Written by Umberto Pelà (20.01.2022)
May 2011. The Rossoneri and their fans have just won their historic 18th Scudetto and Il Diavolo is preparing for an unquestionably prosperous future. That previous, successful season, AC Milan had perhaps one of the scariest teams of all time, including once-in-a-generation talents Alessandro Nesta, Gennaro Gattuso, Clarence Seedorf, and a prime Zlatan Ibrahimović. Whilst many of these phenoms that made up that historic team were now reaching the end of their careers, the Rossoneri had set the fundamentals for a future full to the brim with success. Thiago Silva, Kevin Prince Boateng and Alexandre Pato were set to be the foundations of the next generation of AC Milan domination.
Fast forward 10 years. AC Milan are yet to win their 19th Scudetto. This expected period of domination following the 18th Serie A Title, to say the least, did not come.
During this time, the Milanese club failed in flabbergasting fashion to exert any sort of dominance as the transition from the old generation of players to the new one was conditioned by a variety of poor decisions.
Throughout those 10 excruciating years, AC Milan and their fans suffered. They assisted to a period of pure, shocking dominance led by Antonio Conte at Juventus and the rebirth of Milan rivals Inter Milan. In turn, Il Diavolo only managed to collect numerous 6th place finishes and other disappointing results. The suffering was exacerbated by economic and political chaos within the club, following Li Yonghong’s short stint as Chairman of the Club as he took over from Silvio Berlusconi in 2017. What seemed to be a new chapter that gave hope to the fans only set fog and a sense of unclarity around the club. Mr. Yonghong wasn’t able to repay high-interests on loans he had obtained from US Hedge Fund Elliott Management worth approximately $300 Million, which ultimately lead to Elliot Management seizing the club in 2018. A questionable investment which didn’t obtain the desired return, Yonghong Li was – per people close to the transaction – always going to lose. Considering the high interest rates on the loans, the same source added “If Yonghong Li pays, Elliot wins, and if he doesn’t pay, Elliott will seize the club”.
On top of that, in his short stint, his subordinates CEO Marco Fassone and GM Massimiliano Mirabelli took AC Milan and drove it into the ground with a series of questionable investments. €240 million spent in one summer, with no clear direction on what the strategy was going to be. Ultimately, what Italian fans do remember about that summer transfer window was the now-comedic “passiamo alle cose formali” (“let’s get to business”), which CEO Marco Fassone would say just before the newly announced players signed their lucrative contracts.
The board, ecstatic for the money pump from the club’s new ownership, had put together a talented, yet anomalous group of domestic and international players, hoping that some magic would come out of it.
| Player | Date | Cost |
| Leonardo Bonucci | 20.07.2017 | €44 000 000 |
| André Silva | 13.06.2017 | €34 000 000 |
| Franck Kessié | 02.06.2017 | €32 000 000 |
| Nikola kalinić | 21.08.2017 | €27 000 000 |
| Andrea Conti | 07.07.2017 | €24 000 000 |
| Hakan Çalhanoğlu | 30.06.2017 | €21 000 000 |
| Lucas Biglia | 17.07.2017 | €19 000 000 |
| Mateo Musacchio | 02.05.2017 | €17 000 000 |
| Ricardo Rodriguez | 13.06.2017 | €14 000 000 |
| Fabio Borini | 30.06.2017 | €5 500 000 |
| Antonio Donnarumma | 11.07.2017 | €1 000 000 |
And this magic did not come, ever. In fact, 5 years later, all 11 players departed the Meneghino club leaving an almost comic tint on that 2017 summer transfer window for AC Milan.
No identity, poor finishes in the league, partnership deals coming to an end. AC Milan felt like a Ferrari stuck in the mud. No matter how hard it accelerated, there was no chance of movement.
360 Turn
When in 2018 Elliott Management finally took over control of the club, it felt like a needed fresh start.
Instead of accelerating, that same Ferrari was now taking some time to assess what the best options were to get out of this sticky situation. UEFA’s one-year-ban from European competitions between 2019-2020 further encouraged this reflection, which ultimately led to a 360° turn in the club’s management. The Rossoneri had now decided to take a step back, ask for help, and get towed out of the mud in order to get back on the road to success – a road that they had traveled on for most of their history.
At the head of this 360° turn was former captain and club legend Paolo Maldini, assisted by his right arm and Football Director Ricky Massara. The two understood the gravity of AC Milan’s financial situation, and decided to act upon it.
First and foremost, they changed their strategy. AC Milan and their fans had to wave goodbye to lucrative, €40M + transfers, as Maldini focused on a low-cost strategy. This would include scouting of young, raw talents that would come at lower prices, and a good mix of experienced players who still had a few years of high-level performances to give.
The plan was to build for the future, and so they did. With the aid of Chief Scout Geoffrey Moncada, in the following 2 seasons the Rossoneri put together an impressive list of transfers for even better prices.
