Ivan Gazidis spoke at length at today’s shareholder meeting at Casa Milan, addressing many important points.
A shareholder meeting took place today to approve the financial statements for the financial period that ended on June 2019.
Milan President Paolo Scaroni was present at the meeting, as was CEO Ivan Gazidis and Marco Patuano, who represented the Board of Directors. AC Milan‘s Association for Minority Shareholders (APA) attended as well, with Giuseppe La Scala directing questions at the Milan management, like every year.
The financial year ended with a consolidated loss of €146m and losses of €155m – the largest loss in the history of Milan. Compared to last year, revenues fell by 6.1% (€241m compared to €255m); specifically, revenues from sponsors decreased, with Telecom’s break-up with Milan causing a €4m void. In addition, revenues from the stadium fell slightly while TV revenues increased.
asked the following questions to the Milan board, as reported by Milannews.it:
- Has a strategy been drawn up for investments aimed at strengthening the squad of players?
- Have you shared with the directors responsible for the sporting management a multi-year program, which defined budgets and objectives, for which they have assumed responsibility?
- Do you think that the strategy of acquiring young players for the future at low-prices and with low wages, with the exception of generating significant capital gains through their possible sales, is still feasible?
- Do you consider it necessary and/or compatible with your strategy to increase revenues from ‘player trading’, perhaps during the current financial year, also making important sales?
- Can we think about renewing the contract with Fly Emirates on at least equivalent conditions for our club, or replacing it with a new sponsor of the same weight?
- Have you taken action to look for ‘name sponsors’ for the Milanello sporting center, a shirt-back sponsor and a shirt-sleeve sponsor?
- What are the initiatives to increase revenues given that revenues from other official sponsors, aside from PUMA and Fly Emirates, stood at €425,000?
Questions were also asked regarding commercial income, merchandising, the stadium issue, personnel costs and Financial Fair Play.
Gazidis then went on to give a lengthy speech, answering some of the questions above:
“It is not easy to speak after a defeat. The negative results affect us all. I feel the suffering of a defeat as much as you do. I know we are here today to talk about the economic and financial data of the club, but I want to start by talking about our passion that we share: I chose Milan because I am interested in this club, I believe in the importance and beauty of this project. I’m not so foolish to think that this will be a quick or easy path, and I think that neither are you, but I believe in this club. Our fans have always been fantastic, I understand their doubts and fears. I know that there have been false steps and I know that being patient is difficult, and I am clear and transparent about the difficulties that we have encountered. The end goal of each of us here today is clear and unquestionable, from the ownership to the entire organization, and that is to make Milan come back strong and restore the pride of this club, and we have to make difficult decisions to succeed.
“The responsibility is big, it should not be seen as a burden but as a privilege. I am a privileged man and I will do everything I can to be sure that this great club will return to its natural path. I am convinced that we can get there if we’re all together, even and especially in times of difficulty, overcome all the challenges and restore Milan’s pride.
“Let me talk, first of all, about Elliott’s vision. It is clear and obvious that the return of Milan to the top of Italian and world football should not take place in 10-15 years. We will do it in a way that fully reflects our values to make it an innovative club and make our fans proud.
“I know there’s a long way to go. I know that it will take time, it will be complicated and we will make mistakes along the way. But we have a strong ownership that is absolutely determined and consistent in achieving our objectives.
“They don’t want to set any unrealistic roadmaps and they are fully committed to achieving it. I chose Milan for these reasons and also because, above all, it’s a beautiful challenge, unique in the world of football, one of those opportunities in which I believe and which I think happens once in a lifetime, to revive a giant so important for the city of Milano, for Italy and for the whole world. I believe in the strength of this club and what it represents. The modern Milan was built under the leadership of Berlusconi and Galliani, and I want to thank them for the legacy they left us. We have more than 400 million fans around the world and from this base we start to reach what we have in mind. Milan continues to be respected around the world by everyone who is interested and cares about football.
“15 months, 11 for me, where have we arrived? It’s been an incredible period of activity for the club and not everything we’ve done is visible from the outside. Not everything has been successful but we are all moving in the same direction.
“We adjusted the balance-sheet and stabilized the club, which we found in an emergency financial situation. Despite the losses that we recorded this year, many of which we inherited. Our club now has a solid financial stability. Our net assets have risen from -€36m in June 2018 to +€83m in June 2019. Our net financial position has improved thanks to the repayment of the €116m bond. This allowed us to access new credit lines. Capital increases reached €368m and accumulated losses covered by the shareholders reached €272m in the financial year of 2018/19. During this difficult period, net expenses for the purchasing mercato were €135m between the winter and summer windows of 2019, one of the highest figures recorded in Europe, with a total of €157m since the acquisition of the club.
