When private capital saves a club: AC Milan as a blueprint for modern football

In the Cleats & Cashflows section, we analyse this development. We look at the opportunities that this type of investment offers, but also at the risks involved. This edition is the first part of a mini-series about AC Milan. Now that investor Elliott Management has sold its last financial stake last week, it is a good time to look back on the entire period during which Elliott was involved with the club.

Elliott did not come in as a visionary club owner, but as a financial saviour. In 2018, the company took over the club while Milan was struggling with major financial problems and poor management. Elliott opted for stability rather than spectacle. The company focused on resolving financial risks, improving the organisation and rebuilding the club's commercial and sporting foundations. That patience was ultimately rewarded with the league title in the 2021/22 season, ushering in a new era for Milan.

Private equity is often criticised in the international football world. Opponents say that investors undermine the identity of clubs and make football too commercial. In Cleats & Cashflows, we take a critical look at this view. This series examines how investors, if they approach it in the right way, can actually stabilise clubs and sometimes even help them rediscover their identity.

This edition is the first part of a four-part series on the influence of investors on the two major clubs in Milan: AC Milan and Inter. In both cases, external capital did not come in as a luxury investment, but as a necessary financial rescue. For both clubs, this support ultimately proved important in becoming financially healthy, improving governance and restoring supporters' pride in their club.

This first part focuses on the reconstruction of AC Milan under Elliott Management. The article is particularly topical because it was written shortly after Elliott finally parted ways with the club. Last week, it was announced that RedBird Capital had refinanced Elliott's last loan. That loan was part of the sale of the club in 2022. This officially ends Elliott's involvement with AC Milan.

This moment offers a good opportunity to reassess Elliott's role at Milan. Contrary to the stereotype of tough American investors, the example of Milan shows how institutional capital – when used carefully – can help a fallen top club become financially stable, compete again on the pitch and make supporters proud once more.

Berlusconi: a golden age with weak foundations

AC Milan is one of the most successful clubs in football history. The club has won the Champions League seven times, the Club World Cup four times, nineteen national titles and the Coppa Italia five times. This puts Milan among the absolute elite of European football.

At the end of the 2010s, however, that success felt increasingly distant. In July 2018, Elliott Management took full control of the club after owner Li Yonghong failed to repay a €32 million debt. That takeover was the end of a difficult period that had begun years earlier: the so-called 'banter era'. Between 2013/14 and 2019/20, Milan often finished in mid-table and was far removed from the level that supporters were accustomed to. For many fans, it felt as if the club had lost its identity.

That feeling was reinforced by nostalgia for earlier times. Under owner Silvio Berlusconi, Milan was known for its ambition and glamour. Big players were attracted, substantial investments were made, and matches at San Siro were played under the spotlight of the biggest stars in world football.

But even in the last years of success, cracks were already beginning to appear in the club's structure. Behind the trophies and sporting highlights lay problems that would later lead to decline.

Looking at AC Milan's financial and sporting foundations during the Silvio Berlusconi era, it becomes clear that those problems had begun much earlier.

When Berlusconi acquired AC Milan in 1986 for approximately 10 million euros, he essentially saved the club from collapse. Milan was deeply in debt and the previous owner, Giuseppe Farina, had even fled the country. Berlusconi immediately made the club more ambitious and, with major investments, built Milan into a world-class team. He brought in stars, including the famous Dutch trio of Van Basten, Gullit and Rijkaard. At the same time, the club's success became increasingly linked to Berlusconi's business and political ambitions.

This became clear in the 2001/02 season. Milan spent €146.5 million on new players, while only €18.3 million was earned from player sales. That meant a net investment of €128.2 million. These expenditures coincided with Berlusconi's return as Prime Minister of Italy. Investments in Milan were therefore not only important from a sporting point of view, but also strengthened his personal and political image. Although this model worked in sporting terms, it was difficult to sustain financially.

