HONG KONG – The new, high profile Chinese owner should take Inter Milan back to its glory days. A lot of money was spent on successful goalscorers like Romelu Lukaku and Christian Eriksen. After five years of investment, the famous Milan football club is in the immediate vicinity of its first Italian championship title in ten years.
Now the bill is due – and Inter Milan’s future is suddenly in doubt.
Suning, an electronics retailer who is the club’s majority owner, is dependent on cash and is trying to sell its stake. The club is bleeding money. Some of its players have agreed to defer payment, such as someone close to the club who has asked for anonymity because the information is not public.
Inter Milan have held talks with at least one potential investor, but the parties have not been able to agree on a price with knowledge of the negotiations, according to others.
Suning’s football wishes are also crumbling at home. The company abruptly closed its national team four months after winning the Chinese national championship. Some stars, many of whom would rather play there than Chelsea or Liverpool, have said they went unpaid.
China has failed in its dream of becoming a global player in the world’s most popular sport. Driven in part by the ambitions of China’s frontrunner and passionate soccer fan, Xi Jinping, a new generation of Chinese tycoons plowed billions of dollars into marquee clubs and star players, changing the game’s economics. Chinese investors spent $ 1.8 billion buying stakes in more than a dozen European teams between 2015 and 2017, and China’s cash-soaked domestic league paid the highest salaries ever awarded to foreign recruits.
But the grandeur has exposed international football to the specifics of the Chinese business world. The deep involvement of the Communist Party makes companies vulnerable to sharp changes in the political winds. The freelance tycoons often lacked international experience or sophistication.
Discussions about default settings, fire sales, and hasty exits now dominate discussions about boardroom tables. A mining tycoon lost control of AC Milan when he asked questions about his business empire. The owner of a soap maker and food additive company gave up his stake in Aston Villa. An energy conglomerate lost its stake in Slavia Prague after its founder disappeared.
Suning’s plight mirrors “the whole rise and fall of this era of Chinese football,” said Zhe Ji, director of Red Lantern, a sports marketing company that works for top European football teams in China. “When people started talking about Chinese football and all the attention it got in 2016, it was very quick, but it was also very quick.”
Suning paid $ 306 million in 2016 for a larger stake in Inter Milan. Suning is a household name in China, with stores stocking computers, iPads, and rice cookers for the country’s growing middle class. While it was hurt by China’s e-commerce revolution, Alibaba, the online shopping titan, is among its top investors.
Zhang Jindong, the billionaire founder and chairman of Suning, raised a champagne glass on a brightly lit stage and talked about how the famous Italian team, which has won 18 championships since 1910 but none since 2010, would help its brand internationally and contribute to Chinese sports industry.
Mr. Zhang boasted of Suning’s “abundant resources” and promised that the club would “return to its glory days and become a stronger property that can attract top stars from around the world.”
Led by Mr Zhang’s son Steven Zhang, now 29, the club spent more than $ 300 million on stars like Lukaku, Eriksen and Lautaro Martínez, an Argentine striker nicknamed The Bull for his relentless pursuit of goals.
Suning also agreed to pay the English Premier League $ 700 million for the rights to broadcast games in China from 2019, which impressed the industry.
Suning spent money on a domestic club that he bought in 2015. He spent $ 32 million to acquire Ramires, a Brazilian midfielder, from Chelsea and € 50 million on Alex Teixeira, a young Brazilian striker who picked the Chinese side versus Liverpool of the most popular franchises in football.
The recruits were hired to sell air conditioners and washing machines. In an advertisement, Mr. Teixeira urged viewers to buy a Chinese brand of equipment. “I’m Teixeira,” he says in Mandarin, adding, “come to Suning to buy Haier.”
The money, said Mubarak Wakaso, a Ghanaian midfielder, helped make China attractive. “The money I will earn in China is far better than in La Liga,” he said in an interview last year in a mixture of Twi and English, quoting the league in Spain where he once played. “I don’t tell lies.”
Suning’s soccer betting had a bad time. The Chinese government began to worry that large conglomerates would borrow too much and threaten the country’s financial system. A year after the Inter Milan deal, Chinese state media criticized Suning for its “irrational” takeover.
Then the pandemic hit. Even when Inter Milan won on the field, they lost goal revenue from their San Siro stadium, one of the largest in Europe. Some sponsors left because of their own financial pressures. The club lost around $ 120 million last year, one of the biggest losses any European football club has reported.
Back in China, Suning was hit by both e-commerce and the coronavirus. Problems accelerated in the fall when the company decided not to call for repayment of a $ 3 billion investment in Evergrande, a real estate developer and China’s most indebted company.
Suning’s burden is getting heavier. This year, It has to make $ 1.2 billion in bond payments. The company declined to comment.
Suning began to take drastic steps. Last year he gave up his broadcasting contract with the Premier League.
Then, in February, it closed its national team, Jiangsu Suning, almost four months after the team won China’s Super League title against an Evergrande-controlled team. At least one of the team’s overseas recruits has hired lawyers to recoup their unpaid salary, according to one implicated person.
A former Suning player, Eder, a Brazilian-born striker, got the football world going after media reports quoted him as saying that Suning hadn’t paid him. On Twitter, Eder said the comments were taken from a private online chat without his permission. His agent did not respond to requests for comment.
To save himself, Suning took a move that could complicate Inter Milan’s fate. On March 1, the company sold shares valued at US $ 2.3 billion to affiliates of the Shenzhen city government. The deal gave the Chinese authorities a say in the fate of Inter Milan.
For Inter Milan there is a threat of greater financial pressure. It has to pay off a $ 360 million bond over the next year. A minority investor in Hong Kong, Lion Rock Capital, which acquired a 31 percent stake in Inter in 2019, could exercise an option that would require Suning to buy its stake for up to $ 215 million, according to a related party.
Inter Milan representatives are looking for funding, a new partner or a sale of the team valued at around $ 1.1 billion.
The club was in exclusive talks with BC Partners, the UK private equity firm, until recently, but they could not agree on the price, said people knowledgeable about the talks.
Without fresh capital, Inter Milan could lose players. If it can’t pay salaries or transfer fees for outgoing players, European football rules say it could be banned from top competitions.
“We’re concerned but we’re not scared of this situation yet – we’re just waiting for the news,” said Manuel Corti, a member of an Inter Milan fan club based in London.
“As Inter fans,” he said, “we are never sure until the last minute.”
Alexandra Stevenson reported from Hong Kong and Tariq Panja from London. Cao Li contributed to the coverage from Hong Kong.