hollywood billionaire

Chapter 566 AC Milan's Savior
Amidst seemingly endless conversations and laughter, the Ritz-Blue Rolls-Royce Phantom crossed Vauxhall Bridge, left central London, and headed south. In just about twenty minutes, it arrived at Brixton, located in the Borough of Lambeth, south of London.

From here on, the number of cars on the road begins to increase significantly, and the average speed of traffic also slows down considerably.

When their car turned left onto Hermit Road and onto the two-lane Biura Road, the speedometer showed a speed that was practically idling.

Normally, this small road, located on the outskirts of London and not far from the edge of the metropolitan area, wouldn't be so congested. This is also evident from its numbering system. The UK uses a numbering system to classify and identify all roads. Each road consists of a letter and a number. In the Class A roads, single-digit numbers represent the nine radial roads originating from London or Edinburgh that are most important to the country's ground transport. For example, the A1 road is the famous Great Northern Road from London to Edinburgh. Two-digit Class A roads are slightly less important but can still be classified as arterial roads; for example, the A20 road is the main thoroughfare connecting London and Dover.

The importance and functionality of Class A highways with three or even four digits are further reduced, mainly serving as commuter routes between small towns. The Biura Road, numbered A215, is an example of this.

Under normal circumstances, there are very few vehicles traveling on this highway, and most of the time, the road is unobstructed.

But there are always exceptions.

The only exception to this path is when Crystal Palace is about to host a Premier League match at home.

“I’m glad you took my advice and left the hotel half an hour earlier than scheduled, Mr. Han.”

After their long chat, Aiden had become noticeably more lively and talkative. He rested his right hand on the steering wheel and his left hand on his forehead as he spoke.

"Otherwise, we might not even make it to the stadium by the end of the first half."

“Relax, Aiden, we’re not in a rush.” Han Yi glanced at Barbara and smiled. “It’s okay if we’re a little late… because neither of the two clubs playing here today are actually supported by us.”

“Really?” Aiden glanced at the rearview mirror and raised his voice slightly. “Sorry, I thought you were a Chelsea fan.”

“No, that’s not it.” Han Yi shook his head. “Although they have achieved a lot of great success in the past 12 years, and have shone brightly this season under Conte’s leadership… I prefer clubs with a deeper historical foundation.”

"for example?"

“AC Milan, he’s an AC Milan fan.” Barbara seized the opportunity to tease him about this, “A club that is indeed rich in history, but—unfortunately—only has history left.”

“Oh, no, in my opinion it’s a great club, just having some minor problems.” Aiden smiled, enthusiastically making excuses for his temporary employers. “You’re certainly going through some tough times right now, which is normal; every team has its ups and downs. However, as long as that Chinese consortium can successfully buy the club from Berlusconi and inject enough funds, I believe everything will be fine soon.”

Aiden's words seemed to surprise Han Yi greatly. He even leaned forward slightly and asked, "AC Milan is for sale now?"

"Honey, are you serious?"

Barbara gave him a strange look and teased him.

"The entire football world has been talking about this, and all sorts of rumors have been flying around for almost a year. How could you, a Rossoneri fan, know absolutely nothing about it?"

"I know about this, I just don't know how far it's progressed," Han Yi pursed his lips, trying to justify himself. "I've been so busy these past few months, I haven't had time to keep up with football news."

Clearly, this was a temporary excuse he made up to cover up the truth.

What is the truth?

The truth is, as a true Rossoneri, he knew the ins and outs of the acquisition very well, and even remembered the twists and turns it went through. However, he could not effectively connect the whole thing with the time and space he was in now.

Don't quite understand this feeling?

For example, everyone knows that Nelson Mandela has passed away, but if you were to go back to 2010 and not rely on a search engine, could you still accurately say the exact year he died?
“I just heard the latest news about this deal on the radio this morning.” Since the car was Aiden’s workplace, the car radio was undoubtedly his most convenient way of staying informed about world events. “That Chinese consortium, what’s its name again? China…”

"China-Europe Sports," Han Yi reminded him.

