Milan finances under new owners 'encouraging'

Milan’s 22/23 accounts were the first accounts reported under the ownership of US investment company RedBird Capital Partners, who purchased the club from Elliott Management in August 2022 in a €1.2bln deal that included a minority stake for Major League Baseball club, the New York Yankees.

RedBird already had some experience in the world of football via their controlling interest in French club Toulouse and an 11% stake in Fenway Sports Group, Liverpool’s owners.

Milan’s success on the pitch helped them return to profit for the first time in 17 years, as they swung from a €60m pre-tax loss to a €14m profit, which chairman Paolo Scaroni described as an “important step”.

Revenue rose €126m (46%) from €274m to a club record €400m, slightly offset by profit from player sales falling from €3m to almost nothing. All of Milan’s revenue streams experienced significant growth under the new ownership with each of them setting new club highs. Match day more than doubled from €33m to €73m; commercial rose 41% (€42m) from €104m to €146m; and broadcasting increased 31% (€42m) from €133m to €175m.

It is imperative that Milan continue to do well in Europe in order to boost broadcasting income, as Serie A TV rights are so low at €1.1bln. That is only above Ligue 1 in the “Big Five” leagues, but more importantly it is around half of La Liga and a quarter of the Premier League’s mega deal. Milan’s achievement in reaching the Champions League semi-final was worth €85m, while Inter received €100m after getting to the final and quarter-finalists Napoli got €77m.

The last time that Milan managed to generate a profit was back in the Berlusconi Fininvest era, when they made €2m – and even that was entirely due to €42m from the sale of Andriy Shevchenko to Chelsea.

In the previous nine years, the club had lost around €900m, as chief executive Giorgio Furlani admitted, “Milan was not sustainable the way it is today, the club was on the verge of bankruptcy.”

It has been a steady recovery, as the club reduced losses two years in a row before moving into the black. Importantly, they have basically succeeded in finding the tricky balance between managing the finances, but improving performances on the pitch.

Milan had the second highest average attendance in Italy in 2022/23 with 71,880, which was just behind Inter’s 72,630, but a fair way ahead of the two Roman clubs, Roma 62,038 and Lazio 45,483.

The saga of Milan’s search for a new stadium continues. The joint project between Milan and Inter to build a new stadium has foundered, so the first choice now seems to be a 70,000 seat new stadium in the San Francesco area in San Donato.

Despite the sharp increase in revenue, Milan managed to keep their wages under control, as these only rose €4m (2%) from €170m to €174m, largely due to higher bonuses. Milan’s €174m wage bill is the third highest in Italy, albeit over €100m below Juve’s €282m and also much less than Inter €227m. They were around the same level as Roma €173m, but miles ahead of Napoli €111m and Lazio €110m.

Milan’s €71m gross debt is only the eighth highest in Italy, miles below Inter €538m, Roma €497m, Juventus €389m and even Sassuolo €110m.

Redbird put in €40m capital last season, mainly to progress the new stadium. This was a sign of support, but significantly lower than the €545m that previous owners Elliott had to inject in the previous four years, albeit they only contributed €5m in 2021/22. Milan have been very reliant on increases in capital from their various owners for a long time with over a billion Euros provided since 2010 to cover the club’s substantial losses.

Milan’s first year under the leadership of RedBird Capital was very encouraging, as the club set new revenue records for all business lines, while keeping costs under control, which led to its first net profit for 17 years. There is no doubt that Milan have achieved a great deal in the past couple of years, both on and off the pitch. The challenge is whether they can maintain this level of performance, which means as a minimum qualifying for the Champions League.

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The Political Economy of Football V2

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