5 days ago
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Over the past few days there has been a high volume of speculation regarding AC Milan’s corporate future, and uncertainty as to what it actually means.
Given the size and scale of a club like Milan, as well as how the last two ownership groups tend to operate as funds (Elliott Management and now RedBird Capital Partners), stories about a future beyond the current era are never far away.
Yet, what has come in the past week or so is a plethora of updates from reliable sources regarding changes right at the top of the club, ones that impact those who call the shots every day. You might have seen ‘vendor loan’ and ‘Manulife-Comvest’ mentions, but what does it all really mean?
Elliott out, Manulife-Comvest in
In the summer of 2022, Gerry Cardinale’s RedBird Capital Partners fund purchased Milan from Elliott Management on the basis of a mutually agreed €1.2bn valuation. Of that, €600m was paid to Elliott and €550m lent by the seller to the buyer, AKA the vendor loan.
In December 2024, a further capital outlay by RedBird reduced the debt to €489m (plus interest on top, at an aggressive rate) and extended the maturity (repayment deadline) until 2028. It cooled talk of Cardinale seeking an exit strategy, instead suggesting he is proceeding with a medium-term plan.
The fact remains that Cardinale had been considering for some time how to repay the €489m debt (plus interest). It could have been part or fully-funded by the sale of a minority stake to another fund, but he has gone a different route.
Manulife-Comvest will step in, providing RedBird with the cash to pay off the vendor loan to Elliott. Why the refinancing? It allows Cardinale and co. to extend the repayment period against (to 2031) and to take advantage of a lower interest rate.
This has all happened a bit faster than expected, too. From initial talk of it being something to complete by the end of the season, a board meeting this week revealed that the ‘transactions’ could take place before the next sporting fixture in Bologna next Tuesday.
What will change for Milan?
In terms of personnel, not an awful lot will change. President Paolo Scaroni, CEO Giorgio Furlani and CFO Stefano Cocirio will remain as the main captains of the ship, but the two board members still tied to Elliott Management will depart to make way for Comvest.
The overwhelming message, based on what has filtered from the club’s side, is that continuity must be preserved. After all, Milan have enjoyed a successful run of results not only on the pitch, but also off it, with three consecutive profits in the accounts.
Other projects are currently underway too that could do without any turbulence. The stadium plan is in a decisive year, while the possibility of constructing Italy’s best arena in San Donato has emerged as part of the wider NBA Europe franchise bid.
The Italian financial portal BeBeez has added some interesting added context, though. They confirm that Manulife-Comvest’s objective is to collect interest on the loans granted, without any interference in the operational management of the entrusted companies.
This is quite different from the modus operandi of Elliott, a hedge fund with strong private equity ties that had a say in Milan’s management, to the point of having two members on the board of directors: Gordon Singer and Dominic Mitchell. They were there precisely to strengthen Elliott’s ability to keep tabs on spending.
The amount of the loan that Manulife/Comvest will grant to RedBird is expected to be around €650m and crucially is expected to include a Payment in Kind (PIK) clause. This allows the entire amount to be paid upon maturity, which should be in 2030.
A PIK means that there are other methods of paying the loan off too, such as a trade for equity or other services. It offers some flexibility to RedBird, perhaps in terms of what they offer up in terms of collateral on the loan too (it might be leveraged against the fund and not the club directly, for example).
The questions answered only produce more questions, so we will address another: what does all of the above mean for the short-term of Milan, which is ultimately what the vast majority of supporters care most about.
Back over to BeeBiz “The PIK clause will allow Cardinale and the management team […] to use the liquidity to strengthen the squad and other initiatives.
“Once Elliott are no longer breathing down their necks, and with a financier already known and only interested in regular interest payments, Cardinale & Co. will be able to focus on the transfer campaign, on which the guarantee structure in favour of Elliott posed several constraints, first and foremost the need to pay interest to Singer and partners.
“With the PIK clause, greater liquidity will be available, thus making some previously forbidden dreams become a reality, such as Leon Goretzka of Bayern Munich, or Gabriel Jesus of Arsenal, as well as that of Dusan Vlahovic, currently of Juventus.”
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