"Yes, that's right, Sino-Europe Sports. They reached an agreement with Berlusconi to buy AC Milan two months ago. The entire deal should be completed this Tuesday, which means the Chinese need to pay 100% of the acquisition price, which is... I'm sorry, Mr. Han, I'm really not good at remembering numbers."

“7.4 million euros, that’s the total amount including debt.” After saying that, Han Yi looked at his girlfriend and spread his hands. “Look, Aiden and I complement each other. He can’t remember numbers, and I can’t remember dates.”

“Okay, baby.” Barbara couldn’t help but kiss her silly boyfriend on the cheek, finding him more and more adorable. “I declare that you have retained your title of Rosenary.”

"Yay!" Han Yi clenched his fists and cheered softly in perfect unison. Then he turned his gaze to Aiden and continued to ask, "So, Sino-Europe Sports failed to complete the transaction on time because some of the important investors withdrew their funds... But if I remember correctly, they should have emptied their wallets and paid Berlusconi a portion of it, right?"

“Yes, one hundred million euros, I remember that number.” Aiden raised his index finger, tilted his head slightly, glanced quickly at Han Yi, and then focused his attention back on the road. “After receiving this money, Berlusconi’s side finally agreed to postpone the deadline for completing the transaction to March 3 next year.”

“Even if we give them three more months, Sino-Europe Sports still won’t be able to raise enough money.” When he said this, Han Yi’s voice was very soft and light, not like he was talking to Aiden, but more like he was doing his own analysis.

After 30 years of stable operation, Silvio Berlusconi's decision to sell AC Milan was not a hasty one, but rather the inevitable result of a decade-long decline in both the club's competitive and financial standing. This decision marked the end of an era and reflected a fundamental shift in the modern football economic landscape.

This former Italian prime minister is a typical example of the previous generation of football capital.

Before the wave of globalization swept through the football world and clubs became assets in multinational investment portfolios, the masters of European football were mostly patriarchal figures like Silvio Berlusconi.

They are typically local business tycoons, media moguls, oil magnates, or industrial powerhouses like the Agnelli family of Juventus. What drives them to invest heavily is often not a cold, hard analysis of return on investment, but a more complex mix of emotions: a pure love for football, a desire to gain prestige in the local community, a sense of honor deeply rooted in the city, and even—as Berlusconi perfectly demonstrated—using it as a propaganda machine and a source of public opinion for his political career.

This model is closer to that of a "patron" than an investor in the modern sense. They appear as "presidents," closely tied to the club and deeply involved in its daily operations. Their control over the team is absolute; from transfer strategies to the appointment and dismissal of head coaches, and even tactical arrangements in the locker room, they can exert a strong personal will.

In that era, clubs were more like an extension of their personal wealth, an expensive trophy asset. They were willing to use the huge profits from their main businesses to cover the club's perennial losses in exchange for glory on the field, championship trophies, and the resulting social prestige. The Moratti family, who steered another Milan club, poured decades of oil wealth into Inter Milan, which is another microcosm of this model.

However, with the implementation of the Bosman ruling, the explosive growth in satellite television broadcasting fees, and the resulting exponential inflation in player salaries and transfer fees, football has become a high-level arms race that only the super-rich can afford, and even the super-rich can be bankrupted. This business model, backed by personal wealth and disregarding personal gain, is becoming increasingly unsustainable. It has no advantage in competing with sovereign wealth funds from the Middle East, private equity groups in the United States, or super-oligarchs in Russia.

Berlusconi's decade-long hesitation and eventual relinquishment are the most powerful signal of the end of this old era.