Below, what I see as Maldini and Massara’s most notable transfers over the past few seasons.
| Player | Year Born | Cost * | Value Today (January 2023**) | Difference between Cost and Market Value Today |
| Rafael Leão | 1999 | €29 500 000 | €85 000 000 | +€55 500 000 |
| Pierre Kalulu | 2000 | €1 200 000 | €35 000 000 | +€33 800 000 |
| Ismaël Bennacer | 1997 | €17 200 000 | €40 000 000 | +€22 800 000 |
| Theo Hernández | 1997 | €21 500 000 | €60 000 000 | +€38 500 000 |
| Olivier Giroud | 1986 | €1 000 000 | €4 000 000 | +€3 000 000 |
| Fikayo Tomori | 1997 | €28 800 000 (+ € 600 000 loan fee) | €50 000 000 | +€20 600 000 |
| Mike Maignan | 1995 | €14 400 000 | €35 000 000 | +€20 600 000 |
| Sandro Tonali | 2000 | €6 900 000 (+ €10 000 000 loan fee) | €50 000 000 | +€33 100 000 |
| Zlatan Ibrahimović | 1981 | €0 | €0 (Retirement) | €0 |
*Transfer fees reported per Sky Sports
**Market Value determined by TransferMarkt
On top of this, the leadership team at AC Milan also took an important stance with their wage management. Contrary to what the markets are moving towards nowadays, the Rossoneri decided to let go of any players who felt unhappy with their contracts and had put in excessive wage requests. Whilst this saw the loss of high-caliber players like Gigio Donnarumma, Franck Kessie, and Hakan Çalhanoğlu for a combined fee of €0, the remarkable scouting work done behind the scenes made the fans forget about these players soon enough.
Maignan, Bennacer, and Tonali soon became fan favorites as they replaced AC Milan’s previous deserters.
AC Milan’s management also enabled the club to make a smooth transition to financial stability with the help of key partners and partnerships. In June 2022, AC Milan renewed their initial 2018 Sponsorship deal with German sportswear brand Puma for a further 5 seasons. The deal was reported to be worth €30 000 000 per year, bringing in vital funds for the club’s finances. On top of this, AC Milan’s management carried out a remarkable job in expanding into untapped markets and exploring strategic partnerships that would allow the brand’s image to grow exponentially.
Most notably, its recent partnership with popular designer brand Off-White created a lot of noise in (and out) of the footballing community. The two struck a 3-year-partnership deal which will see Off-White serve as AC Milan’s “official Style and Culture Curator”.
The partnership created a lot of “hype” on Social Media too, with AC Milan’s account receiving 600 000 likes on Instagram over the first 5 posts promoting the collaboration.
The club’s marketing efforts following the change of ownership have also been rather remarkable. In 2018, it launched a new app for the fans to immerse themselves fully in the Rossonero world. Similarly, in 2020 it landed on popular social media platforms TikTok and Twitch whilst also launching a partnership with Jay Z’s Entertainment Agency Roc Nation. The “Milan Media House” was then launched in 2021 and was greatly successful in bringing fans as close to the first team as they had ever been before.
Marketing and Digital Director Lamberto Siega “manages a team of 40 people in the technical and creative areas”,which have propelled the club’s marketing performances into great success. AC Milan has “500k average monthly visits” to acmilan.com, 13M followers on Instagram, 1M+ subscribers on YouTube, and an estimated cumulative online audience of 500M users. On top of this, The fans can now engage in different ways such as electing the team’s ‘MVP of the Month’, joining the Matchday ‘Prize Contest’, Special Member-Only Events or buying the team’s merchandising. Think about this: when the club won its 19th Scudetto in May of 2022, over 3M people streamed the celebrations through the AC Milan app, with “concurrent views peaking at 50,000”. Overall, this clearly shows how the club has made a transition to a fresh, sustainable philosophy both on and off the field.
Financial Performances
The strategy switch enacted by the club’s management has produced wonders on and off the field. From the football point of view, we saw the strategy ultimately culminating with the bringing together of a talented team and the 19th Scudetto in May 2022. It is off the field, however, that AC Milan has surprised many.
As highlighted in Deloitte’s most recent ‘2023 Football Money League’ report, AC Milan generated a noticeable +22% on its revenues compared to the 2021 financial year. This is especially noteworthy if we consider the COVID-19 restrictions that prevented in-person attendance at the San Siro. With €264 900 000 generated in revenue, AC milan was 16th in Europe’s top clubs for revenue generated – third if we consider only Italian clubs. Compared to AC Milan’s revenue from the pre-COVID seasons, the 2021-2022 Season had greater amounts of revenue coming from the commercial side and broadcasting side (€87M and €146M respectively). Whilst the matchday revenue still came together for €32M, it amounted to comparatively less (12%) when put next to the 2019 season (18%). Negative at first, this metric is still positively valuable because it reminds us of AC Milan’s cheap season tickets – as low as €199 per season, with a “good” seat coming at around €400 per season and implies that the club expanded in different ways over the course of the past few years. On top of that, that metric should not scare Rossoneri or their fans, as their club had an at-home average attendance of 73,032 fans, only second to Milanese rivals Inter Milan who had just a few more: 73,250.
