The Harvard Business School, a prestigious American school, has published a document in which the case of the AC Milan company is analysed. A text which describes the project of the Via Aldo Rossi club since the arrival of Gerry Cardinale. Below are the statements of the Rossoneri owner and number one of RedBird, in the translation edited by colleagues at MilanNews.
PURCHASE OF MILAN – “When we bought Milan, many American sports team owners called me and said, 'You're crazy.' They told me that 'You can't do business in Italy' and 'It's impossible to make money in European Football.' Most of those who invest in sports clubs do so because they are emotionally involved. They put winning championships above everything else and this often leads them to make the mistake of thinking that spending too much to field a team of stars is linearly related to the victory. But this is the worst thing what you can do as an investor. We bought it for a figure that corresponded to 3.6 times the club's revenues; the new owners of Chelsea FC bought it for a multiple of seven times the revenues if you consider the earn out I brought the New York Yankees with me for a small minority stake, given our long-standing partnership with them and our desire to bring the best practices of US sports to Italy. I think Milan has the potential to become a 5 billion euro company“.
SCUDETTO 2022 – “The passion of the fans was incredible. I had never seen anything like it. I sent the photos to my team in New York and told them, 'You better get ready.'”
FURLANI AS CEO – “I could have hired someone with a casting in European football. But Giorgio thinks like we think at RedBird. He, like Stefano Cocirio, is a bit unique for European football: young, free from doing things because 'that's how they've always been done', he has an investor background, Italian but educated and trained in the United States and in the UK. I have understood that the most important element of the CEO role in European football is financial responsibility and the ability to integrate performance on and off the pitch. Bringing disciplined financial sophistication to the player transfer market and maintaining a positive cash flow position – this is at the heart of our investment thesis, and this is where Giorgio comes in. Where he is lacking is that he is not a CEO: I think he managed four people when he was at Elliott, whereas at Casa Milan alone we have 260. So it was intriguing for me not to approach this as a typical private equity search for a CEO, but rather to create a 'CEO office' that operates under my direction and brings together the various disciplines needed to evolve European football ownership: Giorgio, Stefano (Cocirio, CFO Milan, ed.), Geoffrey Moncada, Zlatan Ibrahimović and my team at RedBird. Each of us brings something and we are all part of an integrated team. I'm not throwing Giorgio to the wolves“.
IBRAHIMOVIC – “Most people would view his appointment as 'showcasing' or think of me as a celebrity-loving owner. It's the exact opposite: I'm looking for world class people who can make us better. With Zlatan I wanted to say that we will do things differently because there is a legitimate need for innovation in managing these resources better. So I hired him for RedBird as an operating partner and as a senior advisor for ownership at Milan.”
MEDIA PRESSURE – “I stopped reading newspapers here, because they can just make it all up. I see all this as a value chain with different components. The fans do their job, but the problem is that most of the other components in the chain make it more difficult for us to offer the best to the fans. The media often doesn't help, and neither does the government. They recently took away the tax benefits we received when paying players, making it even harder for us to compete with other leagues. How does this help us? They should understand that football is one of Italy's greatest exports.”
BERLUSCONI – “What Berlusconi did with Milan reminds me of what George Steinbrenner did with the New York Yankees. Both were “buying” championships (buying the best players in the world with no expense spared, ed.). In the 80s and 90s it was possible to do this, but now we can no longer afford it. We are competing with clubs in richer leagues and we cannot afford to pay the players what they pay them. We must spend every dollar of capital smarter than our rivals.”
SALE OF TONALI – “We didn't sell him to Newcastle United because we needed him, we sold it because we received a great offer and did a risk-reward assessment. We grossed 70 million euros (including bonuses, ed.) plus an earn-out of 10 million, the highest figure ever in Serie A. And thanks to that sale we bought six new players and completely renewed the team. We don't sell out of necessity, we sell out of opportunism. If we remain disciplined, there will always be counterparts in the market that enable extraordinary returns for players.”
STADIO – “We could significantly refurbish our existing stadium or build a new one that reflects these clubs' current status as a live event entertainment company. For what the renovation would cost, we could probably build a completely new stadium. But building stadiums in Italy is a challenge – the last stadium built in Italy was in 2011 and had 40,000 seats. I would like to see a modern stadium with 70,000 seats built, but we are not getting much help from the city in obtaining planning approvals in our preferred location. And I'm still trying to deal with the misalignment between building an American-style stadium, which will probably cost over 1 billion euros, and the inability to charge American-style prices. It's a real challenge.”
MILAN PROJECT – “I'm not trying to Americanize AC Milan. I'm trying to introduce some American elements that can take Milan to the next level in a constructive way. I'm also focusing more attention on Serie A. I'm curious to see how we can help them negotiate international media deals. In the United States there is a different relationship between team owners and leagues. There are multiple levels here – Serie A, the Italian Football Federation, UEFA, FIFA… That's where the learning curve is for me. In my house I could have done all this with my eyes closed.”
GOALS – “Winning championships is obviously an important goal. But you have to balance that with 'winning smart.' Inter won the Scudetto last year and then went bankrupt (the reference is to the insolvent former owner, not to the club itself, ed.) – is this really what we want? For the fans, my job is to win the Italian championship every year – I understand that. For my investors who focus on ultimate value appreciation, my job is to position AC Milan to fight for the scudetto every year, qualify for the Champions League every year, and go as far as possible in the Champions League every year – this is what maximizes cash flow and brand value. It is consistency and less breadth in performance volatility that maximizes value and ultimately longevity.”
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