The hit of the activist fund Elliott thanks to the 'scudetto' won by Milan |  Business



AC Milan’s success on the pitch has extended to its owner, Elliott Advisors. Paul Singer’s fund, known for his aggressive campaigning, is to sell the Series A champion to US venture capital group RedBird for €1.2bn. It is a good pinch for a club that suffers from chronic losses. Elliott’s purchase of AC Milan always seemed accidental. Singer arrived at the club in July 2018 after shadowy Chinese businessman Li Yonghong defaulted on a pledged loan against the Italian outfit, just a year after finalizing his €740m acquisition from Berlusconi.

For Elliott, managing AC Milan must have been no easy task. The club was in the red when the US fund took over, accumulating 126 million euros of losses in 2018. Elliott had to inject some 410 million euros in the following years to keep the debt under control. Meanwhile, restrictions placed on live sporting events during the pandemic took a toll on revenue. Still, with Singer at the helm, AC Milan cut spending on players and still went on to win their first Scudetto in 11 years, securing a place in the lucrative Champions League in the process.

This may explain the generous price paid by RedBird, whose other investments include Liverpool FC and Boston Red Sox baseball team owner Fenway Sports, even though AC Milan was still losing money last year. The €1.2bn valuation is equivalent to nearly five times AC Milan’s revenue. That is almost double the 2.5 times that local rival Juventus is trading.

This ending means that Elliott can walk away without facing abandonment by his own investors. Assuming a total outlay of just over €740m, taking into account the loan and additional capital injections, the US fund will likely have earned an internal rate of return of around 16%. However, the sale to RedBird is not a complete farewell. Elliott will retain a minority stake in the Italian team. Considering the club’s bizarre history and uncertain future, it’s a show of enduring loyalty.

FOR MORE INFORMATION: BREAKINGVIEWS.REUTERS.COM The authors are columnists for Reuters Breakingviews. The opinions are yours. The translation is the responsibility of EL PAÍS

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