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Big ambitions for AC Milan

You can make money from owning a football club even when the prospects look poor.  AC Milan had a host of problems on and off the pitch when hedge fund Elliott Managemen acquired them almost by chance.  It wasn't their usual investment territory.

Even after injecting €750m into the club, they will turn a profit of €450m with the sale to US investment group RedBird, excluding interest payments coming from the new owners.   That amounts to a return of about 15 per cent a year, nice money if you can get it.

The deal is an unconventional one in that Elliot lent €600m to RedBird at 7 per cent, a sum expected to fall to €200m later this year as money is raised from existing investors and partners.   Elliott also secured warrants that could be converted into an equity stake of between 1 and 2 per cent if the club is sold again or goes public.

RedBird's Gerry Cardinale hopes to draw on his experience of working with top tier sports clubs in the US such as the New York Yankees and the Dallas Cowboys to take the club to new heights.

A new stadium is top of the top do list, along with getting a media rights package for the whole of Serie A.  Cardinale reckons that there should not be the earnings differential on the media side between Serie A and the Premier League (some €3bn).

Cardinale sees scope for brand crossover, drawing on Milan's status as a global fashion capital, the home to Armani, Versace and Prada.

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