UEFA’s decision on Milan’s voluntary agreement has been postponed to October.
This voluntary agreement, in respect of FFP (financial fair play) was originally proposed at the end of April with the change in ownership when Fininvest sold the club to Yonghong Li et al.
As per Milan’s press release, the club has reached an agreement with UEFA to withdraw the “Voluntary Agreement” application submitted last December 2016 while simultaneously submitting another application. This new application will be discussed with UEFA in the fall of 2017 and is applicable for the the 2018/19 season.
According to ANSA, UEFA has requested clarifications on the ownership structure and the revenue potential of the Chinese market.
With Milan qualifying for the next edition of the Europa League and the major investments made in reinforcing the roster, it was important for CEO Marco Fassone to present his plan to respect the break even rule as stipulated by UEFA.
As per UEFA FFP rules, if a club is not in line with the regulations, UEFA’s Club Financial Control Body (CFCB) decides on measures and sanctions.
Non-compliance with the regulations does not mean that a club will be excluded from European competition automatically, but there will be no exceptions. Depending on various factors (e.g. the trend of the break-even result) different disciplinary measures may be imposed against a club. There is a catalogue of measures:
a) warning
b) reprimand
c) fine
d) deduction of points
e) withholding of revenues from a UEFA competition
f) prohibition on registering new players in UEFA competitions
g) restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions
h) disqualification from competitions in progress and/or exclusion from future competitions
i) withdrawal of a title or award
This proposal of a voluntary agreement is a proactive and strategic approach by Milan to ensure compliance with UEFA. Milan aspires to finish in the top 4 next season to qualify directly to the Champions League group stages. If they are successful in their objective, they will need to reinforce their roster even more and management of their debt levels will be of crucial importance.
Milan has been in the red the past few seasons with losses of 91.3M 89.3M and 74.9M for the 2014, 2015 and 2016 years, respectively.
Milan can still have debt going forward, however it can only have debt level to a certain limit, if it is entirely covered by a direct contribution/payment from the club owner(s) or a related party. This prevents the build-up of unsustainable debt.
The debt limit for 2016/17 and 2017/18 is €30m.
