UEFA surprised many people, including the Marco Fassone, the CEO of AC Milan, with the announcement last week that the governing body was rejecting Milan’s settlement offer and sending the club to the disciplinary committee to determine what kind of punishment Milan would suffer as a result of violating the terms of Financial Fair Play rules.
While Fassone’s statement on the matter seemed to focus more on the sins of previous owners, the actual statement by UEFA instead seemed to indicate that they had concerns about the ability of the owner, Yonghong Li, to repay the rather large sum of money that he owes to Elliot Management.
Bloomberg News is now reporting that Elliott Management, the US based “vulture capital” firm, is looking to provide additional financial support to Milan in order for the club to satisfy UEFA regulators and help the club avoid any sanctions by UEFA. While it’s hard to speculate exactly what punishment Milan would suffer, the club could suffer anything from fines to a potential expulsion from any European competition, meaning that Milan would not be able to participate in the Europa League next season, despite qualifying for it by finishing sixth in the Serie A table.
Elliott Management had to step in at the last minute for Li to secure the necessary funding to complete the purchase of Milan, and it appears that the hedge fund might be willing to take control of the club in order to recoup their investment. Bloomberg News reported that, “Elliott is also prepared to take over the soccer club later this year if Li fails to meet his obligations, the people said.”
Support for Li would make sense for Elliott if they expect to take control of the club later this year. Bloomberg reported that Li has resisted offers to buy the club from other parties, and after the news broke about possible sanctions from UEFA, fresh rumors came out about the Miami Dolphins owner, Stephen Ross, being possibly interested in purchasing the club if Elliott were to gain control of the club.
Any punishment to Milan would hurt the resale value of the club, and the value would be severely impacted if the punishment involved exclusion from European competition. With that in mind, it appears that neither UEFA nor Elliot expect Li to be able to secure the funds to pay off the €380 million loan by this October.
At this point, Li selling the club might be a good thing, because the temptation by any ownership group that is short on cash is to have a fire sale on the club’s assets, i.e. players, in order to cover the debt. Milan can’t afford to have a broke owner if they are to hang on to their good players, much less make any purchases to take the club back to the Champions League. Even though this whole situation is terrible, and was completely avoidable, this is where the club is at right now. Maybe it will be for the best if Li and Milan go their separate ways.