Italian Financial Authorities Raid AC Milan Headquarters

Milan, the target of an investigation by the Italian Finance Commission over its acquisition by the American fund Red Bird in 2022, is the number one football club in Italy to attract the attention of the authorities for questionable deals. Police raids on Italian club buildings have become common in recent seasons, after a loud scandal swept the Juventus club against the backdrop of controversial profits linked to player transfers in professional football. A search operation at Milan's headquarters, near the famous San Siro Stadium, targeted current CEO Giorgio Forlani and his South African predecessor, Ivan Gazidis. However, Milan, as an entity, is not in the sights of prosecutors in the Italian economic capital who are studying the file of the sale of the seven-time European champion by the American fund Elliott Investments to another American fund, Red Bird, for 1.2 billion euros in 2022. The judges sent the financial police to search for... The documents are not only at the club's headquarters, but also at the homes of Gazidis and Forlani, where the two men are suspected of having helped conceal from the Italian Football Federation's oversight body that Elliott retained control of Milan despite its sale to the Red Bird Fund. Elliott took over Milan in 2018 when Chinese businessman Li Yongzhong was unable to repay the loan he obtained when he acquired the club from Fininvest, the financial company affiliated with the late legendary president Silvio Berlusconi, in 2017. Elliott responded on Tuesday, “These allegations are false and they are false.” Milan was sold to Red Bird on August 31, 2022. As of this date, the Elliott Fund no longer has any ownership or control of Milan.” During that period, a source said, Red Bird acquired 99.9 percent of the Lombard club's shares, and Elliott no longer owned any capital either in Milan or in Red Bird's funds. In a press statement, Red Bird explained, “The share of capital that it does not control, i.e. 0.07 percent, belongs to individual Italian shareholders who have supported the club for a long time.” The Fund stressed, “The idea that Red Bird does not control AC Milan is completely false and contradicts all evidence and facts, including those that are allegedly the basis of the investigation.” He added that Elliott was not granted voting rights as part of the seller's loan agreement, and also denied reports that the Saudi Public Investment Fund might buy the club. The statement concluded, "There are no ongoing discussions with any investor who could exercise control over the club. Red Bird is and will remain the controlling owner of AC Milan." To help finance the sale to Red Bird, Elliott Fund granted a “seller’s loan” to its American counterpart, an activity common in private equity transactions that allows the seller to give the buyer a loan on a portion of the purchase price, in the amount of 550 million euros at 7 percent interest.