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AC Milan’s 2018/19 Finances: Between a rock and a hard place

An analysis of @SwissRamble data on the poor performance of Milan’s finances.

Milan v Liverpool (Istanbul): Agony
Getty Images

Last year, AC Milan narrowly missed out on the final Champions League spot. At one point on matchday 38, Milan was 3rd on the Serie A log. As the fates would have it, neither Di Lorenzo’s pass to Caputo nor the beautiful link-up between Farias and Salih Ucan, who was a stand out performer on the night would bear any fruit.

Once again, as had become the trope in recent years, Milan lost: to no less an opponent than their bitter rivals, Inter Milan. Atalanta stormed to a 3-1 victory over Sassuolo on that night as well but the victory would have tasted sweeter if it had as its icing, the relegation of Inter to Europa League football: As it turns out, not only did Milan fail on the night, they also opted to void participation in the competition for financial reasons.

It was also for financial reasons that Milan had lost out so painfully in recent years to Inter who unlike Milan, had completed a more effective transfer of ownership to the Suning Group who since arriving, have transformed the finances of Nerazzurri off the field and set them on an upward trajectory on it.

The following is the ugly portrait of Milan’s recent financial past:

In the last half of the decade, Milan has had three owners. After three excruciating years of negotiations with different characters from China and South-East Asia, Silvio Berlusconi finally decided to sell to the highest bidder: Yonghong Li.

During the Yonghong Li period, Milan lost more money than it had ever done before. Before posting taxes, Milan lost about 143 million euros, twenty million euros more than the previous financial year after taxes and this despite a marginal increase in revenue from €220m to €228m.

Serie A: Profit/Loss Accounts
@SwissRamble

Why did Milan lose so much money?

After the free-spending summer of the Yonghong Li era, Milan added 34 million euros to its already inflated wage bill buying players like Borini and Kalinic: the latter being documented as a transfer write-down almost immediately.

Player sales have constituted a serious obstacle for Milan in the last half-decade with Milan pocketing a cumulative 55 million euros since 2014 compared to Juventus who have sold players to the tune of almost half a billion euros, Roma with 319 million euros and Inter who have profited 185 million euros off departing players within the same time frame.

Serie A: Profits on players sales
@SwissRamble

On the other hand, and quite farcically, Milan’s most aggressive growth spurt in 2018/19 was recorded in income from outgoing player loans which grew just under 50% from 7 million euros to 13 million euros within the same time-frame.

For context, Milan lost at least 100 million euros more than rivals, Inter or Juventus who lost 40 and 27 million euros respectively and grew by only about 8 million euros (entirely from fee-paying loans). Atalanta, who also piped Milan to the Champions League made a healthy profit of 35 million euros during this period.

Broadcasting revenues grew by a measly 4% from 101 million euros to 105 million while commercial revenues and match-day revenues declined by a combined 3 million euros (about 5%) compared to the previous fiscal period.

Other accumulated losses like the 545 million euros deficit over the last 5 years, UEFA/ FFP fines and a frustrating propensity to acquire players with little or no resale value also contributed significantly to the devastating decline of the club over the last twenty years.

The negative effect of European exclusion over the last few years not only made it impossible to acquire the first-tier talent, but it also cascaded and affected operating revenues which reduced by 39 million euros (15%): A shortfall directly impacted by the loss of Champions League broadcasting revenues.

Deloitte Money League 2018/19
@SwissRamble

Once more, in a document that has become a shameful homage to the dearth of Il Diavolo’s incredible story, Milan dropped 3 places to 21st in Deloitte’s Money League, a gall-dulling 500 million euros behind Real Madrid with over 700 million euros in revenue.

Perhaps the most poignant part of this portrait is that in 2004, Milan was 3rd on the Deloitte Money league with 223 million euros in revenue. Today, Milan is 22nd on that list with 228 million euros in revenue: A five million increment in the sixteen years since. In stark contrast, Real Madrid in 2004, was one place above Milan in second with 236 million euros in revenue. Today, Los Blancos generate 750 million euros in revenue: Need I say more.

Deloitte Money League 03/04: Milan, 3rd
Deloitte Money League

For fans of the Rossoneri, perhaps there is redemption on the horizon. With the departure of players like Borini, Rodriguez, Suso, Reina, and Piatek in January 2020, the leadership of the club finally seem willing to chart a reasonable course financially. Also, the recruitment of Alex Rasmussen who has worked with brands like Unibet, Adidas, and Carlsberg has come at a critical time: with the Emirates deal nearing its end and a low-ball offer being rumoured in the media.

The results on the pitch must improve but if recent events are anything to go by, the introduction of Zlatan Ibrahimovic to the squad, the consequent improvement in on-field performances and the newly renewed commercial focus, things cannot be much worse than they are right now: At the moment, that alone is cause for optimism.

*All thanks to @SwissRamble for the data

*Other relevant financial details can be found on the twitter account of @SwissRamble or this link.