“We have brought into the club people who know and love the club to supervise and manage the sporting part, like Maldini and Boban. They accepted a difficult challenge by joining a club with poor results in recent years. They are working with commitment and passion. They have all our trust and support. We finished the first season in 5th place, the best result of the last 6 years, but certainly it’s been a start of the season that does not satisfy us. We want to move forward and improve. Pioli will have all our support as he works with full dedication to get the team back in the right direction.
“Because of those losses, inherited from the club, we came to concluding a historic agreement with UEFA for the FFP, which consist of an exclusion from the Europa League, a very painful agreement given the European history that Milan has. We all know that we must bring the club back within the limits of Financial Fair Play. At the same improve, we need to improve the performance on the field and play football that will entertain our fans and make them proud again. To do this, we have to keep costs under control and at the same time improve the team over time, which is not an easy task.
“We have a clear strategy to invest in young players who can improve over the years, players who will spend their best years among our ranks, becoming top players with us. After the investments in Bennacer, Theo, Leão, Paquetá and Piątek, we have the youngest team in Serie A. On the one hand, this is an important side of our strategy, but on the other hand it does not exclude investments in experienced players who can guide young players on their path of growth and improvement, like we did by buying Higuaín, and like we will do again.
“Paolo and Boban are doing a great job to carry out this strategy and to create a team that can be competitive again. We are all very patient but the truth is that we will need time. This is the only way the club can go up. We don’t want to make false promises. If our primary objective was to waste money on players in Sunset Boulevard, we would’ve put the club in a bad financial position and the team would also be in decline. That is not acceptable.
“We are going through a difficult path, but it is the only way to follow for the rosy future of the club. A path that will make the club financially healthy again, with a team that, with strength and optimism, will return to its best.
“We’re also investing outside the field. You’ve asked us a lot about how to improve earnings from the commercial sector. We know that a change of course from this point of view is necessary to bring the club’s revenues back up. It will take time and it is not a problem that is solved overnight. There is a complete mercato from the point of view of sponsorships and licenses. I have already seen this tough course being faced by the top clubs of the Premier League over the last 10 years. We are focused on sponsoring all of our main assets, from game kits to T-shirts, but it will take time. We have implemented our commercial division in an important way to carry out this project, led by an experienced Chief Revenue Officer [Casper Stylsvig].
“We are all focused on building this sustainable revenue growth path, building on the business models of Europe’s largest clubs, creating a long-term growth model.
“We’ve invested in modernization and built infrastructure throughout the club. There is still a lot of work to be done internally to modernize the club and bring it up to modern football standards to drive commercial growth. We are developing our team at the head of the commercial division, hiring experts in their fields in areas such as merchandising and infrastructure management that will help us develop the strategy to increase revenues in these important areas. We are investing heavily in digital, with investments like the one for the new official app. These investments are necessary and innovative to make the club in line with competitors. The goal of these investments is to bring the community of club fans closest to Milan. We know how important this is for the club.
“Our President talked about the stadium. Elliott is working hard on the long-term future of the club and the city of Milano, with an investment of €1.2 billion on the stadium and on the redevelopment of the San Siro area.
“This is a clear vision: to give Milano the best stadium in the world, to offer the club the ideal stage to compete globally and to give the club the right financial sustainability.
“I know there is skepticism and fear. There have been changes of ownership and recent uncertainties; people ask if Elliott will be the same as what has been seen in the past. Of course, worries in the world of football always increase if the results don’t arrive. This is understandable and natural, but as I said, even if we make some mistakes in this difficult path, Elliott’s commitment is clear and not in question. We are totally focused on our objective. A path where the values of the club will be respected. In the midst of the confusion of modern football, ours will be a success path.
“When we talk about finances, this talk goes hand in hand with football and with the pitch. I have been in this position for 26 years. The football industry has a totally different organization. I never talk about individual players and the reason is that football is a world full of controversy, so I prefer not to look at individual situations, but rather I want to talk about the general direction. It’s all very transparent what we have in our financial situation and it’s very clear that the reason that these losses have been generated is linked to the high sum of our players’ salaries, and the result is that we have to spend more efficiently. I have already mentioned this. We need to keep costs under control. I think this is the only strategy that can bring us back to winning.
“We know that a difficult path awaits us, we are working hard together. In a healthy club there are discussions between people who believe in each other. We all want to work together in the same direction. We always look forward. These rumors about some internal divisions… I don’t know where they come from: certainly not from me.
“I’m 55-years-old. I don’t have too much to wait either. It’s unacceptable to say that you don’t want to win the next match, or that we don’t want to win this season. It’s unacceptable. I’m not resigned for this season either. I do not indicate a deadline, for me it’s all immediate and urgent, but we also have long-term plans, even if thinking only of the short-term players and thinking only of the present would make my life easier. It would also make the lives of Paolo and Zvone easier and would probably make people happier for a while. What we’re doing is being responsible for this club. This club needs decisions that are difficult to make, in order to make it more sustainable. We must act responsibly to make the club healthier. We always look at the path ahead. We must always deal with the financial reality. The next game is always the most important.”