Thursday October 17 2019
Expert: 'Milan could be preparing sale'

Financial expert Luca Pagni suggests Milan’s record €145.9m losses are part of Elliott Management strategy to ‘clear’ the decks for a sale.

Eyebrows were raised when the club announced the balance sheet for the 2018-19 season had them running at an unprecedented loss.

However, the directors are not concerned and so asked La Repubblica newspapers economic correspondent Pagni to explain the situation.

It is all part of the same strategy that saw the Rossoneri agree with UEFA to back out of the Europa League and try to wipe the slate clean in terms of Financial Fair Play.

“Considering the situation, they accelerated the clear-out of the balance sheet. If Milan had qualified for the Champions League, they would’ve had an extra €39m at least in revenue. With that money, everything would’ve changed and they probably would’ve decided to make a more conservative balance sheet, postponing this process.

“The big problem we see here is that the sponsorships have dropped and so has the overall revenue. So far, Ivan Gazidis has shown no progress on that front.

“On top of that, the cost of personnel has increased enormously with an extra €35m, a part of that going on the salaries of Gazidis, Leonardo and Paolo Maldini.

“So faced with this complicated situation, and the poor sporting results, they decided to accelerate the process by getting rid of all the dead weight in one go, including old contracts.

“I was frankly surprised Elliott didn’t do this in the last financial year, but as they had just arrived, it perhaps wasn’t possible. I am not saying that they will certainly sell in the short-term, but that evidently this is being done to make the club more appetising for a future buyer.

“Milan don’t have debts with banks, so in case of due diligence, the potential buyer would find a clean slate.”

Pagni also points out the Financial Fair Play problems could also be resolved with the aid of this ‘gap year.’

“If Milan qualify for a European tournament in 2020-21, they will aim for a Settlement Agreement and will be able to work out a plan without that €146m to consider in the next balance sheet.

“The positive for Milan fans is that they no longer have Silvio Berlusconi, who didn’t have any budget for the transfer market in the last few years. There’s no Yonghong Li, who at one point didn’t look like he could afford lunch and dinner on the same day.

“Elliott are solid owners. They are ambitious, according to them. Some have suggested it all revolves around the new San Siro stadium project and sponsors tied to that could enter into the club.

“I think it’s safe to say Elliott have something in mind, whether it’s a sale of the club or something to increase the revenue.”

Elliott Management were never meant to own Milan, but effectively repossessed the club when previous President Yonghong Li defaulted on payments for a loan he had used to purchase it from Berlusconi.

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