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RedBird invests into AC Milan: A new perspective for Italian football?


Milanese sport has always had a peculiar relationship with the United States: Think of basketball of the 80s’ ‘and 90s’, when charismatic figures such as Dan Peterson and Mike D’Antoni acted as Olimpia Milano’s coaches.

The intensity of this relationship seems nowadays destined to reach levels never attained before following the completion of the acquisition of AC Milan by RedBird Capital Partners. Led by former Goldman Sachs banker Jerry Cardinale, RedBird is a US investment firm focused on investments in the sports and media sectors.

RedBird, whose investors include NBA icons such as LeBron James and legendary teams such as the New York Yankees, acquired the controlling interest of AC Milan from Elliott, another American investment management firm that led the team to win his nineteenth championship last May.

RedBird’s operation stirred particular interest in Italy as it represented the first investment in an Italian football team made by an American investment fund specialized in the sports sector. Elliott does not have this focus and had acquired the team due to the difficulties of the previous owner in repaying the loan received by Elliott itself.

Previously, there had already been examples of Italian football clubs that, to promote their development plans, had chosen the listing option, such as Juventus or Roma. Some had been acquired by wealthy foreign families, such as Palermo which has been bought a few months ago by UAE Sheikh Mansour, who already owns Manchester City.
At first glance, the acquisition of AC Milan seems to be particularly congenial for RedBird, which has built its fortune also due to its ability to transform professional sports clubs into media companies, expanding their revenues and sources of income. In fact, Milan had already tried to create something similar in the past under the chairmanship of Silvio Berlusconi, a tycoon of Italian private television networks, who's also a former Italian prime minister. At the time, incomes arising from television rights had not yet reached the crucial importance they have today in the balance sheet of a sports club and the opportunities of the globalization era and the new media were still unknown.
However, RedBird's Italian bet is not without risks and its success seems to be linked in particular to four key factors.

AC Milan
Stefano Pioli
First of all, it will be fundamental for RedBird to entrust the technical sport choices to people who know the reality of AC Milan in depth and for whom Italian football and its mechanics have no secrets.
In this sense, the confirmation of coach Stefano Pioli, the true key player of the triumphal ride that brought the team to the championship and creator of the compactness of the group, is a guarantee. The renewal of the contracts of sport director Frederic Massara and director of technical area Paolo Maldini (renewals which arrived, however, with a significant delay and inexplicable doubts, which compromised the operations of AC Milan in the final phase of the latest Summer transfer market) are certainly a good starting point and a positive sign of continuity.
It will be essential also to increase the team's revenues in geographical areas that are increasingly interested in Italian football and in which AC Milan is already well known but has never fully exploited its development potential. This is the case of China but also of the United States, where Elliott had started a work that is currently still in an embryonic stage.
The recent commercial agreement between AC Milan and the New York Yankees, which will lead to joint activities in the merchandising field and which aims to strengthen the recognition of the Milan brand in the American market, fits well into this context.
But the factors that will decisively influence the outcome of RedBird's investment will be the relationship with Elliott, the previous owner, and on the project relating to the construction of a new stadium.
Jerry Cardinale
Elliott has in fact granted RedBird a loan for the acquisition of the controlling interest of the Italian team and by virtue of this has obtained the power to designate two members of the Board of Directors as well as significant governance and veto rights. Cardinale will therefore be forced to share his development strategies with a creditor who has already shown in the past to have a vision that does not coincide with RedBird's one and which may be reluctant to invest in the purchase of new high-level players, of which AC Milan is in great need to return to be competitive in the European arena.
Finally, the main challenge RedBird is called to face concerns the construction of a new stadium, including entertainment and commercial facilities that could generate significant revenues on a daily basis, even on days when no football matches are scheduled.
Indeed currently AC Milan plays its matches in the San Siro Stadium, a facility plenty rich in history and charm but which is owned by the Municipality of Milan and has no commercial facilities similar to the ones described before.
This is a project that will require years, significant investments, long and complex negotiations with the Municipality of Milan, as well as the involvement of the citizens and the residents in the area where construction of the new stadium is planned to inform them about the project and the relevant consequences.
At the moment there are still many open points on this matter, starting from the identification of the place where the new stadium will be physically built, and it is clear RedBird’s need to accelerate and reach a more defined and more stable vision as soon as possible.
The investment of RedBird has however led, for the simple fact of having been made, to think of previously unheard scenarios for Italian football, which indeed lived and still lives a season of economic decline and lack of competitiveness with the top European clubs. It has therefore brought important innovations in terms of projects and management criteria.
If as of today Milan has certainly been the only truly European Italian city, now there are good reasons to believe that it could also become the Italian city that's closest to the United States.

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