Furthermore, as mentioned earlier in the article, the wage management was also significantly improved, as their % in wages to revenue ratio decreased significantly from 108% to 64% in the space of 2 years (2020-2022). This metric is important to consider (regardless of how arguably flawed it may be due to potential layoffs following the pandemic) because it is the reflection of a change in strategy that the club had.
What’s next?
AC Milan is now valued at €1.1B. Even though it is operating at a €98.2M loss, it has cut down these notably compared to the previous season (€194.6M). Its growth in the past few years has been remarkable in all areas of competency, and it is now also heading towards a strong, stable financial future. Yet in my opinion, it is far from where it wants to be.
In order to get back to where AC Milan deserves to be, the club must do three things: move to a new stadium, win domestically, and win internationally. For the first point, let’s take a look at Tottenham Hotspur’s model. The English club has produced a state-of-the art stadium in just a few years, and is now showing the rest of the world why clubs must own or restore their clubs, and they have to do so now.
Tottenham Hotspur, with its new stadium, has quite frankly experienced a spectacular rebranding as part of their commercial strategy. With a self-owned stadium, Chairman Daniel Levy makes sure that gameday revenues are all for the club. The stadium, which disposes of a retractable field that makes way for an artificial grass field, is also host to an annual NFL game, and will be for the next 10 years. These types of events not only expand the Tottenham Hotspur name to an American market, but also function as another form of income as the games generate an estimated €1.5M from merchandise, food, and beverages.
Today, AC Milan (and Inter Milan) are trying to move out of the historic Stadio San Siro, but bureaucracy in Italy and Minister of Culture Vittorio Sgarbi seem to be halting this process. The two clubs pay approximately €8M per season to play in the San Siro, which is owned by the City of Milan, and locals Milan seem to be opposing the initiative. As a result, not only are the two clubs forced to host home games in a decaying stadium which does not grant a high-quality fan experience, but also lose out on a ton of opportunities for the clubs as businesses. The approved plan for the new stadium called ‘La Cattedrale’ would reportedly be the “most sustainable and inspiring stadium” in Europe, elevating fan experience by bringing fans closer to action (similarly to English stadiums), offering lounge spaces, bars, a modern open space on the roof of the stadium, and a museum. These would be accessible all-year-round, thus generating revenue on a constant basis for the Milanese clubs. Further, La Cattedrale would be able to light up in the colors of the club playing, allowing for branded messages to reach its fans. Ideal.
Finally, for the latter two points, there is unfortunately (or fortunately) no objective way to obtain success on domestic and international terms. That’s the beauty of football: its unpredictability.
Maldini and Massara, with the aid of Coach Stefano Pioli, have put together an impressive team which is now back to competing for the Scudetto year-in-year-out. Over time, especially if it wants to address its international competitions, the club may have to transition to a slightly more spending strategy compared to its current sustainable one.
Whilst domestic success may occur with the current philosophy, I personally see international success as more and more improbable if a club doesn’t bring in star players from other clubs – especially with the investments that other European teams such as PSG, Manchester City, and Chelsea are making nowadays. Granted that this is a more risky strategy, I still believe that Maldini and Massara have at the least earned a shot at a transfer window with a significant increase in budget compared to the previous seasons. If this were to be the case, I wouldn’t be surprised to see AC Milan back on “Il Tetto d’Europa” (“On top of Europe”) soon.
But for now, let’s appreciate the greatness of AC Milan’s comeback, both on, and off the field.
References
https://www.ft.com/content/bbc841e0-8689-11e8-96dd-fa565ec55929
https://en.wikipedia.org/wiki/2010%E2%80%9311_A.C._Milan_season
https://en.wikipedia.org/wiki/2011%E2%80%9312_A.C._Milan_season
https://en.wikipedia.org/wiki/2012%E2%80%9313_A.C._Milan_season
https://en.wikipedia.org/wiki/List_of_A.C._Milan_seasons
https://sport.sky.it/calciomercato/calciomercato-milan-acquisti-maldini-massara#24
https://www.acmilan.com/en/news/articles/club/2021-02-08/ac-milan-the-studios-milan-media-house
https://www.acmilan.com/en/fans/fan-engagement/rossonero-fan-engagement
https://www.archilovers.com/projects/257526/la-cattedrale.html#info
https://www.forbes.com/teams/ac-milan/?sh=a2993993a037
https://nypost.com/2018/07/11/hedge-fund-billionaire-paul-singer-takes-over-ac-milan/