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The Sale of AC Milan​

By Jake Rickman​

What do you need to know this week?

The agreement to sell this year’s Serie A season-winner A.C. Milan has been finalised. Bloomberg reports that the deal could be valued at €1.2bn.

Elliott Management Corporation — one of the most prominent activist hedge funds — is the current owner of the team. RedBird Capital Partners is the buyer.

RedBird is no rookie when it comes to investing in sports teams: it owns a minority stake in both Liverpool F.C. and the US baseball team, the Boston Red Sox, through its share in the holding company of both sports teams, Fenway Sports Group Holdings.

According to the Financial Times, Elliott will keep a small stake in the club.

Investcorp, an asset manager that primarily caters to the governments of the Gulf States, was another bidder.

Why is this important for your interviews?

If you are interested in corporate law and sports, articulating the business case for acquiring a sports team or club will demonstrate to your interviewer a high degree of enthusiasm and business savviness.

This is especially the case considering investors’ increasing interest in acquiring sports teams: Clearlake Capital acquired Chelsea F.C. on Monday and US investors Friedkin Group acquired AS Roma in 2020.

From a business perspective, sports teams are considered “alternative assets” because they behave in ways that other assets like equities or bonds do not. Each team is unique, which means that if they do well, their value appreciates, and they can be sold at a higher price later. In the meantime, they generate lots of cash through tickets and ad revenue.

Additionally, the role of branding and licensing rights that come from sports teams and their players — such as the rights they sell to video game producers — adds another dimension to the potential return on investment.

Finally, as Deloitte observes in their annual football review (p 52), sports are one of the most popular arenas for NFTs, which could make future gains even more enticing.

Given football is the most popular sport in the world, it is no surprise that investors are willing to spend a billion-plus to acquire the top teams.

How is this topic relevant to law firms?

Sports teams are quite complex entities. Their legal status as being incorporated or unincorporated depends on the jurisdiction, which renders any acquisition of it an inherently legal question.

Additionally, the relationship between each team and its key assets (its players) is governed by contracts, each of which must be thoroughly inspected before any acquisition is finalised. In particular, if there is any change of control provision in a highly-valued player’s contract, this may complicate or even frustrate a potential sale. Likewise, professional sports teams benefit from deals with third-party sponsors, which may also contain similar provisions.

It is not yet disclosed which firms are advising the parties to the A.C. Milan transaction, but Sidley Austin, Latham & Watkins, and Paul, Weiss, Rifkind, Wharton & Garrison advised Clearlake in its acquisition of Chelsea F.C.