Elliott Said Prepared to Provide More Funds for AC Milan Team

(Bloomberg) -- Elliott Management Corp. is prepared to provide additional funds to support Italian soccer club AC Milan as its Chinese owner struggles to meet the team’s financial needs, according to people familiar with the matter.

The U.S. fund, which loaned businessman Li Yonghong more than 300 million euros ($350 million) to complete the acquisition last year, is ready to provide additional capital to help the club resolve a dispute with the European soccer body UEFA, said the people, who asked not to be named because the talks are private.

UEFA said May 22 that the team breached financial fair-play rules because of uncertainties about the team’s effort to refinance the loan provided by Elliott. AC Milan now faces the risk of fines, restrictions on the size of its squad, player transfer limits and a possible ban from European competition.

Marco Fassone, AC Milan’s CEO, said in an interview posted on the club’s website after a board meeting Friday that the team is raising about 40 million euros of fresh capital and the club would address the concerns of UEFA.

After the UEFA decision on May 22, Fassone said that he was surprised by the move because “I was expecting that they would offer us a settlement agreement. Since the adoption of Financial Fair Play rules, that always has been offered to clubs in a similar situation as AC Milan.”

Elliott is also prepared to take over the soccer club later this year if Li fails to meet his obligations, the people said. An Elliott representative declined to comment. A spokesman for AC Milan and Li declined to comment beyond the statements made by CEO Fassone.

With its last minute financing, billionaire Paul Singer’s hedge fund had a decisive role in allowing Li to conclude the 740 million-euro purchase of the Italian team from Silvio Berlusconi’s investment company Fininvest in 2017.

Li has so far refused several approaches for selling the club for about 400 million euros, one of the people said. AC Milan hired Merrill Lynch earlier this year to refinance the team’s debt. Last year Elliott loaned 123 million euros to the soccer club and the remaining 180 million to Li’s holding company, the people said.

The sale of AC Milan was extremely troublesome at the time. The original investment group changed several times, and in September 2017 Bloomberg News reported it filed a false bank report during negotiations with Berlusconi’s company. Li denied the allegations. The deal, originally scheduled to be completed in December 2016, also was delayed because the investment group lacked authorization to export funds from China. Regulators in China have been ramping up their scrutiny of outbound investments, with a particular focus on sports and entertainment.

Li, who became chairman of the soccer club last year, had to use his personal wealth to help complete the deal and also pledged the team as a guarantee to secure financing from Elliott last year. His original plan included a listing of the club on a Chinese stock exchange. In a draft of the original fundraising materials, the Chinese investor group indicated the team’s value could multiply several times in the long term to reach 2.9 billion euros, rivaling top clubs like Real Madrid and Manchester United Plc, according to documents obtained by Bloomberg.

--With assistance from David Hellier and Antonio Vanuzzo.

To contact the reporters on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net;Daniele Lepido in Milan at dlepido1@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Dan Liefgreen at dliefgreen@bloomberg.net, ;Vidya Root at vroot@bloomberg.net, Kevin Costelloe

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