From the beautiful Milano Centrale, you can get on the Zurich train that will take you through the likes of Monza and Como before taking to you into the country of clocks, banks and UEFA, Switzerland. The proximity of European Football’s governing body has perhaps never felt so close to Milan as it does today, especially as they are running out of time to find a solution for their recent financial issues. The Rossoneri had tried to act quickly and offer a pre-emptive agreement to navigate FFP but as the year draws to a close, they have seen it rejected by UEFA. How they will readdress this will be now be a cause for concern.
On the field the story has been more of a nightmare than the fairy tale many thought it could be. On the surface, the plan seemed a good one to the fans when they welcomed Rossoneri Sport Investment Lux to town back in April. After all, businessman Li Yonghong was going to relive them from the yoke of Silvio Berlusconi, the man who had made the club but whose coffers were now empty. The spending began immediately as ten new players arrived costing $250, names such as Andre Silva and Leonardo Bonucci brought talk of Scudetto’s and European glory.
The end of 2017 told a different story as both off and on the field things started to fall apart. Vincenzo Montella was dismissed after a succession of poor results and Genaro Gattuso’s blood and thunder approach, as yet, has changed nothing. The aforementioned stars were still not performing but what was worse, was that Financial Fair Play was still hanging over them and disappointment on the field would not bring anywhere near the revenue needed to get them out of their situation. They needed a plan to show UEFA that they were a fully financially sustainable club by the agreed date.
In 2015 a new ‘voluntary agreement mechanism’ was introduced by UEFA that would help clubs who had undergone new ownership to present a plan of how they could get near to the break even point. This would help the club navigate the initial out lay of heavy losses but as long as the long term financial model looked like it would help the club to be self-sufficient within an agreed amount of time, then this would be taken into consideration. This is what Milan decided to do but the financials made this a difficult task to manage.
According to Forbes, “Currently, FFP places a limit on losses over a three-year period at a little over $35M (€30M). The six months of this year to June 30, 2017, Milan recorded a loss of $38.5M (€32.6M). The last full year of accounts brought a loss of $85M which brought Milan’s cumulative loss to nearly $600M over the last 11 years.” The size of these losses would make any possibility of being independently breaking even looked impossible.
Milan still proposed a plan to UEFA’s Investigatory Chamber in November in anticipation of the breach. This was rejected out of hand however, as the Chamber thought that there were too many uncertainties in relation to the loans that are due to be paid back in 2018. They also asked questions about the Rossoneri Sport Investment Lux and whether they were able to provide financial guarantees. This is mainly down to the fact that, at the time of purchase the Far Eastern group had to look to US-based Hedge Fund Elliot Management to close the deal. This has left them with huge amounts of interest to pay by October, or the Hedge fund could even take control of the team if they fall short.
For Milan this means that they will be monitored by UEFA closely from now on and that they will have to reach a settlement away from the voluntary plan next year. The penalties of not doing this before, have been felt by their rivals Inter and are normally in the shape of transfer restriction, squad size limitations in Europe, salary caps and fines.
The thought of Milan having to sell their assets already, despite the lack of success they have brought, seems ludicrous but maybe very real in the coming months. The project that made the mood in Milan so bright back in August has now instead made them no better off. Only qualifying for the Champions League will do anything to stop the wound from bleeding but with Gattuso sitting in 11th place with his team nearer on points to the bottom of the table than the top, this seems unlikely and the Rossoneri are preparing to brace themselves.
