SHOW, DON’T SELL

The story of why AC Milan is for sale, and why maybe it is not.

AC Milan’s sale already seemed to have a complicated story before its most recent development, but the further postponing of the finalisation of the deal, the so-called “closing”, has given it an even more grotesque aspect. Milan fans were once again disappointed. They were promised a new, focused ownership that would restore the club’s international status with proper investments, but now most of them would just be happy with seeing the end of such a long and tiring saga that surely must have also affected the team’s serenity at the training ground in the last two years. Some have begun doubting that the sale will even ever happen, and long-time skepticals, who have always doubted the deal or even Silvio Berlusconi’s will to sell, are not ridiculed anymore as it happened in previous months. There is no evidence at the moment to suggest any malpractice from Berlusconi, but in recent weeks at least some journalists have begun asking the right questions about it.

How we got here

To understand what is currently happening at Milan, it is impossible to ignore the obscure and inefficient management of the Rossoneri of the last five to seven years, after a rarely interrupted streak of almost 25 seasons of success. The turning point that all fans remember is surely the sale of Zlatan Ibrahimovic and Thiago Silva to PSG in the summer of 2012, but Milan had already started cashing out their previous successful decade in 2009 by selling Kaká to Real Madrid. After the end of Carlo Ancelotti’s era in the same year, Milan seemed to have little to no plans for the near future, mostly relying on free agents or last-minute deals in the transfer market (with the notable exceptions, of course, of Ibrahimovic and Robinho in 2010) and hardly giving the impression of having a strategy in building their roster.

In 2013 even Ariedo Braida, the legendary direttore sportivo since 2002 and general director ever before at Milan under Berlusconi, left the club to be later hired by FC Barcelona. Milan seemed to be without guidance at the top, and managers started rotating after the sacking of Massimiliano Allegri, the last successful coach at Milan and current manager at Juventus. Milan failed to qualify for European cups from 2014 onwards, and their current position in the league would keep their subpar streak alive for one more season.

Milan did not only disappoint in sporting matters, since the appeal of their brand was repeatedly hurt by ridiculous public appeareances. Most notably when Adriano Galliani invoked a “neutral” TV production after he claimed Juventus had produced ad hoc offside lines on TV to make a Carlos Tevez’ goal look regular. At the time Galliani was not just wrong (the lines were correctly placed and Tevez’ goal was regular), he also probably knew it but acted for personal reasons.

That event gave an excuse to the Lega Calcio to put the TV production in the hands of Infront, a company whose dark ties with Italian football would require a separate story to explain. But what is worth knowing is that Galliani himself has always been close to Infront and its Italian representant Marco Bogarelli, and pushed for the deal to happen. This was not clear at the time, when his statements simply seemed to be lacking the knowledge of basic TV production, not to mention the rules of perspective on a screen.

Lost in translation

Another example would be Clarence Seedorf’s interview to SportTV at the time he was playing for Botafogo but was already rumored to be the favourite to replace Massimiliano Allegri on Milan’s bench. The inverview was conveniently mistranslated by most Italian media to make it look like Seedorf was criticising Allegri for events that dated back to when the Dutchman was still playing at Milan, and the club did nothing to protect their manager in order to undermine his position and authority, despite the interview being clearly false as it implied, for example, that Paolo Maldini had retired because of Allegri (Maldini retired one year before Allegri took Milan’s job).

In this embarassing confusion, it is no surprise that the team could not perform as Milan used to and became a mid-table force in the Serie A despite its history and its financial strength. The reasons behind the Berlusconi’s slow but stable withdrawal from football things and consequent demise of the club might be better understood by having a more detailed look at their recent history of trials, private events, and political presence.

Try me

Silvio Berlusconi has certainly had a very eventful life: from entrepreneurship to football success, from politics to scandals and, of course, a lot of trials. While this is not the adequate time and place to discuss his moral or legal integrity, a few lawsuits stand out in his life and could have contributed influencing his most recent years and therefore the managing of AC Milan.

