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Goldman Sachs sets sights on Italian soccer

by Gianni Dragoni

He has arrived directly from New York and promises a solution to debt-laden soccer clubs that don't want to give up on their ambitious projects. His name is Greg Carey, he is a banker and works for the world’s most famous (or infamous) bank, Goldman Sachs.

Carey’s latest target is AC Milan. Carey held a meeting with the team’s management in Milan recently to focus on debt and the plan for a new stadium owned by the Serie A club.

The most urgent issue is debt. According to the latest consolidated results, AC Milan posted €247 million of net financial debt at end-2014. Negotiations are ongoing with Thai businessman Bee Taechaubol for a cash injection. But owner and former Prime Minister Silvio Berlusconi’s club needs a restructuring plan independently from the outcome of these talks.

Goldman Sachs is interested in working with AC Milan and has offered its help to seek funds. Among the options is the issuance of either shares or bonds. The plan for the stadium will be discussed later, after the conclusion of negotiations with Mr Bee. If so, this would require further funding for several millions of euros.

Goldman Sachs has already two Serie A clubs in its Italian portfolio – Inter Milan controlled by Erick Thohir and James Pallotta’s AS Roma. Also, it has set its sights on ACF Fiorentina, owned by fashion industry entrepreneurs Diego and Andrea Della Valle.

In both deals, Goldman Sachs worked with Italian bank UniCredit, which has a strong interest in soccer. UniCredit is one of the main sponsors of the Champions League and one of its most important managers, external communications director Maurizio Beretta, is also president of the Serie A soccer league.

National soccer bodies have said nothing about this mix of interests, but there are concerns about a potential conflict.

One year ago, Goldman Sachs helped Inter Milan renegotiate a financial debt of €230 million. The funds were provided by UniCredit, which took the club’s brand as collateral. The transaction was repeated with the AS Roma club a few months ago, again with Goldman Sachs and UniCredit.

On February 12, the refinancing of the club was finalized along with a €175 million senior secured floating rate loan, due in February 2020, with a variable rate based on the three-month Euribor rate (with a minimum of 0.75%) a spread of 6.25% and a discount on the issue price of 3%.

The funding entailed a complex reorganization of the group related to the management and exploitation of the AS Roma brand, the asset that represents the biggest guarantee for creditors. In perspective, this deal also concerns the project of a new stadium, which would eventually require resources for over €1 billion.

In the end, everybody’s happy. But the soccer clubs eyed by Goldman Sachs must keep in mind an important rule: the US bank does not invest in soccer, does not put its own money at risk. It organizes loans and helps find the money. Money that soccer clubs must one day be able to repay.