Demolition of Milan’s iconic San Siro stadium brings benefits to funds in tax havens

San Siro Stadio Meazza Milano

The controversial plan to knock down San Siro stadium is one of the biggest examples of the growing influence of real estate investors in Milan. In 2019, football clubs AC Milan and Internazionale, who both play at the stadium, signed an agreement with the municipality for a mega-project to convert San Siro and the surrounding area. The deal has put a corporate spotlight on the two football giants, whose controlling companies have operations in tax havens and ultimate owners unknown even to local authorities.

Built in 1926, the aging 80,000-seater San Siro has undergone several restorations over the years. It passed its last site inspection at the end of 2021. But the two clubs, both controlled by overseas investment companies, want to leave and are planning to build a new stadium, with only 10,000 fewer seats, on a 50,000m2 site just 70 metres away from the existing ground.

Alongside the desire for a state-of-the-art stadium, demolishing San Siro will also quash any possible confrontation with Hines, the US development company building an apartment complex in front of the stadium. A flagship project of Milan’s major, Giuseppe Sala, the San Siro development is going ahead despite an avalanche of criticism from the world of football, community groups and even singers and art experts.

“Demolishing of San Siro would be awful, it’s a beautiful place, the new buildings don’t have that soul,” Bruce Springsteen, who has often performed at the stadium, recently said.

The environmental costs of flattening the stadium are also a concern. According to a study by Paolo Pileri, Professor of Urban Planning and Design at Milan Polytechnic University, the demolition and its disposal would cancel out all progress in emissions reduction made between 2005 to 2020. The project will result in the release of an estimated 210,500 tonnes of CO2 emissions. Construction is set to commence in 2024.

But the local municipality, which owns the land, feels obliged to cooperate with the powerful football clubs

 “The stadium area is the property of the municipality, it has been managed by the two sports clubs for a century, you cannot disregard the will of the teams,” admits the councillor for Urban Regeneration, Giancarlo Tancredi. “The teams have expressed a number of needs and have even put forward the hypothesis of leaving if they are not met.”

In the project plans filed with the municipality, it is stated that “the ambitions of repositioning [the clubs] at the top of the international rankings depend on the project of a new stadium and the areas around it.” It is hoped the planned shopping complex, conference centre and offices bring fresh capital into the clubs, which have long been riddled with debt.

If the municipality had refused the plans, Sala said previously, then the clubs would go elsewhere. If that was to happen, the former steal-making district of Sesto San Giovanni, in the north of Milan, has been touted as a possible alternative.

“It’s a pathetic bluff,” explains Massimo Mainardi of the Off Topic Association, “all the Falck [a steal company] areas in Sesto are already parcelled out, the so-called T5 would remain, but it has to be cleaned up and in any case is too small for this project.”

In the meantime, the municipality signed the new agreement at a loss. Strikingly, instead of the €9 million per year charged on the current 30-year lease for San Siro, the new terms run for 90 years, with rent revised down to a modest €2.2 million per year.

The San Siro Committe, a local campaign organisation, has been fighting for three years to protect the stadium. Their request for a referendum was rejected, and now they await the outcome of an appeal to the regional administrative court early next year.

“The mayor says there are no other clubs willing to invest for the restoration of San Siro, but if he points to an international tender, he will see that transparent companies will apply,” says Luigi Corbani of the Committee.

The clubs have not yet informed the municipality about the beneficial owners of their companies, even though it is a required under local regulations. AC Milan was sold last summer by Eliott Management to fellow US investment firm Red Bird Capital Partners, for a reported $1.2 billion. Headquartered in New York, Red Bird often operates through companies incorporated in the tax-friendly state of Delaware.

Inter, meanwhile, is majority owned by the Chinese retail giant Suning. The club announced in October that Suning was looking for buyers. The Chinese holding company consists of three companies based in Luxembourg and one in Hong Kong. The remaining 31.05% of Inter belongs to LionRock, another Hong Kong-based entity, which also operates from the Cayman Islands.