The Great Sell-Off Milan Mired in Crisis of Money and Spirit
The days when Milan could call itself a bastion of growth and progress in Italy seem to be gone. As the crisis swells the ranks of the poor, members of the city's business elite are jockeying for foreign investors while squabbling with courts over various legal entanglements.
Beppe Severgnini is renowned for his unique way of describing Italy in his best-selling books, and for his unusual titles, such as: "Surviving in Italy without Getting Married, Run Over or Arrested."
Severgnini is a popular figure, and not just in Italy. Even the BBC and the Economist appreciate the quirky columnist, and Queen Elizabeth II awarded him an OBE 12 years ago. On this rainy November day, the well-traveled writer is sitting in Milan. The white-haired author shakes his head and says he doesn't understand the world anymore. "Within a day, they sold both my football club and the home of my newspaper."
Corriere della Sera, the paper that publishes Severgnini's columns, has been Milan's pride and joy since 1876. Whereas the football club, to which Severgnini has dedicated three books and given his heart, is F.C. Internazionale Milano, more commonly known as Inter. Founded in 1908, Inter is a multiple European Cup winner and Italy's only club that has never been relegated from the top division.
Inter and Corriere are -- or, at this point, were -- as much a part of Milan as the Scala theater and the Duomo cathedral.
On this sad November day, Corriere is reporting that 70 percent of Inter, which has been under Italian ownership for 105 years, is now being sold to an Indonesian investor. After pumping an estimated 1.2 billion ($1.6 billion) into the club, owner and club president Massimo Moratti, an oil-refinery tycoon from one of Milan's best families, decided he had had enough.
The news of the Inter sale is accompanied by the announcement that the 109-year-old Corriere is selling its headquarters building on Via Solferino. US financial investor Blackstone is buying the publishing house's historic palazzo, with its 30,000 square meters (323,000 square feet) of prime real estate, for 120 million. The current owners will be allowed to remain there for a while as tenants. The editorial staff was outraged over the sale, accusing the paper's shareholders of hawking the headquarters building to "speculators."
"Americans can buy a lot of things, but not history," Severgnini says bitterly. "And this here is history. Everyone has written in this building: Pasolini, Pirandello, Sciascia and Moravia. We're walking on the shoulders of giants here."
It was one of those giants, Indro Montanelli, who once said that Milan was "the real capital of the country," because things -- good and bad -- that begin in Milan, the capital of the Lombardy region, usually spread to all of Italy before long. It was the case with Mussolini's fascism beginning in 1919, and with Berlusconism 75 years later. It also applied to the economic miracle after World War II and the breakup of the political landscape in the 1990s.
Many of the 3,200 trials for corruption and illegal campaign donations took place in Milan's palace of justice during the "Mani pulite," or clean hands, campaign. It was a signal for the entire country.
Giants Stumbling Together
Is it now more than a twist of fate that two of Milan's most important institutions, Inter and the Corriere, are being partly sold? Will a sell-off of other Italian brands follow suit? The traditional fashion companies, Gucci, Fendi, Bulgari, Valentino and Loro Piana, have already come into foreign hands. Versace currently has plans to sell a minority stake in the company.
"Canadians will probably be buying Milan's Duomo soon," Corriere quipped in September, "and the Pakistanis will buy Nutella."
Hardly any other EU country has seen as little foreign direct investment as Italy in recent years. This is one of the reasons behind the growing pressure on family-owned companies to become more open to global capital.
But this has also created considerable anxiety. "The gnomes at McKinsey want to transform us into a nation of venerable waiters, guitar players, violinists and geriatric nurses," Giulio Sapelli, a business professor in Milan, has fumed.
Corriere della Sera is Italy's oldest newspaper, and it also has the widest circulation in the country. This liberal bastion looks very British inside, and its conference table is even modeled on that of the London Times. Staid men in shirts and ties work in the adjacent offices, where dark wood and heavy leather armchairs set the tone.
The list of shareholders of Corriere's parent company, RCS, reads like a who's who of the primarily local industrial and financial elite. Almost everyone who considers himself part of the Milan's closely connected upper crust, known as the "salotto buono," wants to hold a stake in Corriere. Its shareholders include Fiat, Pirelli, Mediobanco, Banca Intesa, Tod's, Benetton and Ligresti.
Milan's business elite is an Italian version of Germany Inc., but with more of a fortress-like mentality. Its members have supported each other owing to their well-meshed equity stakes, but since the beginning of the global economic crisis, this has also meant that they have gone into a tailspin together.
"The Italian establishment used to be on our board of directors; today, it's a collection of this country's weakened economic leaders," says Ferruccio de Bortoli, the editor-in-chief. Facing a framed first edition of Corriere from March 5, 1876, he is struggling with the decision to jeopardize the Corriere legend for a handful of quick money, "and to certify the entire company's decline by selling the building."
If necessary, De Bortoli wants to continue publishing unflattering stories about the paper's shareholders. He says that he feels no obligation to go easy on Fiat and other shareholders with billions in sales "because, after all, Corriere has been around longer than its shareholders." Besides, he adds, they have recently provided regular material for negative headlines.
Tire maker Pirelli's CEO, Mario Tronchetti Provera, for example, Italy's best-paid manager in 2011, with an annual salary of 14.5 million ($19.6 billion), was sentenced to 20 months in prison in July for economic espionage. Billionaire Salvatore Ligresti is under house arrest for corruption and accounting fraud. Mediobanca, the centerpiece of old Italy Inc., is the subject of an investigation.
And then, on Aug. 1, to add to the bad news coming from Milan, Italy's supreme court upheld four-time former prime minister and Milan media tycoon Silvio Berlusconi's conviction for tax fraud.
Signs of Crisis
All those convicted or accused deny the charges against them. Does that mean that a crazed judiciary is taking aim at business leaders to help fill the government's empty coffers? Or is this the beginning of a new era, the end of the post-feudal dominance of a handful of captains of industry and finance?
"Milan was long described as Italy's moral capital, a city with the necessary public spirit to combat the so-called Italian disease," says Corriere editor-in-chief De Bortoli. "If we hope to overcome the current crisis, it will have to come from Milan."
Milan, Italy's richest major city, is in the third year of a persistent recession. From its luxury galleries to its soup kitchens to the Unicredit tower, it is clear that Milan is in rapid flux, a city searching for its identity.
There are many signs of the crisis in Milan, including the empty office space in the skyscrapers behind the Porta Garibaldi train station. And then there are the 2,000 square meters in the upscale Galleria Vittorio Emanuele II, in which the cash-strapped city administration has been forced to rent space to Autogrill, the highway rest-area operator. A few steps away, there are ads for Nespresso and Samsung products hanging on the exterior wall of the Duomo.
Another sign of the crisis is that 2,615 companies in Milan alone have gone out of business in the last two years, and that "Rigolo," a popular watering hole for many Corriere journalists, is now half-empty in the evenings. Even in ordinary trattorias, guests often have nothing but a salad and coffee.
Next to Dolce&Gabbana's Gold Restaurant, which offers dishes such as roast Iberian pork with glazed chestnuts, people start lining up at 11 a.m. for a warm meal at the Capuchin monastery on Piazza Tricolore. The monastery now distributes 800,000 meals a year to Milan's poorest residents.
Those who would rather not wait until noon go to the southern part of the city where, in the early morning hours, people are already waiting for food behind the elite, private Bocconi University. The meals are distributed by Pane quotidiano, or "Daily Bread," a charity that has helped fight hunger since 1898 and has two centers in Milan.
- Part 1: Milan Mired in Crisis of Money and Spirit
- Part 2: Skyrocketing Poverty