A Chinese consortium including State Development & Investment Corporation (SDIC) clinched a preliminary agreement to buy nearly all of Italian soccer heavyweight AC Milan late on Friday, just hours after private investor Guochuan Lai sealed a deal to take over British football club West Bromwich Albion.
Former Italian prime minister Silvio Berlusconi is set to sell his 99.93% stake in the seven-time European champions to an investment vehicle called Sino-Europe Investment Management Changxing Group, which has backing from Haixia Capital, SDIC and little-known businessmen Yonghong Li and Han Li.
The consortium will pay €740 million ($820 million) for the Italian football club, after estimating AC Milan's debt level at being around €220 million. The consortium has committed to invest a further €350 million over the next three years.
According to Italian media reports, the consortium has outbid a joint offer by Chinese conglomerate Fosun International and soccer agent Jorge Mendes, which attempted to take over AC Milan for about $600 million.
After Suning’s purchase of Inter Milan earlier this year, the AC Milan sale will effectively turn the classic Derby della Madonnina – a hotly-contested game between Milan's two major football clubs – into a Chinese derby match.
AC Milan fans will now be hoping that the fresh capital injection will help the club re-establish its status as a top-tier European football club. The 18-time Serie A Champions have failed to finish in the top three over the last three seasons, after being forced to sell high-profile players such as Zlatan Ibrahimović to reduce debt.
Significance
While Chinese buyers have already earned a reputation for snapping up European soccer clubs since early last year, the purchase of AC Milan is arguably much more significant than previous acquisitions.
The $820 million price tag means the transaction is by far the biggest single investment into European soccer from China. The amount is more than double the $307 million paid by Suning for Inter Milan’s 70% stake, not to mention smaller investments into British football clubs such as Aston Villa and Wolverhampton Wanderers.
It is also the first time a state-owned entity has been directly involved in the purchase of a top-flight European football club.
SDIC’s investment could be interpreted as a means to exert China’s influence in Italy, something that cannot entirely be rejected given that the seller is four-time Italian Prime Minister Silvio Berlusconi. He is still a popular — albeit divisive — political figure despite stepping down from his leadership job five years ago.
Participation from the state-owned entity suggests that the interest in European football clubs is no longer a means for private investors to please soccer-loving president Xi Jinping, but has perhaps become a national agenda.
