Private investment firm RedBird Capital Partners will acquire Milan from Elliott Management. RedBird will acquire the new Italian champions for € 1.2 billion, with minority shares remaining in Elliott’s hands. The amount could reach up to 1.8 billion euros according to reports. Depending on the options exercised.
RedBird has overtaken the investment company from Bahrain, Investcorp’s, which has submitted a bid of 1 billion euros. According to reports, Jerry Cardinal, the chairman of RedBird, a former Goldman Sachs man, pushed for a deal for AC Milan.
Elliott Management took over Milan in 2018 for about 300 million euros. This is after the Chinese businessman Li Yonghong failed to repay a debt of 32 million euros to the fund, which lent him money to complete the purchase. In 2017, Yonghong borrowed around € 180 million from Elliott to complete the acquisition of AC Milan from Silvio Berlusconi. Since 2018, Elliott has invested more than half a billion euros in Milan. The sale for 1.3 to 1.8 billion euros will help Elliott get out of the investment in Milan with a financial and image profit from Milan.
Jerry Cardinal founded RedBird in 2014 with the goal of investing primarily in four areas: sports, media, customer service and financial services. The company has several interests in sports in general, and football in particular. It has invested $ 750 million in the acquisition of 10% of FSG, the owner of Liverpool, the Boston Red Sox and the Pittsburgh Steelers; She owns the NFL Games Hosting Company; Owner of French Toulouse; Acquired 15% of Rajasthan Royals from India’s Senior Cricket League (IPL) and invests in Spring Hill, LeBron James’ production company. Football in the halls is owned by Dwayne Johnson (“The Rock”). RedBird’s investments – in sports, entertainment and financial services – are investments in long-term relationships.
As mentioned, RedBird are in European football as owners of part of FSG and as owners of Toulouse, which this year was promoted from the second division in France to the first division. In Toulouse – a club founded in 1970 and acquired in 2020 by RedBird for 20 million euros – did an excellent job and built a team that rose to the first division easily with 6 of the 11 players of the season playing in the media. Everything is done with a budget of about 30 million euros – the highest budget in the second division of France. RedBird loves the use of analytics and is not afraid to invest large sums.
This, by and large, is what they will have to do to keep Milan at the top of Italian football and bring it back relevant in the Champions League: a great job with a big budget.
Is it possible? Last February, Milan published the organization’s financial reports. The financial picture is not as encouraging as the professional situation. The latest financial reports showed a loss of 96.4 million euros in the 2020/21 season – a decrease of more than 190 million euros from the previous season. Since Elliott Management took over Milan in 2018, the company has invested more than € 540 million in the group – mainly to cover losses.
The good news is that professional success will lead to a significant increase in revenue – mainly thanks to the Champions League. Revenue from Europe this season will increase by tens of percent thanks to the Champions League bonuses and tickets sold for games in the UEFA tournament.
Total revenue rose from € 172 million in 2019/20 to € 260 million in 2020/21. Revenue from broadcasting rights increased significantly from € 63 million to € 138 million, as did commercial revenue (from € 77 million to € 94 million). The income / wage ratio (the income rate dedicated to players’ wages) also dropped from 93% unhealthy to the most reasonable 70%. Revenue from the season ended (2021/22) will stand at more than 300 million euros.
Revenue from game days will probably increase a lot because in 2020/21 there was no crowd on the pitches throughout the season (revenue from game days will be around 35-50 million euros per season). And in terms of debts to other clubs, the net debt to clubs (from payments on players mainly) has dropped to just € 1 million. Interest payments on debts of about 100 million euros also dropped significantly from 23 million euros to 5 million euros. Payments on acquisition (depreciation) players also fell from € 95 million to € 66 million.
And after all that, Milan are still a very losing team. The salary budget has risen to 170 million euros (third place in Serie A) and in order to continue to strengthen the team at this level, they will have to continue to increase it.
Milan’s revenues, as mentioned, will go up a lot because of the Champions League this year, but as could be seen this season in the home stage of the Champions League – Milan are very far from presenting a deep squad that can succeed in both the Champions League and the domestic league. There are also very high revenue gaps between AC Milan and the leading team in Italian football – Juventus – which brings in about twice as much as AC Milan.
More bad news is coming from the British Isles. Teams like West Ham, Wolves and Leicester City have the same or bigger financial muscle than AC Milan. This allows them to draw talent from any team in Europe – including Milan.
Milan will have to reduce losses and increase revenues to meet UEFA conditions (which will prohibit paying more than 70% of revenue to players’ salaries). The new owners will have to invest their money – both in the staff and in the new Milan Stadium project ( All the approvals and funding). RedBird are not expected to make too big changes in management. Things are expected to continue to work as they have done well for the past two years. .
Milan, despite the prestige and excellent professional management in recent years, is not the best team in the world. However, it is a piece of jewelry that when shiny, is brighter than most other clubs in the world. The question is how much money will have to be invested in this piece of jewelry to keep it shimmering.