Italian soccer power Inter Milan on Thursday posted a $285 million loss for the fiscal year that ended in June, its third-straight year of reported losses. Last season’s Serie A champions reported $421 million in revenue, down from $443 million the previous year.
The Nerazzurri, as the team is known, has been struggling financially since September 2020. The club’s majority stakeholder, the Chinese electronics retailer Suning Group, fell into financial distress after its $700 million deal with the English Premier League for Chinese broadcast rights was terminated due to non-payment. Suning tried to renegotiate the contract, citing the pandemic, but the EPL did not renew.
Inter Milan reported €102 million in losses in 2020 due to the pandemic. With no financial stability on the horizon, Suning was ready to sell Inter, one of its most valuable assets. In January, the company hired Goldman Sachs as advisers and took a different route to save its investments, turning to private equity.
Last May, the U.S.-based PE firm Oaktree Capital gave a $318 million loan to the Chinese company to be paid in three years. This amount is approximately the same as a 30% stake in the Italian team. According to Bloomberg, if Suning fails to pay its debt, the unpaid loan could lead to Oaktree taking complete control of the team.
“It’s difficult to go to a bank to get financing without strong collateral,” said Juan Arciniegas of 777 Partners, a Miami-based firm that recently acquired another Italian club, Genoa C.F.C. “Sometimes when the clubs are struggling and they don’t have available collateral, unencumbered collateral is used to borrow against. They need to go to other types of lenders that are not banks that are willing to take more risk. And those lenders tend to take collateral such as the equity in the club.”
Inter Milan was the second Serie A team to receive private equity funds to survive. Inter’s local rival A.C. Milan was sold to New York-based Elliott Management in 2018 after its Chinese owner failed to make debt payments.
Inter Milan said with stadiums at capacity post-pandemic and new sponsorship contracts, the club expects to reduce losses in the 2021-22 season. In July, the club confirmed that fan engagement platform Socios.com would be the primary jersey sponsor for $23 million per season. Pirelli Tires, a one-time minority shareholder in the club, ended a 30-year-old sponsorship deal in March.
Until it was sold to Suning Group in 2017, Inter Milan depended heavily on the financial contributions of owner Massimo Moratti to make up for losses incurred throughout the 2000s.
(This story has updated the headline.)
