Milan's Financial Position

[youstn4]

I know there is a lot of talk about finances in football and how it affects the transfer budgets etc. I was looking at the new football manager game and was interested to see that according to them, Milan have a £273,043,488 debt owed to the bank. I was under the impression Milna were relatively debt free. Can anybody more in the know enlighten me on our true financial position?

[ACMILAN1983]

Good question, I will try to answer as best I can, but by no means am I a person in finance, so don't take my word to be exact.

I think Milan were last debt free when Kaka was sold (I don't think the Ibra and Thiago Silva sales covered debt), since which the club has been making a loss year on year leading to the debt to rise to something around 250m last year (I assume that's where Football Manager got the figure from).

At the most recent shareholders meeting in April, Galliani said the club made a loss of around 91m, meaning the debt is now around 350m in total. Funny thing is, Galliani also tried to claim the 91m loss was in his view around 45m, as we normally get money from Champions League participation. Only problem is, the club wasn't in Champions League this past year, so there was no money from Champions League participation.

Until now Silvio Berlusconi and Finnivest have covered the debt (well, more like pumped money into the club to keep it afloat).

This has also been a very important issue for the recent sale of minority shares of the club. Part of the reason Silvio's so keen to get new investors is to try and service and reduce/remove the debt. This also appears to have been key in negotiations for the amount to sell the club. Back when negotiations were ongoing, it was reported that after assessing the club accounts, pretty much both Bee's group and the Chinese group were offering significantly less than the asking price due to the debt.

Knowing the club will be out of Champions League for another year and there's yet to be any known change over the next year, I expect the debt next April will rise to well over 400m. What happens after will be of interest to us though, as I expect that's when we'll see the actions to start reducing the debt.

[nefremo]

I believe that's all correct Dev.

But I think the debt will be taken care of (at least most of it) once Bee's money comes in. I remember reading a piece that said a big chunk of Bee's money (close to 500mil) will be used to erase the debt. I don't think Berlu/Fininvest will take any of the money apart from the normal annual division to shareholders. I really do believe Berlu (maybe I'm stupid to) when he said he is making a decision for the good of Milan. So Bee's money according to that article will be used to take care of the debt, summer transfer spending, and othe fees (Fininvest shareholders).

[ACMILAN1983]

Thanks for confirming nefremo

[somedevil]

http://acmilanfinance.com/2015/08/17/the...-accounts/

Ragazzi, for those interested in how our books look. Quite the mess it is ! Better than some others though. Next year's accounts will be very interesting.

[ACMILAN1983]

Thanks for the article. One thing it didn't really go into is how Milan can spend as we've done this summer without breaking FFP. Would have been very interesting to see the analysis from that angle.

[somedevil]

Mostly by installment purchases that allow them to distribute player costs over multiple years. Player sales are counted for the same financial period, thereby reducing the deficit.

[ACMILAN1983]

Makes sense. Do you or anyone else know the details behind the signings this summer. For example, while I'm aware of the figures to sign Romagnoli, Bacca and Bertolacci, I'm not aware of instalment payments.

I'm also sure the changes in FFP to allow short term losses to spend also has some impact:

http://www.espnfc.co.uk/uefa-champions-l...play-rules

[somedevil]

Let's take the example of Romagnoli- The way I read it (and I forgot where)- Is that Milan show it as 5m spent per year till the 25m for Romagnoli is exhausted (in 5 yearly installments) or till we sell him to someone else.

Roma however show it as 25m income from player sale for this year. Which allows them to bypass FFP sanctions (in this case allowing them to offset the Dzeko purchase perhaps). In the end it's a win win for everyone.

Knowing Galliani and his love for prolonging payments, he sure has these installment deals going with everyone.

[ACMILAN1983]

Thanks. I honestly don't know many of the details of the transfers from this summer, so wasn't sure if it was payments in instalments or not.