FSG and Liverpool investor RedBird has big plans for AC Milan after £1bn deal

RedBird Capital Partners had long had the ambition to own an elite European team.

After acquiring French second-tier team Toulouse in the summer of 2020, the New York-based private equity firm launched a series of sports property investments, taking stakes in the city’s cricket team. Indian Premier League Rajasthan Royals and Spanish team Malaga. But his biggest deal in the last two years, before the start of this month, was the $750 million investment in Liverpool owners Fenway Sports Group.

It’s a deal that saw RedBird become FSG’s third-largest shareholder at 11%, giving them part ownership of the business and its associated properties, including the Reds, the Reds baseball team Boston Sox and the Pittsburgh Penguins NHL team, a deal that was struck by FSG in November on the back of capital that came into the company when the RedBird deal was signed in March 2021.

But RedBird, led by founder and managing partner Gerry Cardinale, has now secured its biggest sports deal yet after agreeing a €1.2bn (£1bn) deal to acquire Italian giants and recently crowned Serie A champions AC Milan from another New York investment fund. Elliott management.

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Unlike Elliott Management, which found itself the owner after former AC Milan owner Chinese entrepreneur Li Yonghong defaulted on 300 million euros of high-interest debt provided by Elliott. which saw them take over, RedBird observed football teams across Europe for some time. time. Before taking over at Toulouse, a club they brought back to French football’s top tier, Ligue 1, last month, RedBird executives spent two years vetting clubs across the continent, more than 80 of them, and to compile some kind of file.

AC Milan’s opportunity arose when the period of exclusivity between Elliott Management and Bahraini investment fund Investcorp passed without a deal being struck. Cardinale took a dive and a deal was struck earlier this month, with Elliott Management providing RedBird with €600 million in funding, a figure which the Financial Times says is set to drop to €200 million this year thanks to the funds. raised from existing investors and partners. . Elliott will also retain a minority stake.

ECHO understands that the decision to acquire AC Milan does not affect the agreement it reached with FSG or its plans to continue on the path that has been charted, Cardinale having said earlier this year in an interview with the Boston Globe that he would be “disappointed” if they did not “significantly” increase the amount of FSG’s capital. RedBird’s ownership of Milan also poses no Champions League and ownership issues, with RedBird’s minority stake and no presence on a Liverpool board meaning they don’t have no influence on the affairs of the club, the amount of separation sufficient to not register on the radar of UEFA.

The plans for AC Milan are big. The Rossoneri won their first Scudetto since 2011 this season, a feat orchestrated by head coach Stefano Pioli and technical director, club legend Paolo Maldini. Cardinale has already met with Maldini to discuss his role beyond the end of his contract this season, according to the FT.

There are plans to build a new stadium, with the San Siro, for all its glorious history and place in world footballing heritage, becoming something of an aging relic at a time when the biggest clubs are remodeling or relocating to stay with time and maximize revenue streams. But achieving a new stadium will likely require sustained success on the pitch for AC Milan, which will see them go further in the Champions League than they have typically achieved in recent years. The club’s last Champions League victory dates back to 2007, a 2-1 win over Liverpool in Athens.

“A brand of this stature, like AC Milan, should have an infrastructure that speaks to its footballing prowess and global potential,” Cardinale said. told the Financial Times.

“We have a lot of experience in stadium projects in the United States. Milan and Italy deserve a world-class stadium that is home to the best in sport and entertainment on a global scale.”

Cardinale, whose company RedBird may also be looking to make the most of Milan’s unique positioning in the fashion world by following Paris Saint-Germain’s example with its Air Jordan link and pushing to promote a brand lifestyle that transcends traditional football. fandom and reaching new demographics, also wants to see a move towards narrowing the media revenue gap the Premier League receives, revenue for the next round of almost £10bn which far exceeds this that Serie A can command.

“There is a huge opportunity at macro level with Serie A,” he told the FT.

“There shouldn’t be this kind of revenue differential on the media side between Serie A and the English Premier League.”

How RedBird goes about achieving success and increasing revenue streams will provide clues as to how they might contribute to FSG’s growth in the future. RedBird are business builders, not passive investors. With the possibility for them to increase their capital in FSG, this opens up the possibility of an interesting dynamic going forward.

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