A Glimpse into "Inter's" Financial Woes: A Rollercoaster Ownership and Debt Mess
Debting their way to the Champions League semi-finals: Insight into Inter's finances
Last year, in a celebration tainted with bitter whispers, "Inter" clinched the Italian championship for the 20th time, placing them a breath behind legendry "Juventus" (36) in the Italian football hall of fame. As the city painted itself black and blue in triumph, the club's ownership switched hands unexpectedly - from the Chinese retail and e-commerce juggernaut Sunning to the American global investment firm, Oaktree Capital Management, due to mounting debts.
Suning had a firm grip on the three-time Champions League winners since 2016. Led by Steven Zhang, sporting a then-worthwhile fortune of $6 billion, Sunning bought a 70% stake of "Inter" from Italian entrepreneur Massimo Moratti and Indonesian businessman Erick Thohir for a cool $307 million. Zhang injected over €800 million into the Milan club during his tenure, according to La Repubblica, yet the pandemic-induced crisis erased all his hard work. So much so that in 2021, Sunning had to borrow an emergency €295 million loan from Oaktree Capital Management, a sum that ballooned to €395 million over three years.
The 2023 Champions League final failed to improve "Inter's" financial predicament. Zhang made numerous attempts to restructure their debt, but Oaktree's management balked at extending the credit line till 2027. Conversations to sell the asset to the American investment fund PIMCO and a Saudi Arabian family linked to the state investment fund PIF fell through, with Oaktree blocking all potential deals.
"For far too long, we've been fighting tooth and nail to find a resolution with Oaktree. Despite several attempts, our efforts were constantly impeded by their legal threats and reluctance to cooperate," Zhang lamented. "This conduct poses a substantial risk to the club's stability, potentially jeopardizing its future."
Zhang's business failures extended beyond Inter, with his investments in the now-bankrupt Evergrande and several other ill-fated projects leading Suning to declare bankruptcy at the start of this year.
A Mirror Image: The Financial Tussle of Inter and Milan
Inter and their arch nemesis, Milan, share more than just the San Siro stadium; they've also experienced similar turns in their respective fortunes. In 2018, Chinese businessman Liang Yuhong struggled to repay a €32 million debt to hedge fund Elliott Management. Four years later, Elliott sold Milan to the American investment company RedBird Capital Partners for €1.2 billion. Oaktree is eyeing a similar deal for Inter, but the club's financial health needs a serious overhaul before the big sale.
Inter's financial turmoil is notunique; it's a common issue plaguing top Italian clubs. As per Calcio Finanza, Inter's debt stood at €734.8 million by June 30, 2024, diminishing slightly from €807 million the previous year. Massive debts are a persistent problem among top Italian clubs, with a combined debt of €3.2 billion ($3.6 billion USD) among key players like Juventus (€638.9 million) and Roma (€636.3 million) lingering behind them.
The Financial Burden: Debt and Wages
One of the main challenges for "Inter" lies in its highest wage bill in Serie A, amounting to €206 million, which includes salaries for the first team, youth divisions, coaching staff, and technical personnel. The wages mountain is steep for other top spenders like "Juventus" (€200 million), "Milan" (€163 million), "Roma" (€160 million), and "Atalanta" (€106 million). Napoli, the current Scudetto contender, spends €104 million on the current season's wages with four games left to play.
The highest-paid player at "Inter" is captain and top scorer Lautaro Martinez, raking in €16.6 million per year. Nicolò Barella, Hakan Çalhanoğlu, and Alessandro Bastoni follow close behind with earnings of €12 million, €11.1 million, and €10.1 million, respectively.
As the summer transfer window approaches, "Inter" plans to significantly revamp its aging squad, with an average age of 29.1 years, by focusing on signing younger talents at lower costs. This may involve cutting ties with veteran players like Yann Sommer (36), Henrikh Mkhitaryan (36), and Francesco Acerbi (37).
The exit from the financial crisis could be expedited by successful performances in the current Champions League - the Milanese team has already advanced to the semi-finals, earning €118.1 million in the process. However, the main progress hinges on the Oaktree Capital Management's plan presented in the spring for repaying the main part of "Inter's" bond debt - €403.9 million, which they intend to close by 9 February 2027.
"Oaktree believes they can significantly increase the value of the asset in the coming years. The goal is to sell 'Inter' at a substantial profit, around €2-2.5 billion," posits football finance expert Marco Bellinazzo. For further information on specific dates, bond details, or sale projections from Oaktree Capital Management or Marco Bellinazzo, it's best to consult financial news sources or direct communications with these entities.
- Despite investments totaling over €800 million by Steven Zhang, the Chinese businessman's fortune, former owner of Sunning, faced a financial crisis that led to emergency loans from Oaktree Capital Management in 2021.
- Oaktree Capital Management, an American global investment firm, currently holds a significant stake in "Inter" following the unexpected sale from Sunning in 2021.
- The European leagues, with Serie A being a part, have long been grappling with high debt levels among top clubs, with "Inter," Juventus, Roma, Milan, and Atalanta being among them.
- "Inter" faces a steep wage bill, amounting to €206 million in 2024, with the captain and top scorer, Lautaro Martinez, earning €16.6 million annually.
- Restructuring the debt has been a challenge for "Inter," as Oaktree Capital Management has resisted extending the credit line beyond 2027, potentially jeopardizing the club's future.
- As part of the plan to propel "Inter" out of the financial crisis, Oaktree Capital Management intends to repay a major part of the club's bond debt - €403.9 million - by February 2027.
- To expedite the sale of "Inter," Oaktree Capital Management aims to significantly increase the club's value, with a target price of approximately €2-2.5 billion according to football finance expert Marco Bellinazzo.