Milan's financial stability was heavily dependent on Berlusconi's company Fininvest. For years, this company made up the club's losses. In 2010 and 2011 alone, Fininvest paid €71.7 million and €68.9 million respectively to cover deficits. The figures for 2010 show how big the problem was: Milan had €227.7 million in revenue but spent €329 million. The difference had to be made up by the owner each time.

Even in years when Milan made a profit, it became apparent that the club was not financially sound. These profits were mainly due to the sale of top players and not to stable business operations. For example, the sale of Andriy Shevchenko generated a profit of €31.5 million. The sale of Kaká brought in €4.6 million, and the sales of Zlatan Ibrahimović and Thiago Silva together only €5 million. This showed how dependent Milan had become on selling key players.

In addition, the club invested very little in youth training. For a financially healthy club, developing its own talent is often essential. Under Berlusconi, however, AC Milan hardly managed to break through youth players into the first team. It was not until 2011 that Mattia De Sciglio succeeded in doing so. Success was mainly bought rather than built. When the owner's financial support stopped, it became clear how vulnerable the club actually was.

At the end of Berlusconi's tenure, Milan had little debt, but the club was operating at a structural loss. Milan lost more than €70 million annually and was completely dependent on support from the owner. When that support disappeared, the problems really came to light.

The Chinese-European gamble: lots of debt, little certainty

In 2016, AC Milan was acquired by Sino-Europe Sports for approximately £600 million. This acquisition was intended to herald a new era of success. It was part of a broader trend of Chinese investors buying football clubs worldwide.

Initially, there was a great deal of optimism. In the summer following the takeover, Milan spent more than €200 million on new players, including Leonardo Bonucci and André Silva. However, at the end of 2017, the situation suddenly changed. The Chinese government introduced stricter rules for foreign investment in sport. This made it more difficult to send money to foreign clubs.

This had major consequences for AC Milan. The takeover was largely financed with borrowed money. When refinancing became impossible and debts had to be repaid, a major crisis ensued. Within ten years, Milan had gone from being Champions League winners in 2007 to a club in financial trouble, which was eventually taken over by the American hedge fund Elliott Management.

For many supporters, this felt like a humiliation. They felt that the club's identity had been sacrificed to financial interests and that Milan had fallen into the hands of hard-nosed investors from the financial world. However, this view turned out to be not entirely accurate.

The recovery under Elliott: stability instead of spectacle

Under Elliott's leadership, AC Milan began a period of recovery. This was achieved not through large and risky expenditures, but through discipline and structure. Financial stability became more important than quick successes. Good governance replaced chaos and long-term planning replaced nostalgic decisions.

Elliott's approach: from crisis to stability

Elliott's role is often misunderstood. The company did not take over the club to make a quick profit or to impose a sporting vision. Elliott had to intervene because Milan was financially unstable and the club's survival was in jeopardy.

Elliott's recovery plan was based on three key objectives:

eliminating the biggest financial risks

improving governance and organisation

strengthening stable commercial revenues

Accepting losses to save the club

The financial figures from 2018 to 2020 show that Milan was not yet financially healthy in its first years under Elliott.

Operating losses were substantial:

2017/18 season: approximately €99 million loss

2018/19 season: approximately €132 million loss

2019/20 season (partly due to COVID-19): approximately €187 million loss

It is important to note that these losses were not covered by new debts or the sale of club assets. Instead, Elliott made up the shortfall with its own money. The company invested:

approximately €265 million in 2018/19

approximately €145 million in 2019/20

Supporters' fears that Elliott would drain the club proved unfounded. Elliott behaved like an investor who wanted to stabilise the club and secure its future. An important part of this was strengthening the AC Milan brand and increasing commercial revenue.

Commercial revenue: stabilise first, then grow

If Elliott had only tried to protect the club from risks, revenues would probably have stagnated. In reality, the opposite happened. AC Milan's financial figures show that the club consciously switched from an unstable and unsustainable model to a more stable way of generating revenue.