In December 2010, then Prime Minister Silvio Berlusconi was investigated for using his position in the public office to push for the release of a girl of Moroccan origin that was being held by the Italian police. She was later suspected of being part of a prostitution scheme that would lead up to Berlusconi’s residence, which he allegedly tried to cover up by not having her questioned in that occasion. This trial deteriorated his strength in the parliament and led to the fading out of his political power, which culminated with his resignation from the role within 11 months. Berlusconi was later cleared of the accusations (another branch of the trial is pending), but this trial surely distracted Milan’s owner from any sporting matter for quite a while.

While his career in politics was already stumbling, it would take another proceeding to put an inevitable end to it, as it happened with the “Mediaset trial”, in which he was accused of creating a structure of offshore companies to move his money out of Italy and in tax havens during the process of acquiring the airing rights of American movies on his Mediaset channels. He was first sentenced to four years in late 2012, and the conviction was confirmed in two appeals by August 2013.

Three of those four years were discounted due to a partial pardon for all crimes committed before 2006 (which had been previously passed during his government), but as an accessory punishment he will not be able to be elected to any public office until 2019, marking de facto his retirement from politics, despite still nominally being president of his party Forza Italia.

Follow the money

But two other trials would take the biggest toll on Berlusconi, as they touched the finances of the family: the civil lawsuit for the Mondadori trial and his divorce from Veronica Lario. The first one was a spin-off of the same criminal trial in which Berlusconi was not judged as legal terms for reaching a sentence had expired. In late 2009 the verdict enstablished that Fininvest, the company controlling all family businesses, had to pay 750 million euros in fines, later reduced to nearly 500 millions in 2013. The divorce was not as expensive for Berlusconi, but not cheap either given the 1.4 million euros he has to pay his former wife every month (not a typo), which is an already-discounted amount after the initial number of 3 million euros per month.

While Berlusconi could certainly try to mend his scars (but not his ego) for not being able to continue his political story and set out for a happy life as a grandfather, the financial blows turned out to be a problem even for a man as rich as he was. The economic crisis of 2008 did not spare his wealth, which, according to Forbes, saw a decrease from 11.8 billion dollars of 2007 to 6.5 in 2009 and 5.9 in 2012. At the same time, the now 80-year-old must have felt the pressure of his heirs trying to get control of family companies and, of course, the family treasure. Which meant that his money was first cut by the crisis, then distributed within his sons, then (albeit only partially) taken away by his divorce and the fine resulting from the Mondadori trial.

Better call Barbara

All of these elements led to a shift in direction for the family businesses, which of course had to include the football club. During the Spring of 2012 Silvio Berlusconi himself promised not to sell Thiago Silva in the upcoming summer transfer window, only to then accept the admittedly generous offer of Paris Saint-Germain to bring the Brazilian defender to France along with Zlatan Ibrahimovic. Berlusconi justified breaking his promise with a change in the financial management of the club, implying that it could no longer sustain big signings and contracts, nor afford turning down good offers for its best players.

Meanwhile, Barbara Berlusconi entered Milan’s board in April 2011 and after two years and a half was promoted CEO together with Adriano Galliani, the two of them splitting out-of-pitch and football business respectively. This move, and the first words pronounced by Barbara in the new role, were not appreciated by Galliani, who threatened leaving the club shortly after but was then persuaded to stay.

But the Mondadori trial and the divorce proceeding were reaching their final stages (respectively September 2013 and February 2014), and the family must have felt the need for cash. This prompted to a sale of part of the Mediaset shares, in which Fininvest decided to drop from over 40% to 33%, marking in February 2015 the first sale of a certain size in ten years. It was more or less at that time that the reduction in budget and the new managerial asset were not considered enough to steer the finances of the football club towards a safer place, and mr. Bee Taechaubol moved from anonymity to sudden fame in Italian media.