AC Milan's financial situation during the later years of Berlusconi's era can only be described as riddled with problems. After recording a meager profit of €2.5 million in 2006, the club sank into a prolonged period of losses, with the amount increasing year by year. On the eve of its sale, the club's financial bleeding was out of control: losses reached €9128 million in fiscal year 2014, €89.3 million in fiscal year 2015, and the upcoming 2016 fiscal year was expected to see losses exceeding €75 million. This continuous massive loss made AC Milan stand out among Europe's top clubs. According to Forbes' 2016 club valuation, among the top 20 clubs in Europe, only AC Milan and its city rival Inter Milan were operating at a loss. Even more worrying was AC Milan's debt-to-value ratio of 32%, ranking third among all top clubs, highlighting the fragility of its financial structure. This series of data clearly shows that Berlusconi's family holding company, Fininvest, is no longer able or willing to continue to provide financial support to the club.

In his farewell letter, Berlusconi frankly pointed out the core reason for selling the club: "In the modern world of football, to compete at the highest level in Europe and even the world requires continuous investment and resources, which is beyond the capacity of a single family." Therefore, compared to sellers who are not in a hurry to sell their prime assets and are waiting for a better price, Berlusconi and his Fininvest were extremely eager to find a financially strong partner for AC Milan. However, at the same time, their pride as former champions made them hesitate on the issue of club control, ultimately leading to a stalemate and the loss of many valuable and dignified opportunities to exit the club.

In the early stages of the club's ownership transfer, Berlusconi's core demand was to bring in external capital, but he was determined not to relinquish control of the club. China's Wanda Group expressed interest in acquiring a 30% stake in AC Milan, coinciding with the group's aggressive overseas acquisitions of various cultural assets in early 2015, including AMC cinemas and a 20% stake in Atlético Madrid. However, this proposal did not make substantial progress. Berlusconi's stance at the time was that he was willing to accept the sale of a minority stake, but would reject any offer aimed at a complete takeover of the club. Furthermore, his valuation of the club at €15 billion deterred many potential investors. This contradictory mindset of wanting both capital injection and maintaining absolute control caused most of the initial negotiations to fail.

A few months later, Thai private equity banker Biddechobor, nicknamed "Mr. Bee" by the media, became the first buyer truly close to a deal. His initial offer was €10 billion for a majority stake in the club; however, the focus of negotiations quickly shifted to Berlusconi's obsession with control. The deal structure was repeatedly modified to accommodate the seller's wishes. Ultimately, in 2015, the two sides reached a preliminary binding agreement—Biddechobor would acquire a 4.8% minority stake in the club for approximately €48 million, while Berlusconi and his Fininvest company would retain a 52% stake and remain chairman.

However, this deal, which seemed to be finalized and even had Berlusconi himself posting photos of it on Instagram, ultimately fell through.

There are two main reasons. First, the major investor behind Mr. Bee is CITIC Bank from China. On the eve of the transaction, CITIC Bank suddenly proposed an additional condition, requiring Mr. Bee to cooperate with an investment fund from China and share equity. However, Mr. Bee was unwilling to do so, which led to problems in the financing process.

Secondly, the seller's mindset underwent a fundamental shift during this period. In June 2016, Berlusconi underwent major heart surgery, replacing his aortic valve. This life-or-death event made him realize that he was no longer capable of continuing to manage the club. Therefore, Berlusconi suddenly changed his mind, no longer satisfied with selling a minority stake, but hoping to completely divest himself of the club to achieve a complete release. This change rendered the minority stake transaction agreement between Fininvest and Björn de Ciobor meaningless, and negotiations collapsed.

What followed was a series of actions by Fininvest that can be described as a drowning camel desperately grasping at straws. But none of the straws closest to it on the surface were reliable. Before Sino-Europe Sports entered the fray, another Chinese consortium, advised by renowned American sports banker Sal Garatioto, had initiated exclusive negotiations with Fininvest. The two sides entered a 45-day exclusive negotiation period on May 10, 2016. However, this initial consortium had a loose structure, failed to complete the transaction within the stipulated time, and ultimately disintegrated.

After the consortium disintegrated, Sino-Europe Sports and its behind-the-scenes leader Li Yonghong suddenly appeared as the white knight to save the deal and took over the negotiations.

