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Plan B



So Milan are officially owned by Elliott Management Corporation, the American hedge vulture fund that loaned Yonghong Li the cash to buy the club in the first place. This was the scenario that UEFA feared for Milan – not that Yonghong Li didn’t have the money, but rather that we would fall into the hands of a vulture fund – businessmen without morals who are just looking for a quick buck. And while UEFA themselves helped to push us into this position, it seems that Paul Singer and his Elliott Advisors (UK) Limited actually have a Plan B.

That's a funny looking vulture

Milan’s current situation traces back to the poor business practices of both Berlusconi and Galliani. Having invested and built the history that Milan are known for, they also ran the same club into the ground with free transfers, overinflated wages, and overall just not keeping up with modern football. So Berlusconi courted potential minority buyers, including Bee Taechaubol, who gave Silvio the run around for over a year and even got him to invest €90m into Milan in 2015. But “Mr. Bee” never invested in the club, never reimbursed the €90m, and in fact, our loss for that year was €89m. Ironically, that loss was one of the reasons we were investigated by UEFA for FFP violations.

Despite that deal going so very badly, Berlusconi was desperate to sell the club, as Fininvest were potentially facing a hostile takeover. That is when Yonghong Li came into the picture, with Sal Galiatoto and a bunch of other potential investors. Looking to purchase a majority of the club as a consortium, the negotiations and deadlines dragged on for over 11 months. Even as Sino Europe Sports, they failed the Maldini Litmus Test. Maldini was unconvinced of their plan, which was one of the most telling predictors of this ordeal.

While Milan falls into the wrong hands due to his negligence, Berlusconi announced personal profit of €90m

One by one, all of the other investors dropped out of the group and eventually it was just Yonghong Li. After making three payments for a total of €250m, was he simply desperate not to lose his money? Or did he really want to buy Milan? He said it was the latter, but having used shady offshore sources to make the original payments, he struggled to get enough to close the deal. Reports said China were limiting funds leaving the country, particularly for things like football clubs. So finally, he turned to the American Elliott Management Corporation. They handed him the last €300m he needed to close the deal, but with massive interest and an 18 month deadline. It was very easy to predict where this was headed.

Maldini wasn’t the only one who wasn’t convinced by the business plan of this new ownership. UEFA failed to grant us both voluntary and settlement agreements. They said it was because of break-even non-compliance, which pointed to the final three years of Berlusconi’s ownership. But that was just a formality. Now that the 33 page explanation has been released, they repeatedly cited concern over Yonghong Li’s use of the hedge fund, as well as the credibility of the business plan Fassone and Mirabelli created, then changed throughout the year when things didn’t work out. This, despite Yonghong Li making all of his capital investment payments on time up until the June 23rd one. So Milan are banned from Europe this season, pending appeal.

Yonghong Li doesn't play well with others

When he failed to make that €32m payment, the Elliott Fund made the payment with a due date of ten days. Due to a clause in the contract, if Yonghong Li failed to make his capital investment payments, he would default on the entire amount he owed and Elliott Management could take over. This is where it gets really strange: during that ten day process, it appears that he was seeking a minority or majority investor in the club. Specifically, there were multiple American businessmen willing to buy the club. This would make the most sense for him, as it would limit his losses, remove the Elliott Fund from the equation, and be the best option for the club, too. But instead, he persisted in stalling each deal offered, apparently holding out for some control of the club. And in doing so, he held the club hostage once again, and once again impacting our mercato.

Now he’s lost everything. Pending some sort of legal appeals, he literally gets nothing out of the €740m deal. While the media did more than their fair share of taking liberties with his story, in the end, he has proven his haters and doubters correct, and stolen over two years from the rebuilding of our club. Why? Why would he lose everything when he could have lost about half of his cash investment and still been a minority shareholder? And he has left us in the hands of a vulture fund. A fund everyone reported would turn around and sell the club to the highest bidder. Instead, they want to be our Plan B.

An ever-changing plan that was not credible

So their plan is to stabilize the club both financially and with new management, as well as make sure that we comply with FFP. They say they want to return us to being one of Europe’s top clubs again, too. Which sounds like a dream. Until you remember that none of these guys have ever run a football club before. They are not Milanisti, their lawyers are undoubtedly up all night tonight reading UEFA’s FFP for Dummies, and they seem to have unrealistic ideas about how much stabilizing this “asset” will cost them. There is also the question of why they are doing this. It would be far more profitable for them to just sell the club now than for them to invest so heavily in time and money and attempt to sell the club for even more later.

To come full circle, this plan of theirs does seem to pass the Maldini litmus test, as he is widely reported to be finally coming home to preside over the technical side of the club. It’s impossible to trust a company whose business it is to loan money to high risk clients only to swoop in and repossess everything when any little thing goes wrong. And yet, they appear to have done their homework.

If he comes back, will everything finally be okay?

While I would feel much safer in the hands of a person or family that has managed a sports club before, somehow I feel safer in the hands of these vultures than I did in the hands of an enigma. I don’t feel like Milan’s troubles are over, but I can’t help but be excited if Maldini does in fact come home. Even if there is a fear that they will “burn” him, like Silvio burned Seedorf and Pippo, I want to see what he can do. Despite being as inexperienced at his potential job as Fassone and Mirabelli, he does know Milan. And he has lived and breathed football since birth. After all we’ve been through and the other potential scenarios we could be in, I guess I can get used to the idea of this plan B.


This post inspired by the music of XTC