Spending Spree: How Milan Were Able To Spend €90M This Summer

by: Ginelle Polini (@GinelleP)

It’s been a busy summer for clubs around Europe, preparing for another season of competition. Milan has been one of the most active clubs in Italy during the transfer window this summer, with the aim of achieving European football. 2015 has been a year of change for the Rossoneri, most notably with the 48% stake sale of the club to Thai businessman, Bee Taechaubol. Promising President Silvio Berlusconi an injection of funds to his precious club, that is exactly what Mr. Taechaubol delivered.

The following list displays a breakdown of the transactions that the Rossoneri took part in this summer mercato, excluding any end-of loan-deals and focusing on the monetary transactions the club participated in:

Notable Summer Transactions:

Carlos Bacca: from Sevilla – €30M Riccardo Saponara: to Empoli – €4M
Alessio Romagnoli: from Roma – €25M Adil Rami: to Sevilla – €3.5M
Andrea Bertolacci: from Roma – €20M Stephan El Shaarawy: to Monaco – €2M loan
Luiz Adriano: from Shakhtar Donetsk – €8M Ezekiel Henty: to Olimpija – €150K
Luca Antonelli: from Genoa – €4.5M Giampaolo Pazzini: to Hellas Verona – free transfer
Juraj Kucka: from Genoa – €3M Michael Essien: to Panathinaikos – free transfer
Simone Verdi: from Torino – €450K (loaned to Eibar) Cristian Zaccardo: to Carpi – free transfer
Matteo Pessina: from Monza – €20K (loaned to Lecce) Robinho: to GZ Evergrande – free transfer
Mario Balotelli: from Liverpool – loan Daniele Bonera: to Villarreal – free transfer
Rodrigo Ely: from Avellino- free transfer Sulley Muntari: to Ittihad – free transfer
Jose Mauri: from Parma- free transfer Gabriel Paletta: to Atalanta- loan
Alessandro Matri: to Lazio- loan
Hachim Mastour: to Malaga- loan
Valter Birsa: to Chievo Verona- n/a
Michael Agazzi: to Middlesbrough- loan
Michelangelo Albertazzi- to Hellas Verona- free transfer
Total Spend – 90.97M Total Earnings – 9.65M

*Not an all-inclusive list. Figures according to Transfermarkt.com.

With the fees spent on bringing in top strikers Carlos Bacca and Luiz Adriano, Milan didn’t make a whole lot of sales to make up the difference. The club did well in offloading players who no longer have a place at the San Siro, however, most were completed on free transfer deals. After earnings versus spending, Milan’s books record a deficit of €81.32M.

Compared to the transfer window last summer, “strapped-for-cash” Milan made numerous short-term loan deals that had players come in for a short amount of time, struggle to find form or a period on the pitch and then leave (i.e. Fernando Torres). The difference with this mercato, was that Milan actually invested through fees for high-potential players like Alessio Romagnoli and Andrea Bertolacci, who can remain with the club on a longer-term basis and develop with the growth of the squad.

In addition to new players, the red and black inked Siniša Mihajlović to a two-year contract this summer, replacing Pippo Inzaghi behind the bench. Considering that Milan are adding yet another coach to their wage-bill while still having to pay previous coaches, both Inzaghi and Seedorf from their contracts, is a ton of money that Milan has put upfront in a matter of three months.

Since acquiring a portion of the club under Mr. Bee and the regulation changes that influenced UEFA Financial Fair Play (FFP) rules at the end of June, Milan had much more flexibility this summer than compared to last. European clubs are able to spend more as the rules now adjusted for greater room to maneuver the budgets. Clubs are allowed to record a loss of €5M over the last three reporting periods, and can increase to €30M over budget providing those losses are covered by an owner or shareholder. Since almost all of Milan’s spending came from Bee’s accounts, this offers some lax on the budget.

Yet how can spending close to that amount on only one player be feasible for the Rossoneri? Especially when you consider their debt falls in the €80M range, just on player transfers. Information from acmilanfinance.com explains this methodology very well [you can read the full article here] due to UEFA’s voluntary agreements. In Milan’s case, they are able to apply under this agreement since “they have a license to play in UEFA competitions, but didn’t qualify for one season before the voluntary agreement comes into place.” Part of this agreement also claims that owners must make a commitment to monetary contributions for the duration of the agreement.

So is over €80M in debt worth the spending for Milan? In the long run, yes. Over the next four years while under the FFP voluntary agreement, the club will have to convince UEFA that eventually they can meet a break-even requirement (according to FFP, a €30M loss) while demonstrating revenue growth to cover those loses. Four years to balance the budgets allows plenty of time to stable wage-bills from ex-coaches and earn profit from selling a few more players. Galliani can still make that big-budget signing, however, a plan should be in place over the next few years to offload players weighing down their wages.

Contrary to many fans belief, it is this voluntary option that allows Milan to spend, not necessarily the fact that Mr. Bee automatically began to inject funds into the organization. We will not see concrete figures on the deal with Berlusconi until 2015-16 financials are released. However, it is the ability to apply under the voluntary option so that in the long run future investments will help to balance current overspending, since Bee would be considered an owner.

During 2014-15, Milan were still paying fees to a number of players who contributed little to the squad including Alessandro Matri, Giampaolo Pazzini, Cristian Zaccardo and Robinho. Although they didn’t gain any revenue due to free transfer agreements, the club did well to offload these players and avoid further wage expenses to the budget in the future.

The future not only depends solely on Silvio Berlusconi, as the stake held by Bee Taechaubol allows debts to be covered by two equity participants, as claimed by UEFA. Selling 48% was virtually the only option to allow for Milan to fork up this type of spending. We’ll have to sit back and see how the summer investments pay off in 2015-16. Claiming a spot in Europe not only forces Milan to continue to abide by FFP regulations, but also offers up a few more bonuses in cash –something that Mr. Bee and Berlusconi wouldn’t mind having.

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