AC Milan could have said to have experienced a renaissance in recent years, both in terms of their financial stability and on-field success.
However, there is an interesting juxtaposition between Milan’s improved accounts and financial status and its current sporting achievements, especially when comparing it to the approach of their cross-city rivals Inter.
Despite Milan’s recent exit from the Champions League Semi-final at the hands of the Nerazzurri only a couple of days ago, the two clubs showcase contrasting business models.
Milan have prioritised sustainable growth and a youth-led project, while Inter have focused on immediate success with older, more experienced players. The involvement of Elliott Management and RedBird Capital has been key to that vision.
What we are now left to do is ponder the club’s future as it strives to strike a balance between economic prudence and capitalising on its recent momentum.
The turnaround begins
Milan’s financial troubles in the past have been well-documented, with the club struggling to compete on the domestic and European stage while grappling with mounting debts.
However, the club’s fortunes began to change when American hedge fund Elliott Management assumed control in 2018. Under their stewardship, the Diavolo implemented a more sustainable business model, focusing on reducing costs, restructuring debt, and investing in infrastructure.
Elliott’s astute financial management laid the foundation for further growth, attracting investment from RedBird Capital in 2020. This collaboration injected fresh capital and expertise into Milan, allowing the club to strengthen its financial standing and focus on long-term sustainability.
In fact, the financial work has been largely the best success Milan has experienced reversing the damage Chinese ownership famously imparted and there are now clear signs of recovery. Milan went from the deep red of €-194.6m to €-96.4m in the last financial year ending June 2021. Inter, by contrast, have increased their losses to €-245m.
The Rossoneri have also seen an increase in sponsorship revenues, a big issue for Milan pre-Elliott, with revenues now at €53.9m compared to €36.6m in 2019-20.
Lastly, it is believed that for the first time in a very long time Milan should post an operating profit next financial year, something that none of the ‘big six’ in Italy can boast and not even many other clubs in Europe – Premier League included – can say.
Of course, this tells only half the story and legacy is built largely on the pitch not in the boardroom, even though both are needed for a club like Milan to truly return to the top of world football once again.
Contrasting approaches
While Milan’s financial situation has markedly improved, the club also witnessed a resurgence in its on-field performance. The team displayed significant progress, particularly during the 2020-21 season, when they finished second in Serie A, securing Champions League qualification after an eight-year absence.
Whilst the first return back in the Champions League, now referencing the 2021-22 season, Milan’s UCL run was cut very short, failing to progress out of what was dubbed ‘the group of death’ featuring Liverpool, Porto and Atletico Madrid.
It was really the end of the season – where we saw Pioli and his players lift the Scudetto – that truly marked any tangible success for the club, success that has been a long time coming for both the club and especially the fans. That title win then presented the litmus test of what Elliott’s and now RedBird Capital’s project was all about.
However, it can be fiercely argued that the difference between Milan and Inter sporting achievements in the last four years is stark. Inter clinched the Serie A title in the 2020-21 season prior to Milan lifting it, and therefore already had matched Milan’s more recent league success and only major trophy in 11 years.
What makes it even clearer that their ‘immediate success’ model has worked out better, is they already have a Coppa Italia win (a trophy Milan have not lifted since 2003), two Supercoppa and have now emerged victorious over Milan in the Champions League semi-final.
This means they not only have multiple trophies to their name but they have also had better cup runs, have a Champions League final appearance and another shot at winning the Coppa Italia this season, with the Nerazzurri waiting to play Fiorentina in the final.
Inter’s success can be attributed, in part, to their business model, which prioritises immediate results and features experienced players who bring stability and a winning mentality to the squad.
Even if their model is not a beacon of long-term sustainability and they are in financial difficulties due to having bonds to repay, they have executed their footballing plan much better than Milan and have the ultimately have the silverware to prove it.
The red side of Milan, on the other hand, embarked on a youth-led project, nurturing talented prospects such as Theo Hernandez, Sandro Tonali and Rafael Leao to name but a few.
The Rossoneri even doubled down on this opposite approach to their city rivals as they let players like Franck Kessié, SAlessio Romagnoli and of course Hakan Calhanoglu leave, who were all experienced players similar to the sort Inter would (and in the case of Calhanoglu did) employ.
Milan’s approach is aimed to build a sustainable foundation for long-term success, both on and off the pitch. The club’s investment in the youth academy and emphasis on developing homegrown talent reflect a commitment to a more organic and cost-effective strategy.
This is to be commended, especially given that before Milan lifted the league title it was seen as nothing more than a pipe dream. It could be argued that because of the big club status and speed at which a major trophy was acquired, the fans previously realistic expectations of the project has been damaged.
The dilemma
Despite the progress made under Elliott Management and RedBird Capital, Milan faces a critical juncture as it seeks to strike a delicate balance between financial prudence and capitalising on recent momentum.
The club’s failure to build upon their strong showing last season raises questions about the timing and extent to which the Rossoneri should push the boat out.
While it is crucial to maintain sustainable spending and avoid the financial pitfalls of the past, there comes a point where additional investment may be necessary to bolster the squad and compete with Europe’s elite.
The allowance of key players to leave and not recouping any useable funds from the likes of Donnarumma and Çalhanoğlu, in order to balance the books, sparked concerns among fans about the club’s ambition and ability to challenge for major trophies.
The club must now navigate this delicate situation, ensuring that economic health continues while selectively investing in proven talent to reinforce the squad. Striking the right balance is hard, but it is achievable.
The future
Milan’s improved financial accounts and stability – underpinned by the involvement of Elliott Management and RedBird Capital – have laid a solid foundation for the club’s future.
The project has shown promise, and the team’s return to the Champions League provided a taste of what lies ahead. However, the recent exit from the competition at the hands of Inter highlights the contrasting approaches between the two Milanese clubs.
The Rossoneri now face the challenge of advancing strategically, building upon its economic growth, and capitalising on its recent progress.
A large question mark has now appeared regarding the project that arguably was not there before. Of course, this is most likely down to specifics such as Pioli’s tactics, World Cup disruption and specific transfer decisions. Regardless of that fact, the buck will always stop with the project identity itself.
In order for the ball to keep rolling, continuous Champions League qualification must be achieved and therefore the focus has to be a top four finish, because otherwise the clear gamble for this year’s Champions League will have backfired.
Milan’s future lies in its ability to strike the right balance between fiscal responsibility and targeted investments to strengthen the squad, ultimately aiming to reclaim their place at the pinnacle of Italian and European football.