But Li Yonghong was far from the messiah Berlusconi had hoped for—the one who could take over AC Milan and its €2.5 million debt, rescuing him from his predicament. This company, Sino-European Sports Investment Management Changxing Co., Ltd., which only gained widespread media and public attention after its connection with AC Milan, was shrouded in mystery and skepticism from its inception. Many European media outlets conducted in-depth analyses of its background, membership, and funding sources, clearly revealing that it was not a financially strong investment entity, but rather a speculative shell built around its core figure, Li Yonghong, fraught with uncertainty.

Why do you see it?

When the deal was first revealed, almost no one in China's business and media circles knew who Li Yonghong was. He had never appeared on any version of China's rich list, and his personal wealth could not be verified through public channels.

Li Yonghong claimed to AC Milan that his wealth originated from phosphate mining operations in Fuquan City, Guangzhou Province, China. However, investigations by media outlets such as The New York Times revealed that the actual owner of these mines is an entity called Guangdong Lion Capital Asset Management Co., Ltd., whose shareholding structure has changed frequently in recent years, involving multiple individuals with the same surname, resulting in a chaotic and unclear ownership record. Even more dramatically, when reporters visited the company's office in Guangzhou, they found it deserted, with rent payment notices posted on the door.

Most fatally, Li Yonghong even fabricated his official endorsement to Berlusconi. When the deal was first announced in August 2016, Fininvest's press release mentioned that the consortium included China's State Development & Investment Corporation, adding significant credibility to the transaction. However, this information was quietly removed in subsequent communications, suggesting that its involvement was either never confirmed or was a blatant lie from the outset.

Furthermore, besides Li Yonghong himself and a fund called Straits Capital, the consortium claims that several other state-owned and private enterprises are involved, but a complete list of investors has never been released. A list of potential investors, purportedly from within the consortium, was leaked, including Far Eastern giants such as China Construction Bank and Ping An Insurance, but the involvement of these institutions has never been officially confirmed; it seems more like a smokescreen to bolster public confidence.

By December 2016, signs of Li Yonghong's fraud and his financial difficulties were beginning to emerge. His inability to pay the full amount before the transaction deadline was the most compelling evidence. While others in this timeline were unaware of what the future held, Han Yi, as part of Rosenelli, was fully aware of the dark abyss this acquisition was about to plunge into.

Throughout the lengthy transaction, Sino-Europe Sports was repeatedly suspected of using forged documents. To prove its financial strength, Sino-Europe Sports provided a financial support document, allegedly issued by Dongguan Bank, during initial negotiations with Fininvest. However, Dongguan Bank explicitly denied issuing any such document when questioned. Furthermore, reports also indicate that another document involving Jiangsu Bank is suspected of being forged.

These allegations of financial fraud should have been a red flag, prompting any prudent seller to immediately terminate the deal. However, Fininvest, eager to extricate itself, chose to proceed with the transaction. Even when Li Yonghong could only scrape together €100 million in December to cover the losses, he still chose to trust the buyer and extended the deadline by another three months.

However, by March 3, 2017, Li Yonghong still hadn't been able to raise enough funds to complete the transaction, and the AC Milan acquisition plan was on the verge of collapse. This situation arose for two reasons: firstly, Li Yonghong lacked the financial strength to complete the transaction on his own; secondly, it was due to a shift in official policy. Starting in the second half of 2016, in order to curb capital outflows and stabilize the RMB exchange rate, the Chinese government began to strictly restrict overseas investment by domestic capital, especially in non-strategic or irrational investment areas such as real estate, hotels, chain cinemas, entertainment, and sports clubs.

The introduction of this policy was a fatal blow to Li Yonghong. His previously relied-upon funding channels, which claimed to originate from mainland China, were completely blocked. Those investors with state-owned backgrounds, even if they genuinely existed, quickly retreated under the pressure of the new policy.

On April 13, Sino-Europe Sports finally announced that they had raised all the funds needed to complete the agreement. However, the source of these funds sent chills down the spines of everyone in the industry familiar with the rules of the financial world. Li Yonghong raised the funds by borrowing a 3.03 million euro bridge loan from Elliott Management, a US hedge fund renowned for its global investments in distressed assets and handling complex debt disputes—a loan that was practically a predatory debt.