Elliott introduced a new strategy that focused on increasing the club's commercial activities. The aim was to create stable and long-term revenue through sponsorship contracts and commercial partnerships.

During the five years that Elliott was involved with the club:

sponsorship revenues increased from approximately €38 million in 2018/19 to approximately €58 million in 2021/22

commercial revenue and royalties doubled from approximately £11 million to approximately £25 million

broadcasting rights revenue grew strongly, partly due to improved sporting performance, to more than £130 million in 2021/22

This growth did not happen by itself. Elliott invested in experienced commercial managers and made the organisation more professional. Casper Stylsvig (with experience at Manchester United and Fulham) and James Murray (formerly of Arsenal) were appointed. Elliott's aim was to make AC Milan less dependent on incidental income and instead ensure structural commercial growth.

Another important moment was the revaluation of the 'Milan' brand in 2022. The club valued the brand at approximately €174 million and included it as an intangible asset on its balance sheet. This was done in accordance with Italian law and improved the club's financial position and credibility. However, it did not generate any additional money or tax benefits.

In other words, it strengthened the club's financial image without changing its liquidity. This is in line with Elliott's strategy, which focused on stability rather than quick profits.

Sports investments as a financial strategy

Elliott did not view investments in players as ordinary expenses, but as a way to make the club stronger and more stable. A good team should not only deliver sporting success, but also contribute financially to the club's future.

To achieve this, the sporting organisation was thoroughly revamped. Club icon Paolo Maldini was given an important role in technical policy. In addition, Hendrik Almstadt, with experience at Goldman Sachs and investment company 3i, was appointed to develop data-driven scouting and talent analysis. This was not an emotional choice, but a conscious step towards professional management.

This approach was also evident in contract decisions. AC Milan decided not to renew several expensive contracts, even if that meant losing top players. The best-known example is Gianluigi Donnarumma. Despite his status as a top talent and youth product, he left on a free transfer to Paris Saint-Germain because no agreement could be reached on a new contract. In sporting terms, this was a loss, but financially, the club remained true to its strategy: Milan did not want to sign contracts that would pose long-term risks.

At the same time, the club focused more on younger players. This made Milan less dependent on older stars with high salaries, such as Leonardo Bonucci. The goal was not to spend less, but to become more flexible. Younger players usually have lower salaries, can be sold at a profit later on, and give the club more room to invest.

This strategy is clearly reflected in the figures. In October 2020, despite the presence of Zlatan Ibrahimović, AC Milan had the youngest squad of all five major European leagues. The average age of the team was 24.5 years. This was no coincidence, but part of a clear strategy to better link sporting performance and financial stability.

Investing with cost control

The focus on young players did not mean that Milan invested less. In the 2018/19 season alone, the club spent more than €150 million on player rights. Elliott continued to invest, but at the same time kept salary costs tightly under control.

This combination of targeted investments, salary discipline and data-driven scouting led to better sporting performance without repeating the financial problems of the past.

The salary data clearly shows this. While revenues grew strongly after the coronavirus pandemic, salary costs remained virtually unchanged. According to analysis by Football Benchmark, salaries rose only slightly between 2019/20 and 2021/22, from €145 million to €148 million.

Depreciation costs on transfers also fell, from around €95 million in 2020 to €63 million in 2022. This was mainly because Milan focused more on younger players and developing its own talent.

Meanwhile, revenues grew much faster. In the same period, the club's core revenues – i.e. excluding revenues from player sales – rose from €164 million to €287 million. That is a growth of €123 million, or 75%.

This development radically changed AC Milan's financial model. In 2019/20, 88% of revenue still went towards salaries, which was financially risky. By 2022, that percentage had fallen to 52%, a level considered healthy and competitive.

Conclusion: rebuilding a club

The difference between rapidly rising revenues and stable costs shows how Elliott has structurally reformed the club. The investor did not seek to make a quick profit, but wanted to make AC Milan attractive again to future owners and investors.