The Jackson Martinez incident

The sale of the club would probably make sense in the narrative described so far: the family could use some liquidity, Berlusconi is getting older and is distracted by other things, Barbara is the only daughter interested in keeping up the name of the club while her siblings might see AC Milan as a loss of money rather than an asset. But from a slightly more skeptical point of view one should also note that certainly Silvio would rather die while still president and owner, and that such a strong brand could still be useful for him or the rest of the family, at least for the traditional purpose of getting publicity while pursuing public offices or businesses.

It is difficult, for example, to determine whether the announcement of the signing of Jackson Martinez by Milan’s official TV channel was just another sign of poor management or an attempt to show Berlusconi’s renewed interest in the club just ahead of the ballots for administrative elections of June 2015. Martinez never signed for the club, but Italian media went along with the story following yet another mistranslated interview from the Portuguese newspaper A Bola.

While there were plausible reasons for Berlusconi both to be looking for a buyer and wanting to keep control of the club, the way things have developed in the last two years could lead to more obscure plans, of which there is no proof yet but that have finally started being discussed on traditional media and corroborating the idea that there might be more to this story.

The one billion euros question

Bee Taechaubol, or “Mr. Bee”, quickly earned notoriety in Italy for different reasons: he was the first one to approach AC Milan with anything that could resemble an offer and he had a strong presence on social media that helped journalists track his moves. He also reportedly offered 1 billion euros to buy Milan out entirely, an amount of money so big that it could not go unnoticed.

Taechaubol is a Thai businessman whose strongest link with football had been the organisation of the Global Legends Series in the Asian region, a series of exhibition games for retired football stars. In February 2015 Italian media reported that he was ready to buy Milan from Silvio Berlusconi for the sum of 1 billion euros, but Fininvest quickly denied any agreement or contact. Despite the dismissal of the offer and even subsequent denials of the club being for sale, this event acted as an unofficial announcement that Fininvest could be listening for offers for shares of the club, and opened a two-year saga that still does not seem to be close to an end.

In March 2015 a Romanian gossip website reported that Chinese billionaire Poe Qui Ying Wangsuo may had bought Milan from Silvio Berlusconi since the two appeared together in a picture, signing some papers. The picture was posted by Wangsuo’s fiancee, who mistakenly congratulated him on buying the club. And again, despite the piece of news being quickly dismissed, Milan gave the impression that for the right offer, the club could be sold.

In the same month, Mike Ozanian wrote on Forbes.com that Bee Taechaubol would probably not be able to buy Milan on his own, since he would not be in possess of the money that he was offering. But that did not stop Taechaubol from beginning his due diligence process in April, along with Hong Kong businessman Richard Lee. The two of them were reportedly being helped by PwC (at the time known as PricewaterhouseCoopers), the company that gained popularity for the unfortunate incident at the most recent Academy Awards, but that was still seen as a respectable firm ever before that.

As time went on, more characters appeared to claim their fifteen minutes of fame in this story, proving that if Milan were actually looking for new investors or buyers, they were at the very least doing things the wrong way. It should not be so difficult to find serious and transparent businessmen interested in such a brand, but Milan could only attract people from different continents -mainly Asia- whose background was sometimes impossible to determine.

Surely some of them were just looking to get publicity while taking advantage of a confused situation at Milan, but the difficulty of getting information about most of them also proved to be fairly convenient for Berlusconi, who was also never clear about the sale in his few public appereances.

Actors in supporting roles

Italian media then began reporting any sighting of Taechaubol in Milan, which were also announced on Twitter by Victor Pablo Dana, an Italian businessman based in Dubai, which would later have a role in the Pisa sale, a story that was as excruciating as Milan’s, but that at least seemed to have reached an end in recent months. While there was no public confirmations of the sums involved, the rumors that circulated in those weeks spoke about a new offer of 500 million euros for 50–60% of the shares. It meant that Taechaubol was looking for the control of the club and he was still evaluating it around 1 billion euro, which again seemed too much but was also the amount mentioned by Berlusconi in other occasions.

