Back in February, the Italian newspaper Corriere della Sera dropped a bombshell investigation.
They claimed that the new Chinese owner of Italian giants AC Milan, Li Yonghong, maybe
wasn't the moneybags billionaire he had claimed to be when his Rossoneri Sports Group bought
the club from the erstwhile former owner Silvio Berlusconi in April 2017.
When the move was first mooted in 2016, it seemed that AC Milan was the latest pawn in
China's multiple billion pound gambit to revolutionise the international football business.
Over £200 million was spent on transfers even though there had been question marks
raised over who Li was, where he got his money.
Instead Corriere della Sera alleged that Li was, in fact bankrupt and that his assets
were being auctioned off on China's version of ebay.
Li, of course, strongly denied the rumours of his financial demise in a statement, saying
that “some media have irresponsibly reported fake news that has damaged the Club, my companies,
my family and myself.
From the day I bought AC Milan, I have faced difficulties and have been under unprecedented
pressure.”
But this wasn't the first time doubts about Li had been raised, a self declared billionaire
who claimed he had grown rich in mining before emerging to buy one of the world's most famous
clubs from one of football, and indeed Italian politic's, most infamous men.
Silvio Berlusconi bought AC Milan when it was down on its knees.
The Rossineiri had been relegated to Serie B twice in the early 1980s and was on the
verge of bankruptcy.
Berlusconi was a flamboyant Italian billionaire media tycoon.
Through a tangled web of companies he secured control of AC Milan in 1986.
The club was one of a host of entities owned by his holding company Fininvest, which included
Mediaset, Italy’s biggest private media company.
The move had been especially lucrative for Milan and Berlusconi.
Arrigo Sacchi was appointed coach and his team – which featured Ruud Guilit, Marco
van Basten, Paolo Maldini and Franco Baresi – became one of the first global super clubs
of the modern era.
Although Sacchi left in 1991, he was replaced by Fabio Capello.
Milan dominated Italian football in the decade after Berlusconi's arrival winning five Scudettos,
two European Cups and the newly rebranded Champions League in its second year.
Berlusconi meanwhile, became Italy's prime minister, a controversial figure mired in
corruption allegations.
He was cleared of paying an underage prostitute for sex in one trial, which popularised the
phrase “bunga, bunga” sex parties.
He was eventually found guilty of tax fraud and barred from public office.
Although that didn't stop him trying to make a failed political comeback during this year's
Italian general election, even though he was banned from taking up any role until 2019.
Nor the fact that he is 81 years old.
Still, in 2016 Berlusconi was looking to offload Milan which was losing money and was performing
poorly on the pitch.
After a few abortive attempts at selling the club, Berlusconi finally found someone with
pockets he believed were deep enough to buy AC Milan.
The buyer was from China.
We have spoken at length before about the Chinese football revolution, how China's President
Xi Jinping is a massive football fan and how he prompted a flood of investments into European
football, some good, some bad.
So when a Chinese company Sino-Europe Sports Investment Management Changxing Co.Ltd came
looking to buy AC Milan for over 700 million euros, it seemed that the club was the latest,
and perhaps biggest, acquisition of Xi's football revolution.
At the centre of the takeover was Li Yonghong, a Hong Kong based businessman who few had
heard anything about.
The holding company looking to buy AC Milan sat atop a complex web of companies and state
back investors.
A large nine figure deposit was paid and negotiations commenced.
But, a year later, those negotiations were still dragging on as certain red flags were
raised as to whether the Chinese company actually had the money.
State backed investors pulled out as the Chinese government cracked down on capital flight
– money leaving China for foreign investments.
That was not all.
When Reuters tried to find the offices of eight companies connected to the shell company
and the bid they found that none existed.
The New York Times later discovered that Li Yonghong's mining empire wasn't quite as a
lucrative has he had claimed, nor was it actually owned by him, at least on paper.
There was also the issue of alleged forged bank documents that held up the sale.
But, eventually, the sale went through in March 2017 to what was now Rossoneri Sport
Investment Luxembourg.
It was the biggest capture of football club by a Chinese business, and Li Yonghong would
be chairman of the club.
Milan went on a spending spree, buying Leonardo Bonucci, Nikola Kalinic, André Silva and
Hakan Calhanoglu [CHEL-HUN-OH-YOU].
Thanks to the investment climate changing in China, and Chinese investors backing out
of the AC Milan deal, Li secured a US$354 million loan from Elliot Management, a controversial
US hedge fund that has also been dubbed a “vulture fund”.
Vulture funds buy up bad government debt at low rates, usually when a country is in a
deep crisis, and later fiercely litigate to to extract repayment usually at the expense
– activists say -- of other government expenditure like healthcare and education.
The loan, with an interest rate that can top 11%, is to be paid back in October 2018.
Results, alas, didn't go to plan.
After losing to Roma, Juve, Inter and Napoli, coach Vincenzo [VIN-CHENTO] Montella was sacked
and replaced by Milan legend Gennaro Gattuso.
Meanwhile, around the time of Montella's sacking, UEFA annoucned that it had taken a keen interest
in Milan's finances and whether or not the club can comply with its Financial Fair Play
rules.
In December 2017 the Investigatory Chamber of UEFA's Club Financial Control Body turned
down AC Milan's request for a voluntarily agreement to be in accordance with FFP rules.
In a statement UEFA said that: “There are still uncertainties in relation to the refinancing
of the loans to be paid back in October 2018 and the financial guarantees provided by the
main shareholder.”
And then, a few months later, came the allegations (since denied) that Li, or at least some of
his businesses, were bankrupt.
Still, it's not all doom and gloom, for now at least.
Things are looking better on the pitch, even though Arsenal knocked Milan out of the Europa
League.
After a rocky start, Gattuso's Milan has won eight of its nine Serie A games in 2018.
But they are five points off a Champions League qualification spot.
With so much uncertainty about Milan's finances, its owner, the club's ability to meet UEFA's
Financial Fair Play rules and the huge loan it has to repay in October, Gattuso has been
thrust into the middle of a financial saga, one where missing out on the Champions League
might leave AC Milan in a very vulnerable position indeed.