Share

Milan, RedBird puts 22% of the club up for sale to pay off debt with Elliot

RedBird, owner of 96% of Milan, seeks new investors to repay 693 million euros to the Elliott fund and finance the new stadium. Offer of 22% of the shares without earnings to rebalance the initial investment

Milan, RedBird puts 22% of the club up for sale to pay off debt with Elliot

Qualche shadow looms over Milan's future. Two years after the acquisition, RedBird Capital Partners, an American investment management company founded by Gerry Cardinal and owner of 96% of the club, needs to Find new investors and liquidityThe main objective is the construction of the new stadium and the repayment of a substantial debt of 693 million of euros per Elliott fund, to be paid within 11 months. As reported by Republic, RedBird has put 22% of its shares up for sale at the “basic cost price”, without profit, according to a document drawn up by Washington harbor, to rebalance the portfolio and reduce the initial investment of 681 million euros.

Debt to Elliott to be repaid

In August 2022, RedBird has acquired Milan for 1,2 billion euros, with a loan of 560 million provided by the Elliott fund through the so-called vendor loan. This loan, due in August 2025, has already accumulated interest, bringing the debt to 634,3 million euros and projecting a final value of 693 million by maturity. A figure that represents 57,7% of the current value of Milan, and the pressure to repay the debt is pushing RedBird to seek new investors and reduce exposure.

Advantageous conditions for investors

To incentivize potential buyers, RedBird has structured theoffer in a favorable way, despite the financial successes achieved in 2022-2023. The club has in fact recorded a second consecutive year of positive balance sheet, with a surplus of 4,1 million euros for 2023-2024, after the 6,1 million of the previous financial year. These figures, however, are not enough to guarantee the financial stability necessary to meet future commitments, thus pushing RedBird to looking for new partners.

Milan's Future: Possible Arab Partners

An interesting aspect of RedBird's plan is the prospect of involving international partners. It is in fact assumed that by 2027 the club can sell a minority stake in a sovereign wealth fund or one billionaire family, thus providing liquidity to investors interested in exiting before the completion of the new stadium. This possible collaboration with Arab or billionaire investors could ensure long-term project stability, ensuring the necessary funding to complete the work.

The San Donato Stadium Project: Keystone of the Future

Il fulcrum of future prospects of Milan is represented by the project of the new owned stadium in San Donato. The facility is expected to generate revenues of €211 million per year, with an estimated expenditure of €900 billion, largely financed by debt (€2029 million). The stadium, which is expected to be ready by 70.000, will have a capacity of over 13.000 seats, of which more than XNUMX will be reserved for premium seats, such as skyboxes and loggias. In addition, the project includes the construction of a new club headquarters, a store, a museum, a hotel, and areas for restaurants and shops.

Il The stadium project, however, is still uncertain. Although the expected start date of the works is set for October 2025, there have been second thoughts about the possible cohabitation with Inter to share the costs.

Management Incentives

To further motivate the management of Milan, the dossier also includes a financial incentive plan tied to the success of the stadium projecto. In the best possible scenario, which includes the construction of the stadium and the success of the business plan, the bonus for managers could reach 569 million euros. In the base case, the compensation would stop at 358 million, while in the worst case, which foresees the failure of the project, there would be no additional earnings for managers.

From a financial standpoint, the offer for investors becomes even more attractive: those who buy a 22% stake today could sell it in 2027 for an estimated €390 million, with a return of 2,6 times the initial investment.

Sports prospects

In addition to the financial aspects, the dossier presented to investors also outlines Milan's sporting goals predictions. For the next three years, it is expected to maintain third place in Serie A, while in the Champions League the goal will be to reach the playoffs at most in the 2024-2025 season and the round of XNUMX in the following two seasons. Although these forecasts may turn up the nose of the fans, they are seen as sufficient to support the club's business.

comments