AC Milan Owner Reportedly Bankrupt, Ordered to Auction off Assets

AC Milan

AC Milan owner Yonghong Li is reportedly bankrupt, initiating concerns about the solvency of the team’s ownership group and the status of the team’s star players. Li took out a high-interest loan to purchase the Serie A club from former Italian Prime Minister Silvio Berlusconi, a loan that he could only repay if the team were to return to the Champions League (for the first time since ’12). Currently residing in 7th place (just the Top 4 qualify) and unable to refinance the loan, the club may now be forced to sell off its star players to make loan payments. Reports indicate Li’s assets will be auctioned off on Taobao (BABA subsidiary), with decisions regarding the club’s future will likely be postponed until that occurs. It is unclear if AC Milan will even be considered among Li’s assets; the club is technically owned by Sino-Europe Sports, a holding company that Li maintains a stake in. It must be noted that Li has dismissed reports that he’s insolvent as “fake news.”

Howie Long-Short: Li (as part of a Chinese consortium) acquired the club in April ’17 for $911 million, with the help of a +/-$500 million high-interest loan from Elliott Management and +/-$400 million in off-shore assets; allowing him to take control of the franchise for less than $150 million in cash. For comparison purposes, NFL majority owners must pay at least 30% of the team’s purchase price (+/- $1 billion).

Fan Marino: If you think a U.S. professional sports franchise would never be sold to a prospective owner without the fiscal resources to support team operations, think again. In 1996, John Spano took controlling ownership (for 4 months) of the New York Islanders; acquiring the floundering franchise for $165 million. Spano, worth just several hundred thousand dollars at the time, convinced a series of banks (and league execs) that he had $230 million in assets to his name; enabling him to pull off the fraud. ESPN did a 30 for 30 called “Big Shot” on the story. It’s a must watch, here’s the trailer.

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Author: John Wall Street

At the intersection of sports & finance.

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