UEFA’s “impossible” prerequisites for Milan’s Financial Fair Play agreement reportedly included an immediate deposit of €150m to cover future debts.
The FFP commission will meet tomorrow to decide whether to grant the Rossoneri’s request for a voluntary agreement, but it’s expected that they will reject the proposal.
CEO Marco Fassone, who submitted a 150 page business plan, appeared to confirm as much when he stated this morning that some of UEFA’s requests were “impossible”.
According to the website Calcio e Finanza, the first condition was that an agreement be found to refinance the loan from Elliott Management which funded the takeover of the club.
The hedge fund loaned Yonghong Li and the club a total of €300m - €180m for the takeover, €73m for short-term payments and €50m to the club -, which must be repaid by October or Elliott can take control of the club.
This condition was also reported by Gazzetta dello Sport and Corriere della Sera.
While talks are underway to refinance, with Fassone stating they hope to complete a deal by April, it won’t be done in time to meet FFP.
The website panorama.it reports that the second condition was a €150m “precautionary payment” by Li to cover future losses.
However, the owner couldn’t guarantee to provide that in time which pushed the committee toward a no vote, though no official decision has been taken.
Financial website Il Sole 24 Ore reports that, as much as anything, UEFA doesn't want to give an endorsment to an owner about whom they have significant reservations.
This would be the first voluntary agreement to be put in place, and as such will be seen as something of a test case.
If it were to go wrong it would reflect badly on UEFA and FFP, and the organisation's President Aleksandar Ceferin has admitted he's "worried" by the new ownership.
Uefa allows for a voluntary agreement if a club “has been subject to a significant change in ownership and/or control within the 12 months preceding the application deadline”.
There are several conditions imposed to be granted such an agreement though.
The first is that any applicant must “submit a long-term business plan, consisting of a balance sheet, a profit and loss account and a cash flow statement which must be based on reasonable and conservative assumptions, in the form communicated by the UEFA administration, including future break-even information up to reporting period T+4”.
Milan initially submitted a plan which included huge revenue growth in China, but it was withdrawn, likely because the projections were not "reasonable and conservative".
Secondly, a club is required to “demonstrate its ability to continue as a going concern until at least the end of the period covered by the voluntary agreement”.
If these reports are correct, it appears Milan may have fallen foul of the third condition, which requires owners to guarantee funding, with the law stating “this irrevocable commitment must be evidenced by way of a legally binding agreement between the licensee and the equity participant”.
Those legally binding agreements can be in the form of payment into an escrow account, a guarantee from another company in the legal group structure or any other form of guarantee which “the UEFA Club Financial Control Body investigatory chamber considers satisfactory”.
The final condition is that a club must “demonstrate its ability to meet the targets and obligations agreed with the UEFA Club Financial Control Body investigatory chamber”.
It is entirely down to the UEFA Club Financial Control Body investigatory chamber to decide whether to grant a voluntary agreement.
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