2023/24 was the second set of accounts reported for Milan 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.
Before and after the change in ownership, Milan have done
pretty well on the pitch finishing in the top four in each of the last four
seasons, including a league title in 2021/22.
Revenue growth
Milan posted a pre-tax profit for the second year in a row,
though this fell slightly from €14m to €12m. Despite a poorer performance in
the Champions League, revenue rose €9m (2%) from €400m to a new club record
€409m.
Milan have set new club records for operating revenue four
years in a row, so this has shot up by €180m (79%) from the pre-pandemic €228m
to €409m, thanks to steep improvements in all revenue streams, especially
commercial and match day, which have both more than doubled.
Milan had enjoyed the third highest revenue in the world
back in 2003/04. At that time, they generated €83m more revenue than the 10th
placed club, but in 2022/23 they were €147m lower, meaning a swing of a quarter
of a billion Euros. That said, the gap was as high as €254m four years ago.
Milan’s revenue growth was driven by commercial, which rose
€33m (23%) from €146m to €179m, while income from player loans was up 21% to
€8m. However, there were decreases in
the other revenue streams, due to less progress in the Champions League.
Broadcasting fell €23m (13%) from €175m to €152m, while match day was down €4m
(5%) from €73m to €69m.
Milan have achieved a major turnaround in their finances,
registering a profit for the second consecutive season. In the previous ten years, they 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 will be interesting to see whether Milan can again make a
profit this season, as they have made little to date from player sales, though
this could be offset by more money from the Champions League, depending on
their progress.
It’s worth noting that Milan’s financial improvement has
been achieved despite the adverse impact of COVID. The authoritative Swiss Ramble estimates that
the pandemic caused a €74m revenue loss, split between €27m in 2019/20 and €47m
in 2020/21. This was made up of match day €47m, broadcasting €16m and
commercial €11m.
Losses of the Italian
big four
The big four Italian clubs established an unwanted
reputation for suffering huge losses, which means that they lost a staggering
€2.6 bln in the last five years. However, these have more than halved from
€754m in 2020/21 to €313m last season, most of which came from Juventus’ €199m.
All these clubs have improved their bottom line, though
Milan have been the star performers, as they are the only club that has managed
to generate a profit in this period. If we look at the last three years,
Milan’s net €56m loss is comfortably the best result, as the others have lost a
lot more: Juventus €562m, Roma €399m and Inter €261m.
Player trading was clearly an area for improvement for
Milan, as their €21m profit in the three years up to 2022/23 was one of the
lowest in Italy, a long way behind the likes of Atalanta €181m, Inter €134m,
Fiorentina €131m and Napoli €131m.
Milan’s 2023/24 profit would have been higher without €14m
of exceptional costs relating to the dismissal of head coach Stefano Pioli and
his technical staff. Over the last ten years, Milan have been hit by €92m of
similar provisions, though 2021/22 benefited from an €18m gain on the sale of
Casa Milan, the football club’s headquarters.
According to La Gazzetta dello Sport, Milan received
€87m TV money from Serie A in 2023/24. Last season the algorithm applied a new
factor based on the number of minutes played by young players.
The disadvantage that Italian clubs have in terms of
broadcasting revenue was highlighted in the 2022/23 Money League, where no
fewer than five leading clubs earned more than a quarter of a billion Euros,
led by Manchester City €344m. Milan were
14th highest, but this figure was boosted by reaching the Champions League
semi-finals. Their more normal €152m last season would have placed them even
lower in the rankings.
European earnings
Based on the Swiss Ramble’s model, Milan earned €53m TV
money from Europe last season. They got €48m from the Champions League after
finishing third in the group, then added another €5m after dropping down to the
Europa League, where they reached the quarter-finals.
Milan’s financial recovery owes a lot to their return to the
Champions League, as they have earned a hefty €184m in the last three seasons,
averaging €61m a year, compared to just €45m in the previous seven years
combined.
Indeed, they failed to qualify four times in the last decade
(one year because of an FFP punishment), which had seriously damaged their
finances. The last time that they had made more than €40m was back in 2012/13.
The €184m that Milan have received from Europe in the last
three years is the second highest in Italy, only surpassed by Inter €230m, but
better than Napoli €164m and Juventus €143m.
Stadium
The saga of Milan’s search for a new stadium rumbles on. A few months ago, it seemed to be certain
that the club would be focusing on a 70,000 seat new stadium in San Donato.
Indeed, Furlani said, “We have thrown ourselves into that project. San Siro is
no longer feasible.”
However, the Milan council has recently re-opened the project
originally started in 2019 for a new stadium in the San Siro area. Although
both Milan and Inter have formally expressed their interest, there is an
understandable degree of caution.
The only thing that all parties would agree on is the recent
comment by the mayor of Milan, Giuseppe Sala, “This is a long story, but it’s
not easy to build a stadium in Italy.”
Milan’s gross financial debt increased by €28m from €71m to
€99m, consisting entirely of factoring payables (Factorit €67m and Banca Ifis
€32m), i.e. advances on future receivables, so they have no bank debt. The amount owed has fallen from over €300m in
2009, though this was greatly helped by Elliott, who repaid the bonds and
shareholder loans taken out under the previous Chinese ownership.
Even after last season’s increase, Milan’s €99m gross debt
is only the seventh highest in Italy, miles below Roma €497m, Inter €427m and
Juventus €279m. Scaroni had noted that
“the debt must always be kept under control”. Of course, if the stadium
development does eventually take off, then debt will significantly increase.
Conclusion
Milan’s second year under the leadership of RedBird Capital
continued on the same positive path as the previous season, with the club once
again profitable, while setting another new revenue record in the process.
President Paolo Scaroni said, “Milan is a well-managed and
healthy club”, which is fair comment, given these excellent financial results,
though it should be noted that last season’s profit relied on player trading to
offset the operating loss.
In fairness, Milan are clearly more focused on the cost base
than years gone by, but qualification for the Champions League remains extremely
important for their bottom line. This means that they need to continue to
invest well in the squad to avoid any deterioration in sporting performance.
I have been to La Scala twice, but never to the San Siro! A Milanese friend did investigate the possibility of having my book Political Football translated into Italian but without success. Unfortunately, he had to go the post office and pay a customs fee for the copy I sent him because of Brexit! Cheap copies available at https://www.abebooks.com
Comments
Post a Comment