These hedge funds are often referred to as vulture funds in the industry. Anyone with common sense knows that vultures don't hover around healthy humans. They are most interested in the decaying, rotting flesh of the dying. This is vividly illustrated in the terms of this €3.03 million loan.

Elliott's loan is divided into two parts. The first part is €180 million with an annual interest rate of 11.5% and a repayment deadline of October 2018. The collateral is the 99.93% stake in AC Milan that Li Yonghong will soon hold.

The second part, €1.23 million, has an annual interest rate of 7.7% and a repayment deadline of October 2018. The collateral is all of AC Milan's tangible and intangible assets.

This loan transcends a simple financing transaction. Elliott Management wasn't optimistic about Li Yonghong's ability to repay his debts; rather, it was eyeing the value of AC Milan as a core asset. By setting up a high-interest loan that a cash-strapped borrower was unlikely to repay in the short term, Elliott Management effectively acquired a call option to acquire a world-class football club with minimal risk. If Li Yonghong defaults—a highly probable event—Elliott Management can then legitimately become the new owner of AC Milan at the cost of the loan's principal and interest.

Subsequent developments did not surprise the American vultures. After a difficult acquisition through a high-interest loan from Elliott Management, Li Yonghong's control over AC Milan lasted only 15 months. This period began with a reckless spending spree and ended with a predictable default and the loss of ownership.

To fulfill his promise to lead AC Milan's revival and to quickly improve performance and qualify for the Champions League to repay massive debts, Li Yonghong's new management launched a blitzkrieg that shocked European football during the 2017 summer transfer window. In just two months, the club spent a staggering €2 million to bring in 11 new players. The underlying logic was to quickly establish a new squad and secure a place in the lucrative Champions League to repay Elliott Management's loans. However, success in football is not simply achieved through sheer money. The new squad struggled to gel, the team's performance fell short of expectations, and AC Milan ultimately failed to qualify for the Champions League. This gamble's failure directly led to the collapse of its financial model.

By 2018, Li Yonghong's cash flow was in dire straits. He couldn't even raise the funds for the club's routine capital increase. The final straw came in June 2018. According to the agreement, Li Yonghong was required to inject €32 million into the club to complete the current capital increase plan. However, he failed to provide the funds on time. To maintain the club's normal operations and protect its own claims, Elliott Management chose to pay the €32 million on his behalf, and this money was directly added to Li Yonghong's debts. Subsequently, Elliott issued an ultimatum to Li Yonghong, demanding that he repay the €32 million advance by July 6, 2018.

Li Yonghong unsurprisingly missed the final deadline. On July 10, 2018, Elliott Management issued a statement announcing that it had exercised its rights as a creditor and formally taken over full ownership of AC Milan by executing the collateral.

Thus, the nearly two-year-long acquisition, costing 7.4 million euros, ended abruptly with Li Yonghong's departure and a complete financial loss. His brief 15-month tenure not only failed to bring about a revival but also burdened the club with an even heavier financial load, ultimately leading to its acquisition by an American hedge fund.

This is almost the most tragic and bleak ending this century-old family could ever hope to encounter.

"Do you know them?" Barbara asked in a low voice, carefully observing Han Yi who had suddenly fallen silent.

"Them?" Han Yi snapped out of his daze and looked at his girlfriend.

“China Europe Sports,” Barbara reminded her, “You said they can’t raise enough money, and it sounds like you know a lot about them.”

"On the contrary, nobody knows anything about them, and that's the most fatal flaw." Han Yi sighed. "You were right, Barbie. AC Milan will become a club with a rich history, and only that history remains... after this difficult deal is completed."

"And you don't want that to be the end for your beloved club, do you?"

Barbara moved her face even closer. She looked at Han Yi with a serious and focused expression, asking each word carefully.

"You want to be a savior."

"You want to save AC Milan."

"You want to buy it."

(End of this chapter)