressure on Milan and Vincenzo Montella to deliver results straight away is immense.

“In the end it was our decision,” continued Fassone. “We could have decided to sign three or four players this year and the same again next year, which would probably have been easier to integrate into the team, but with the sporting director we decided to make a big revolution this year.

“We know it may take a year or so to integrate all of the players but in this way next year we will be in a position just to change two or maybe three who do not perform in the best possible way. It’s a calculated risk, in our opinion.”

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