By absorbing losses, professionalising the management and increasing commercial revenues, Elliott laid the foundations for sustainable growth. Without this period of financial and organisational reform, there would have been no stable future and no successful sale of the club.

When stability also brought sporting success

Financial reforms do not immediately lead to better results on the pitch. In football, it often takes several seasons before changes behind the scenes become visible in sporting performance. This was also the case at AC Milan under Elliott. But as the club became more financially stable and the organisation improved, results on the pitch began to improve slowly but surely.

Milan made its comeback in European football in the 2020/21 season and finished second in Serie A that year. The club also reached the semi-finals of the Coppa Italia in both 2018/19 and 2019/20. These were not coincidental peaks, but signs that Milan was gradually becoming stronger again. The highlight came in the 2021/22 season, when the club became Italian champions. That title did not feel like a sudden success, but rather the result of several years of careful rebuilding.

Milan's recovery did not come about through one big transfer or a risky gamble. It was mainly the result of less financial pressure, clearer choices and more confidence within the club. As the financial situation became more stable, Milan was able to show patience in putting together the squad, developing players and supporting the technical staff.

That patience proved essential. The calm within the club gave coach Stefano Pioli and technical director Paolo Maldini the time to build a coherent sporting project. This allowed Milan to work on continuity without having to start over again and again. In doing so, Elliott showed that private investors are not necessarily focused solely on quick results. In this case, financial stability actually made sporting success possible.

The financial figures also confirm this picture. In the 2021/22 season, Milan's turnover increased by 22 per cent compared to the previous year. This made Milan the only club among the traditional Italian top clubs to grow in that year. The club also posted a positive EBITDA of approximately €30 million and reduced its net debt from €101 million to approximately €28 million. Sporting performance and financial stability reinforced each other, exactly as Elliott had intended.

When Milan finally won the league title, it felt less like a miracle and more like a logical consequence of the policy. The club had regained its structure and stability.

Ready for a new era

The 2021/22 league title meant more than just the end of eleven years without a championship. It also marked the moment when Elliott could consider his work at AC Milan complete. Not because winning trophies was the main goal, but because it showed that the club was financially, organisationally and culturally healthy again.

Elliott did not try to change Milan's identity, but rather to strengthen it. By giving club icons such as Paolo Maldini an important role and reinvesting in youth development and club culture, Milan found a balance between tradition and modernisation. The club did not try to force itself to remain relevant, but gradually rebuilt a clear identity.

When Elliott left, AC Milan was no longer dependent on financial emergency aid from shareholders. The club had regained its competitiveness, commercial growth and professional organisation. Strikingly, the sporting high point coincided with the transfer of ownership. Not because Elliott wanted to make a quick profit, but because the stabilisation work had been completed. The Scudetto was not a stroke of luck, but the result of a strategy that had been carefully executed over many years.

The sale of the club to RedBird Capital was therefore not a risky move, but a logical next step. Elliott did not hand over a vulnerable club, but an organisation that was ready for further growth. Milan made the transition from investing to survive to investing to grow.

Even after the sale, Elliott's influence remained visible. The recent refinancing of the loan that Elliott provided at the time shows that AC Milan is now seen as a financially stable and reliable organisation. This is a quiet but clear confirmation of the changes that have been implemented.

As Gordon Singer summed it up: "We are proud of what AC Milan has achieved since Elliott acquired the club in 2018. Under Elliott and later RedBird, both financial and sporting performance have improved significantly, and the club has won important trophies, including the 2021/22 title. Managing a club like AC Milan is a big responsibility, and we wish RedBird every success in the future."

Elliott did not win any matches for AC Milan itself. It ensured that the club was once again in a position to win them.

The next part of this mini-series, which will be published later this month, will focus on how RedBird has taken over this foundation and is trying to build on it. In doing so, the focus is shifting from stability to growth, media development and long-term value creation in a new phase for AC Milan.

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