Did AC Milan score with Chinese ownership?

Jon Van Housen

Protracted negotiations and the final sale of AC Milan to a murky consortium of Chinese buyers will finally reach fruition in mid-February, according to published reports in Italy, drawing to close a two-year saga that left local fans perplexed.

Following a deal signed last summer, a varied and mysterious mix of buyers has been reported, all with ties to China in one form or another. Tranches of deposit money and operating capital for the storied football club began arriving in early fall.

The €800 million transaction was originally set to conclude on June 15, but as summer turned to autumn and then winter, one deadline after another passed. It is now supposed to be finalized within a month.

Current owner Silvio Berlusconi and his team at Fininvest might have considered the sale maddeningly difficult, but it could be just the beginning. The Chinese can be slow, changeable and confusing in their approach to management.

I know – I worked at China’s preeminent English-language newspaper for more than eight years. The large foreign staff there often found themselves shaking their heads in disbelief, wondering how something could be of supreme importance one day and abandoned altogether in a few weeks.

Much of it is culture. Chinese staff would never dream of openly challenging their bosses and pointing out flaws in their plans, even if the worker is right. Fearful of making a mistake – or a perceived mistake – individuals rely on consensus that reduces their exposure to the criticism and hand-wringing that often accompanies any change. The result can be another unwieldly plan that covers the backside of everyone concerned.

Sale of AC Milan to Chinese investors
In the locker room: The players are publicly known, but who will actually sit at the table in the boardroom remains unclear (Robin Bos).

As well, in a command economy and government, decisions are not always made to solve a problem or advance a sensible concept. Underpinning everything is the government’s obsession with retaining control. Any violation of that prime directive can have serious consequences for your career – or perhaps even your person. No wonder Chinese management appears cautious and imponderably slow to Westerners.

So once the sale finally does conclude, can the new owners of AC Milan successfully manage a top-tier team in Italy? Can the voluble Italians adapt to the seemingly inscrutable Chinese?

If past acquisitions by Chinese companies are any guide, the outlook is mixed. In the Milan suburb of Greco, just up the highway from the legendary San Siro soccer stadium, Pirelli continues to grow as one of the biggest global names in tires following its purchase by state-owned giant ChemChina in 2015. It reported a 6.6 percent rise in revenues to €4.5 billion in the first three quarters of 2016. The 143-year-old company remains a major player in Formula One auto racing and has just unveiled a new tire for the circuit.

In 2010, the prestigious but floundering carmaker Volvo was purchased by Chinese automaker Geely in a move that seemed to save it from the same fate as its Swedish peer Saab, which ceased production altogether.

In its latest full-year report, Volvo said it generated record profits in 2016 following a five-year effort to retool its lineup.

But around 70 percent of Chinese overseas acquisitions fail, and about 70 percent of deals gone bad are due to cultural conflicts, Winston Zhao, senior counsel with MWE China Law Offices, told the Shanghai Daily.

“It is important to be open-minded about the challenges of cultural gaps to win a counterpart's sense of community identity and sense of belonging,” said Zhao.

The best guideline to AC Milan’s outlook could ironically be its crosstown rival Inter Milan, which was itself acquired by a Chinese company last year. According to published reports in Italy, Inter is aggressively trying to recruit Barcelona superstar Lionel Messi and plans to lavish €150 million to revamp the squad this year.

Every deal is different and every company has its own culture. Splashing around cash is not the only solution, especially in a tradition-heavy milieu like European soccer. Winning has a way of healing and fans will no doubt embrace it all if the pitch leads back to victory.

First AC Milan’s new owners will have to pay Berlusconi what they promised.