At this point, it is difficult to say whether Milan were trying to be cryptic on purpose or if they were just without a clue of what was happening: Adriano Galliani reportedly answered a question about the sale saying that maybe Marco Bogarelli (from Infront) could have the answers the journalists were looking for. This led to speculation about Chinese organisation Dalian Wanda Group, who had just bought Infront and 20% of Atletico Madrid’s shares, being involved in the deal. The story was later denied by all sides, but Galliani’s peculiar answer helped creating even more confusion.

More weeks went by among speculations, while supposedly Taechaubol was negotiating with Berlusconi, but in May 2015 Milan’s owner used a public appearance to state that in case the deal failed, he would be happy to keep the club and try to build the roster only with Italian players. Despite such statement, in June Fininvest announced that they would be negotiating exclusively with Bee Taechaubol, the reported offer being of 500 million euros for 48% of the club. Taechaubol also added that he was receiving support from China CITIC bank.

To Bee or not to Bee

In August 2015, an agreement was announced for figures similar to the ones mentioned before: 480 millions for 48%. The Thai investor could retain the exclusive rights on the deal as long as he finalised it by the end of September by paying such amount, while no penalty clause was included in the announcement, which talked a of “gentlemen’s agreement” between the two sides.

A few days before the deadline, journalists Paolo Biondani and @Vmalagutti wrote an investigative report for the Italian newspaper l’Espresso, uncovering suspicious links between the firm assisting Taechaubol in the negotiation and the Fininvest universe: Taechaubol was receiving the services of Tax&Finance, a Swiss-based company founded by Gerardo Segat, Paolo Di Filippo and Andrea Baroni. The trio also had important roles in the Fininvest scheme to get Berlusconi’s money out of Italy, when back in the 90s they were working in London for Edsaco, a company providing financial services that handled Berlusconi’s offshore organisation. Another clue about their proximity to Fininvest was the company’s address, which is the same of a former trust company managed by Giorgio Ferrecchi, a Swiss professional that would later sit in the board of Fininvest Service, Swiss branch of the big family company.

Regardless of the article published by l’Espresso, in late September a joint media release acknowledged some delays in the process and granted more time to Mr. Bee to put the money together. He was then expected to complete the transaction in four to six weeks, but again came February 2016 and Silvio Berlusconi admitted the “Chinese market” was having some problems and the deal could not go through, which meant Fininvest would also be listening to other offers.

La Cordata

The first rumors about a Chinese group of investors appeared in April 2016, and they were said to be helped by advisor Salvatore Galatioto, Italian-American former employee of Lehman Brothers who had already supervised the sales of some sports franchises in the USA, and Nicholas Gancikoff, British owner of Sports Investment Group, a company described as involved in developing and building stadiums. The investment group (or cordata, in Italian) was rumored to be willing to buy at least 51% of the shares, but no actual name was provided to the press after various well known wealthy Chinese people were ruled out or even said publicly they were not interested.

In May 2016 Silvio Berlusconi posted a video on his Facebook page in which he admitted he was trying to sell AC Milan, but also that he was wishing to leave it “in good hands, possibly Italian ones”, despite all negotiations up to that point having been with foreigners of the Far East. In the same video, he also weirdly claimed he had played in AC Milan youth teams, showing a very unconvincing picture of his young self with a red and black shirt. Once again, to explain such a public stunt it is difficult to choose between his age, his ego that wants to believe he actually played for Milan before becoming its owner, or just the will of keeping things unclear on purpose. What became certain is that he was no longer a reliable source for any news about the sale, despite being one of the only two.

Some more informations about the group were made public in August, when Fininvest announced a preliminary agreement with an organisation called Sino-Europe Sports (or SES) for the sale of 99.9% of AC Milan at the price of 740 million euros, club debts included. Sino-Europe Sports were supported by Haixia Capital, a venture capital firm, and captained by Li Yonghong, a Chinese businessman that was fairly unknown up to that point. This time Fininvest asked for insurance against the possibility of the deal falling apart, which meant the Chinese group had to pay 100 million euros up front as a non-refundable fee that would get deducted from the final amount at the moment of the long-awaited closing, which was scheduled for December.

