Tuesday May 22 2018
Why did Milan fail FFP parameters?

UEFA rejected the FFP settlement agreement with Milan because of concerns over Yonghong Li’s debt to Elliott Management and a lack of revenue.

“The Investigatory Chamber of the UEFA Club Financial Control Body (CFCB) has decided to refer Italian club AC Milan to the Adjudicatory Chamber of the CFCB for breach of the Financial Fair Play regulations, in particular the break-even requirement,” read the statement.

“After careful examination of all the documentation and explanations provided by the club, the CFCB Investigatory Chamber considers that the circumstances of the case do not allow the conclusion of a settlement agreement.

“In particular, the CFCB Investigatory Chamber is of the opinion that, among other factors, there remains uncertainties in relation to the refinancing of the loan and the notes to be paid back in October 2018.”

Many have asked why Paris Saint-Germain or Manchester City can spend far more on the transfer market and still reach settlement agreements, but Milan are in an unusual situation.

As explained by financial newspaper Il Sole 24 Ore, the problems at San Siro regard on-going and deep uncertainty.

Yonghong Li bought the club a year ago thanks to a massive €300m loan from US hedge fund Elliott Management, which is due to be repaid in full in October 2018 with interest taking the total up to €380m.

Negotiations have been going for months to refinance the loan or find other investors, but there is still no sign of that being achieved.

Milan, meanwhile, were meant to stay within the €30m limit between their revenue and spending, but are believed to be closer to €100m.

It’s a huge imbalance and that’s not only due to spending, but above all the lack of visible new revenue that was promised from China.

In January, Soccerex calculated that Manchester City were the most financially powerful club in the world based on playing assets, fixed assets, money in the bank, potential owner investment and net debt.

The Premier League winners had €788m in evaluated owner potential investment.

Paris Saint-Germain were third in that ranking, with Juventus in eighth and Chelsea ninth.

Milan came in 34th place with €250m in net debt and €39m in potential owner investment.

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