As is now known, there is an ongoing investigation into the sale of Milan from Elliott to RedBird, which took place in August 2022, by the Milan Public Prosecutor's Office.
Former Milan CEO Ivan Gazidis and current CEO Giorgio Furlani are registered as suspects in this regard. They are accused of the crime of 'obstruction of public authorities' supervision' regarding the actual ownership of the Rossoneri club.
Investigators suspect that Paul Singer's fund is still in control of Milan rather than Gerry Cardinale's.
The Corriere dello Sport newspaper through its football and finance expert journalist Alessandro Giudice, analyzed the issue from a technical perspective in an attempt to shed some light on the matter.
In the article, Giudice recalled how RedBird acquired almost all of Milan (99.93%) for about 1.15 billion euros. On this occasion, Cardinale chose to finance the acquisition with a combination of debt and capital (raised from the fund's investors) in roughly equal proportions.
"In such cases, the debt is usually provided by investment banks specialised in these operations, usually at rather high rates. Instead, RedBird agreed with Elliott to receive proceeds from the latter to complete the acquisition, a practice not unusual in operations of this kind, called a 'vendor loan', as highlighted by the Roman daily."
By doing so, in the acquisition of Milan, RedBird obtained a lower interest rate (around 7%) compared to what it could have obtained from banks. What advantage does this bring to Elliott? "A significant gain (400 million euros in profit over five years) by replacing equity capital with debt capital, which is intended to be repaid. Investing slightly more than the profit generated by the operation."
"In this type of operation, it often happens that the parties enter into shareholders' agreements committing to appoint representatives on the Board of Directors or grant consultation rights for certain operations", Giudice continued. "The prosecutors' thesis would be that Elliott has gone far beyond its influence, to the point of being the hidden owner of Milan. Where would the crime be? Since it is not illegal for two private entities to enter into contracts (Milan is not listed and therefore not subject to Consob or Banktalia supervision), the hypothesis would be to have obstructed the FIGC's supervision (perhaps Covisoc's) by omitting to disclose the true ownership of the shares. Which would be Elliott's even though all documents - also consulted by us and publicly available - attribute them to RedBird."
At present, Gazidis and Furlani are under investigation, not Milan. It's undoubtedly a complex matter. However, one must await developments before drawing conclusions, perhaps prematurely. From the closing of the investigations, if there will be one, to assess the consistency of any accusations. The newspaper closed by drawing a parallel with the acquisition by British financier Jim Ratcliffe of 25% of Manchester United (a club listed on the New York Stock Exchange) through various classes of shares, as relayed via Pianeta Milan.
"The Glazers retain a higher share that still makes them relative majority shareholders. But an agreement between the parties gives Ratcliffe operational control of the club. So, who owns Man United? Who holds the majority or who exercises control even with a minority stake? In Great Britain, no one seems too concerned about it", the CorSport expert concluded.
READ MORE | Il Sole 24 Ore: Prosecutor’s spotlight on the ownership and the potential clues that Elliott still own the AC Milan club
