Finding the financial guarantees for the Bonucci and Biglia transfers is still a topic on Milan’s agenda. In recent days the Rossoneri have been trying to obtain the required guarantees from various Italian banks to pay for the two players, and have not found it an easy task.
Calcioefinanza.it has learned that Milan have approached, among others, Banco BPM (who have a sponsorship agreement with the club until 30th June, 2019), but have encountered a number of problems. The bank’s response to the club’s request to accept their guarantees was, in fact, negative: given the Rossoneri’s current financial situation (their balances are in the red), the bank cannot grant any sureties.
However, this isn’t a ‘personal’ issue: it is primarily a matter that concerns the lending system’s rules, any other bank would operate in the same way if any other football club were to offer these sorts of guarantees.
It is, therefore, a fairly normal issue for Serie A clubs, whose balance sheets are often tarnished by heavy losses. In these cases, clubs provide banks with collateral for their accounts: these are defined as assets, and are usually claims on future revenues, buildings, and so forth. Essentially, if the club aren’t able to make good on their guarantees, the bank can claim some of their assets.
Milan, however, find themselves in a unique situation: almost all of their assets have already been committed as collateral for the financing deal made by the American private equity fund Elliott. The list is fairly lengthy – the assets that are acting as guarantees to Elliott (through Project Redblack) are as follows:
- A pledge on the so-called “current account statement” opened by the club at the Banca Popolare di Milano;
- A pledge on the intellectual property rights (in particular, the trademarks) owned by the club;
- A lien on all receivables coming from commercial contracts and sponsorship agreements underwritten by the club;
- A lien on all receivables coming from media contracts underwritten by the club;
- A lien on the archive of images, data, records and videos used and/or owned by the club;
- A pledge on the club’s 100% shareholding of Milan Entertainment S.r.l.;
- A pledge on the so-called “current account statement” opened by Milan Entertainment S.r.l. at the Banca Popolare di Milano;
- A lien on all receivables coming from the various commercial contracts and sponsorship agreements underwritten by Milan Entertainment S.r.l.
Calcioefinanza.it has learned that Banco BPM has offered two options, two possible solutions for Milan to obtain the guarantees: either release some of the assets given to Elliott as guarantees and hand them over to the bank as collateral, or find an international bank that will provide a counter-guarantee.
Now it’s up to Milan to choose which path to follow, and time is of the essence. Official statement n.165/A, dated 30th May, 2017, in which the FIGC issued the time restrictions and regulations regarding player registration for all clubs in Serie A, Serie B and the Lega Pro for the 2017/18 season, explains that the payment of the first instalment (20% of the total sum for the 2017/18 season) and the “deposits of sureties that guarantee the payments of player transfers completed prior to 31st July, 2017, must be made by Serie A clubs before the deadline of 11th August, 2017; failure to do so will result in the contracts not being enforceable and subsequent abrogation of the effects of the deposit, which will be immediately communicated to the relevant parties by the Lega.”
Furthermore, the fact that the receivables from media contracts are among the pledges made to Elliott for the financing deal means that the Rossoneri don’t have the option of using revenue from TV rights deals for the 2017/18 Serie A season as a guarantee, an option that would otherwise be open to a club in the top flight.