European soccer’s top financial investigators have recommended excluding the storied Italian club A.C. Milan from continental competition for violating rules that limit spending, according to two people involved in the process.
A final decision on whether UEFA, the governing body of soccer in Europe, banishes Milan, a seven-time European champion, from participating in the Europa League is due in early June. But after scrutinizing the club’s finances for several months, UEFA announced last week that the club had failed to convince officials that it is on sound financial footing and referred the case to the adjudicatory chamber of its financial control unit to recommend an appropriate punishment.
A ban from continental competition is now likely, according to the two people, who spoke on condition of anonymity because the case is continuing and they were not authorized to speak about it publicly. It would serve as the latest indignity for a club once considered soccer royalty, and another bellwether for a deepening crisis in Italian soccer.
Italy failed to qualify for the World Cup in 2018 for the first time since 1958. An emergency president is running the national federation. In early May, Serie A, the country’s top league, was forced to scrap a new $1 billion television contract amid antitrust complaints.
Milan’s troubles stem from the former Italian prime minister Silvio Berlusconi’s deal to sell the money-losing team last year to the Chinese businessman Li Yonghong for $860 million. To clinch the deal, Li needed last-minute financing from the American billionaire Paul Singer’s Elliott Management. Li must repay the high-interest loan in October.
Milan loses tens of millions of dollars each season. As a result, the team, which spent $270 million to acquire nearly a dozen new players last summer, has failed to meet UEFA’s so-called financial fair play criteria, which prohibit clubs from spending beyond their means. The rules were designed to reduce a cycle of boom and bust at many top clubs, and to prevent the sport from becoming an arms race among superrich club owners.
After a lackluster start, Milan finished sixth last season. That was only good enough to qualify for the second-tier Europa League for a second consecutive season rather than the more prestigious Champions League. The club had banked on reaching the lucrative Champions League, a competition that would have been worth at least $50 million.
A spokesman for UEFA said the organization did not provide details on recommendations made to its adjudicatory chamber.
For Milan, the focus on finances is humiliating. The team has won 18 domestic championships and was often a favorite in Champions League. Only Real Madrid has lifted the trophy more times.
UEFA’s decision to refer Milan to its financial adjudicatory chamber appeared to take the club by surprise. Marco Fassone, the club’s chief executive, said after UEFA announced its decision that he expected the organization and the team to come to a settlement.
“This certainly hurts our image, but we are still hopeful,” he said in an interview.
UEFA has said the club’s plan to repay Elliott Management remains uncertain. Under the terms of the loan, the hedge fund could take control of the club if Li does not repay on time.
UEFA also continues to have concerns about Li. A New York Times report last year showed the businessman’s mining empire appeared to be owned by someone else. Chinese records revealed a series of business disputes between Li and Chinese regulators.
UEFA has struggled to stop cash-fueled clubs from streaking away from the rest of the competition. A major test will come when it announces the results of an investigation into Paris St.-Germain, the Qatari-owned champion of France that spent about 400 million euros (about $467.7 million) to buy forwards Neymar and Kylian Mbappé last season.
UEFA had already sanctioned the club previously, levying a fine and limiting the size of its squad in 2014.
The P.S.G. and Milan cases have also sharpened the focus on UEFA’s financial control bodies.
Split into two chambers, one to investigate and one to adjudicate, they are described as being independent, but UEFA’s governing executive council appoints the members.