AC Milan 2017/18: A season of turmoil but is it all in the past?

The 2017-2018 season was meant to be one of the most turbulent in the history of AC Milan. From the patriarch Silvio Berlusconi down to the controversial figure of Yonghong Li and then under the administration of the hedge fund Elliott, the Italian colossus experienced in a sole year vast and major changes. And, yet, no one can be sure that the turbulences belong in the past.

The end of an era

"Today Fininvest has completed the sale of the entire stake owned in AC Milan -- equal to 99.93% -- to Rossoneri Sport Investment Lux".

That statement, released on the club's official website on 13 April 2017, marked the end of a historic, 31-year, love affair between Silvio Berlusconi and AC Milan. The Cavaliere decided to step down from the Rossoneri presidency and his holding company Fininvest came to an agreement with Rossoneri Sport Investment Lux, a Chinese consortium for 99.93% of AC Milan stakes. The total cost of the buy-out, according to the official statement, was €740million.

The sale was completed at last after it was postponed during 2016 due to funding complications. In fact, in August 2016, Fininvest signed an agreement with Sino-Europe Sports Investment Management Changxing, a Chinese Investment Management Corporation under the presidency of Li, for the sale of AC Milan. However, up to March 2017, the deal was closer to falling through than to being completed as the second installment of €100milion was yet to be transferred to Fininvest's accounts. The reason was, per some reports, that the Chinese government vetoed the export of Chinese money to oversees corporations and thus, Li wasn't able, at the time, to complete the purchase of the club.

At last, Sino-Europe Sports paid the second deposit via Rossoneri Sport Investment Lux, their subsidiary based in Hong Kong. Li had eventually managed to pay €200million to Fininvest but that was not enough to complete the purchase of AC Milan. In order to do so, the Chinese businessman approached the hedge fund, Elliott Management asking for financial support. Elliott then agreed to finance Li with a loan of over €300milion, which, shockingly, carried a double-digit interest rate and a full repayment due date of October 2018. Nevertheless, the sale was completed on 13 April 2017 and Li became the president of AC Milan.

AC Milan under Li Yonghong

The new Milan administration: Han Li (right) as executive director, Li Yonghong (center) as the president and Marco Fassone (right) as the managing director

''I thank the fans of the patience, we promise we'll lead Milan back to the summit of world football''

That was the first statement of Li Yonghong after he was named the president of AC Milan. In fact, the 2016-2017 season ended with Milan qualifying for the Europa League third qualifying round under the instructions of Vincenzo Montella after finishing 6th. In the 2017 summer transfer period, the new administration did as promised, strengthening the squad. Nearly €200milion were spent on the likes of Frank Kessie, Nikola Kalinic, Ricardo Rodriguez, Mateo Musacchio, Andrea Conti, Hakan Calhanoglu, Lucas Biglia, Fabio Borini, Antonio Donnarumma and Andre Silva. That exceptional 2017 summer for Milan was highlighted by the sensational acquisition of Juventus's Leonardo Bonucci.

Nevertheless, despite the promising start against Crotone with a 0-3 away win, the weaknesses of Milan's squad became evident very early in the heavy defeat against Lazio (4-1) in September. This was just the start of the crisis. As of November, Milan had lost against all the top-table teams and after the scoreless home draw against Torino on 26 November, Vincenzo Montella was sacked and the team was entrusted to Genaro Gatusso, who was, until that time, the coach of Primavera.

Apart from the on-field problems, Li's administration was experiencing its own on an economic level. The heavy-interest rate loan from Elliott had to be repaid up to October 2018 and Li was struggling to refinance it. Moreover, the doubts over Li's financial ability reached a climax after New York Times journalists visited Li's business offices in Tokyo and found nothing but eviction notices. In addition, in March 2018, Italian prosecutors opened an investigation regarding the sale of AC Milan and the financial status of Li was placed under scrutiny. On February, Corriere Della Sera shockingly reported that Li had declared bankruptcy which, however, the patron instantly denied.

Skepticism over Li's financial stability was raised even more after UEFA refused to agree a Financial Fair Play settlement agreement with Milan citing there “remain uncertainties in relation to the refinancing of the loan and the notes to be paid back in October 2018” as the cause. In fact, Li and his subordinates were struggling to find investors who could refinance the loan to Elliott and thus, provide them with some essential extra time. In the aftermath of the UEFA ruling, Milan set a one-day deadline to Li to proceed a €10million capital increase. According to reports, Elliott Management would immediately seize control of the club if the money was not deposited on time.

Milan were then knocked out in the Round of 16 of the Europa League by Arsenal while losing to Juventus in the Coppa Italia final. Nevertheless, the Rossoneri managed to capture the 6th place in the league and qualified for Europa League group stages. However, Milan was in breach of UEFA FFP (Financial Fair Play) principles and the European committee decided to ban the Rossoneri from European competitions.

Moreover, on June 22, Li failed to increase the capital by €32million, as the terms of the Elliott loan demanded. Elliott Management then stepped in and provided the sum but Li had until 6 July to repay it otherwise the fund would take control of the club. This was added to the €300milion+ interest that Li had to pay back to Elliott by October.

#A New Milan

Milan's Sporting Director, Leonardo, (left) with new signing Gonzalo Higuain (center) and president Paolo Scaroni (right)

Elliott officially took control of the club on 10 July and confirmed that they would inject €50million to the club while stating that they had written off all debt. Moreover, a few days later, CAS (Court of Arbitration for Sport) overturned UEFA's decision to ban Milan from European competitions. Changes on an administrative level followed. Paolo Scaroni, a member of the Milan Board of Directors, was appointed the president of the club, Leonardo returned as the club's sporting director and Milan legend Paolo Maldini finally accepted a role in the club.

#A New Milan was the hashtag of the new Elliott-run Milan while changes to the squad were made. Leonardo Bonucci returned to Juventus with Milan signing striker Gonzalo Higuain and the promising Mattia Caldara. Pepe Reina, Ivan Strinic, and Alen Halilovic were acquired on a free transfer and the rights of Samu Castillejo and Diego Laxalt were bought. Tiemoue Bakayoko was signed on loan from Chelsea with Milan spending a total of €122million to reinforce their squad having, however, secured €84million from players' departures.

Yet, no one knows if the turmoil that Milan have experienced belongs in the past. Elliott Management has been described as ''a vulture fund owing to its tendency to buy up debt owed by failing companies and states at knockdown prices '' as Mike Ozanian, Forbes' reporter claims. Even though Elliott's statement talks about achieving ''long-term success for AC Milan by focusing on the fundamentals and ensuring the club is well-capitalized'' no one can be sure that Milan will not change hands once it is back on solid footing given the nature of the hedge fund that owns the club.

In fact, as The Guardian's Ed Aarons asserts, Elliott has yet to respond to questions regarding their intentions towards AC Milan.