The first part of the money arrived on time, with 15 million euros paid right at the signing of the agreement and 85 millions in the following month. But in the same period an article from Bloomberg stated that Sino-Europe Sports were stilll trying to gather money as they would not possess the amount needed to complete the deal. Fininvest would have their backs covered since the 100 million euros were already paid, and that money seemed enough to keep fans happy in the knowledge that by December they would either have a new ownership or at least some money to use on the transfer market. But none of that happened.

Red and pitch-black

After an inquiry from La Gazzetta dello Sport explained how Li Yonghong was virtually unknown in his own country as well, in October Bloomberg found evidence that SES had forged a letter, supposedly sent from Bank of Jiangsu, in order to vouch for the stability of their own finances. The bank denied to have produced such a document. This is so far the only proof of any malpractice, but at that point it should have been enough to raise a few doubts about the whole negotiation. It went unnoticed by big Italian media yet again.

In November 2016 Silvio Berlusconi publicly said that the deal was done, but also added that should it fail at the last minute, he would have to “take his club back” and build the young, all-Italian Milan he always dreamed about in recent years. This would have surely been remembered as a last gag from the always-funny entrepreneur, had the deal been finalised in December as expected. But once again, pending authorizations from the Chinese government to unlock to full amount of money, Sino-Europe Sports could not go through with the payment.

Instead, a new fee of 100 million euros was paid to keep the deal alive, which meant Fininvest had now received a total of 200 millions as a guarantee that the sale will happen, or else they would be entitled to keep the money. The closing was moved by three months to early March, and Milan had to go through another transfer window under the old management, and without the investments the fans were hoping for. Fininvest and SES also announced that the names of the investors in the group would remain anonymous up until the closing itself.

The excessive lack of transparency and the wearing length of the negotiations finally had some fans turning impatient and some journalists getting suspicious of what was actually happening. In an attempt to understand more, website Calcio&Finanza managed to get to the source of the money used to pay the second “insurance fee” of 100 millions euros. In an article written by @MatteoSpaziante (English translation by Stefano Bernardini), the site tracked the origin of the money back to the British Virgin Islands and to a company named Willy Shine International Holdings Limited, which had lent the full amount to a Hong Kong company that was specifically created back in July by the name of Rossoneri Champion.

This discovery could explain how Sino-Europe Sports might have managed to work around the reported restrictions of the Chinese government regarding capitals leaving China, but at the same time that sketchy movement of money between tax havens opened the door to unpleasant scenarios, like money laundering or, even worse, the return of hidden capitals back to Italy.

Insert coin to play again

The second deadline for the closing of the sale has expired once again with the beginning of March, and now Milan could either receive 100 million euros more in the next week to keep the deal alive or let it fall apart and keep the 200 millions received so far. Another option would see Sino-Europe Sports gathering the remaining money with some loans in a short span of time, but five days after this solution is reported as not likely.

Meanwhile, the fans keep waiting. At the end of the 2009/2010 campaign, in San Siro they confirmed their support to the team for the following season with a big banner, in which they thanked players and coach for their efforts but also criticised president Silvio Berlusconi for being “absent”. Milan had a last spark of pride in 2011 when they won the Scudetto, but then they inevitably dropped positions in the Italian rank under a dubious guidance. Six sad years followed, of which two were spent supposedly looking for a new ownership, amongst false promises of great returns (Ancelotti, Ibrahimovic) and short-term placebos for the fans, like the project for building a new stadium presented in early 2015 and then quickly withdrawn with little excuses only a few months later.

After the last meeting of the board, in which essentially they decided to do nothing, Giuseppe La Scala, representant of small shareolders of AC Milan, was angered by the lack of answers from Fininvest. On the doorsteps of Casa Milan he talked to the journalists for almost 15 minutes, and at some point he expressed his opinion about the negotiation not being real, denying this possibility but stating with a certain degree of precision “imagine if somebody like Berlusconi gets his money back from abroad in plain sight”. At least somebody has started asking the right questions.