On 27 June 2018, UEFA’s Adjudicatory Chamber of the Club Financial Control Body (“CFCB”) issued a decision to exclude AC Milan from participating in the next UEFA club competition for which it would otherwise qualify in for the next two seasons.

This meant that AC Milan would be prevented from competing in the Europa League next season, for which the club had qualified.

The CFCB found that AC Milan contravened Financial Fair Play (“FFP”) rules, in particular the requirement for clubs to break-even, balancing the club’s spending with its revenues. This rule aims to restrict clubs from accumulating debt. The CFCB is an independent branch of UEFA and reviews the last three years’ worth of club finances in order to assess whether clubs have complied with the break-even requirement.AC Milan has experienced some difficulty in recent years in re-establishing its dominance in European competitions and at home in Serie A. Deloitte’s Football Money League report in 2017 revealed AC Milan’s total revenue for the season was €191.7m, the 22^nd highest of a football club that year. The report notes:

“AC Milan’s departure from the top 20 is their first and is remarkable given they had been in the top ten in every edition up to and including 2012/13.”

Li Yonghong’s takeover of the club in 2017 prompted hope of revival but poor financial management and a lack of concern for UEFA’s FFP rules has potentially devastated the club.

Li Yonghong borrowed up to €300m in financing from US private equity fund Elliott Management, which is now repayable at an interest rate of 11%. Despite this, the club spent enormous amounts last year, signing Leonardo Bonnucci for €40m(subsequently swapped yesterday with Gonzalo Higuan), Andre Silva for €38m and Andrea Conti for €24m.

However, the club’s future may not be so bleak. Esteemed alumnus, Gennaro Gattuso, had an impressive season in management at the club last season, reaching the final of the Coppa Italia and the last 16 knockout stage of the Europa League. The club has also invested in its training facilities and plans to field a women’s team next season. AC Milan’s chief executive, Marco Fassone, has labelled the ban “unfair” and confirmed that the club intended to appeal the ban before the CAS.

AC Milan has, indeed, appealed the ban and the CAS ruled on 20 July 2018 that:

• the decision of the Adjudicatory Chamber of the UEFA CFCB rendered on 19 June 2018 establishing that AC Milan has failed to fulfill the break-even requirement is confirmed;
• the decision of the Adjudicatory Chamber of the UEFA CFCB rendered on 19 June 2018 to exclude AC Milan from participating in the next UEFA Club competition for which it would otherwise qualify in the next two (2) seasons (i.e. the 2018/19 and 2019/20 seasons) is annulled;
• the case is referred back to the Adjudicatory Chamber of the UEFA CFCB to issue a proportionate disciplinary measure.

As such, the CAS has partially upheld AC Milan’s appeal and acknowledged that the CFCB’s decision was disproportionate.

This is good news for AC Milan and should lead to a lesser sanction being applied by UEFA.

The CAS also noted AC Milan’s improved financial situation, alluding to Elliott Management’s takeover of the club. Elliott Management is now in control of the club and could be welcomed with good news pending the CFCB’s revised decision.

Despite a turbulent off-season, the club will be hoping to build some momentum and stability on the field this season under Gennaro Gattuso.