Elliott takes control at AC Milan and throws club another €50m

AC Milan

July 12 – AC Milan’s Chinese buyer Yonghong Li has lost control of the club after US hedge fund Elliott Management announced it has taken over the Italian giants following Li’s failure to make a €32 million loan payment.

Elliott has said it will immediately put €50 million into the club saying: “Financial support, stability, and proper oversight are necessary prerequisites for on-field success and a world-class fan experience.”

Talks had been on-going with potential US investors Rocco Commisso and the Ricketts family, but neither appeared willing to get close to the €740 million Li paid for the club putting their valuations around the €500 million mark. There was also talk that AS Monaco’s Russian owner was interested.  as well.

Instead Elliott has taken the option through the payment default to take control and attempt to rebuild the club’s valuation.

Elliott’s founder and co-CEO Paul Singer said his fund “looks forward to the challenge of realising the club’s full potential and returning the club to the pantheon of top European football clubs where it rightly belongs.”

Initially that will be difficult as UEFA has banned AC Milan from next season’s Europa League for failing to meet the break-even requirement in its Financial Fair Play (FFP) rules. The club is appealing the ban at CAS.

UEFA had expressed doubts at AC Milan’s ability to refinance loans from Elliott due to be repaid in October. Their fears were realised faster than perhaps even they had expected with Li missing a loan repayment deadline. With Elliott now in control the October deadline may be less of an issue of UEFA and CAS arbitration might throw the club a lifeline.

AC Milan was acquired by Li from Silvio Berlusconi’s Fininvest in a protracted €740 million deal that took months to finance. Elliott bridged the finance gap with a €300 million+ loan to Li’s investment vehicle Rossoneri Sport Investment Luxembourg to complete the purchase. AFP reports that interest on the parts of the loan were as high as 11%.

Last summer the club went on a €200 million player spending spree in a gamble to challenge for the Serie A title and reach the Champions League. The club fell well short, finishing in sixth but in doing so qualifying for the Europa League.

An Elliott statement said it aims “to create financial stability and establish sound management; to achieve long-term success for AC Milan by focusing on the fundamentals and ensuring that the club is well-capitalised; and to run a sustainable operating model that respects UEFA Financial Fair Play regulations.”

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