As One Era Ends, A New One Begins With AC Milan Sale
At last, Yonghong Li’s Rossoneri Sport Investment Lux has completed the purchase of AC Milan from Silvio Berlusconi’s Fininvest. The deal values AC Milan at 740 million euros, which includes the club’s debt of 220 million.
After initially agreeing to the terms of the deal in August, Li struggled to raise the remaining capital he owed to Fininvest. Citing increased foreign investment restrictions levied by the Chinese government, he created Rossoneri Sport out of Luxembourg to finance the deal without assistance from Chinese banks and investors.
When the outcome looked bleak in early March, he reached an agreement with U.S. hedge fund Elliott Management that covered the bulk of the remaining funds due to Fininvest.
The final terms of the deal state that the new ownership group will invest 350 million euros in the club over the next three years. This comes as a relief to AC Milan fans, who desperately hope that their club will return to European competition and contend for a title in the domestic league. Milan last finished atop the table in 2011, and they have been shut out of the Champions League for the past three seasons.
The drought led Berlusconi to consider a sale, as he has struggled to compete with the top spending clubs in Europe. Under his leadership, Milan won five Champions League trophies, but the last came in 2007.
Former Milan president Silvio Berlusconi and current Milan president Yonghong Li.What a picture. pic.twitter.com/wsiRwfYg9R
— TheMilanBible (@TheMilanBible) April 13, 2017
Although Li promises to return AC Milan to its international prominence, doubts linger about his ability to substantially invest in the club. The terms of the emergency loan from Elliott include a prohibitive 11% interest rate on 180 million euros paid to Rossoneri, while the remaining 123 million euros invested directly in the club will be paid back at 7.7% interest. A change in ownership was necessary, but it remains to be seen whether Li will be able to deliver.
The new era kicks off this Saturday with the Derby della Madonnina. AC Milan and Inter Milan trail Atalanta by four and two points respectively for a guaranteed spot in the Europa League next season.
In addition to its implications for European competition, the fixture will make football history. AC and Inter are the first major European clubs to be principally owned by Chinese investors. Last summer Suning Holdings Group, headquartered in Nanjing, China, bought a 69% equity stake in Inter. Suning Chairman Zhang Jindong and Li are now both tasked with returning their clubs to glory and developing a growing fanbase in China.
Executing the latter objective could likely decide many of the future derbies, as capitalizing on growth in Asia would provide a significant revenue stream.