HONG KONG – The new Chinese owner was supposed to return Inter Milan to its glory days. It has spent a lot on productive scorers like Romelu Lukaku and Christian Eriksen. After five years of investment, the deepened football club in Milan is within striking distance of its first Italian league title in a decade.
Now the bill is payable – and Inter Milan’s future is suddenly in doubt.
Suning, an electronic retailer that is the club’s majority owner, keeps money in its pocket and tries to sell its stake. The club is bleeding money. Some of his players agreed to postpone the payment, according to one person close to the club who requested anonymity because the information was not made public.
Inter Milan have held talks with at least one potential investor, but according to others, the parties are not even over a price.
Suning’s football aspirations also crumble at home. The company abruptly stopped its domestic team four months after the club won China’s national championship. Some stars, many of whom prefer to play there instead of in Chelsea or Liverpool, have said they have not been paid.
China has failed in its dream of becoming a world player in the most popular sport in the world. A new breed of Chinese tycoons, fueled in part by the ambitions of Xi Jinping, China’s leading leader and ardent football fan, plowed billions of dollars into marquee sticks and star players and changed the game’s economy. Chinese investors spent $ 1.8 billion between 2015 and 2017 acquiring interests in more than a dozen European teams, and China’s cash – soaked local league paid the largest salaries ever awarded to overseas recruits.
But the spate exposed international football to the quirks of the Chinese business world. Deep involvement by the Communist Party makes companies vulnerable to sharp shifts in the political winds. The free-spending subjects often did not have international experience or sophistication.
Talks about defaults, fire sales and hasty exits now dominate discussions around boardroom tables. A mining magnate loses control of AC Milan amid questions about his business empire. The owner of a soap maker and food additive gave up his interest in Aston Villa. An energy conglomerate relinquished its stake in Slavia Prague after its founder disappeared.
Suning’s distress reflects ‘the whole rise and fall of this era of Chinese football’, said Zhe Ji, director of Red Lantern, a sports marketing company working for top European football teams in China. “When people talked about Chinese football and all the attention it got in 2016, it came very quickly, but it also went very fast.”
Suning paid $ 306 million in 2016 for a major stake in Inter Milan. Suning is a well-known name in China, with stores with computers, iPads and rice paddies for the growing middle class in the country. Although hurt by China’s e-commerce revolution, it considers Alibaba, the online shopping title, a major investor.
On an illuminated stage to announce the Inter Milan deal, Zhang Jindong, the founder and chairman of Suning’s billionaire, raised a glass of champagne and talked about how the famous Italian team – which has won 18 championships since 1910, but since 2010 none – his brand would not help. internationally and contribute to China’s sports industry.
Zhang promises that the club “will return to its glory days and become a stronger property that can attract the best stars from around the world.”
Led by mr. Zhang’s son, Steven Zhang, now 29, has spent the club more than $ 300 million on stars such as Lukaku, Eriksen and Lautaro Martínez, an Argentine forward nicknamed The Bull because of his relentless pursuit of goals.
Suning has also agreed to pay $ 700 million to England’s Premier League for the rights to broadcast games in China from 2019, which stuns the industry.
Suning spent money on a local club he bought in 2015. It spent $ 32 million to acquire Ramires, a Brazilian midfielder, from Chelsea and 50 million euros for Alex Teixeira, a young Brazilian striker, who chose the Chinese team over Liverpool, one of football’s most popular franchises.
The recruits were put to work selling air conditioners and washing machines. In an ad, Mr. Teixeira encouraged viewers to buy a Chinese brand of devices. “I’m Teixeira,” he says in Mandarin, adding, “come to Suning to buy Haier.”
The money, says Mubarak Wakaso, a Ghanaian midfielder, has helped make China attractive. “The money I’m going to make in China is much better than La Liga,” he said in a mix of Twi and English. in an interview last year, referring to the league in Spain where he once played. “I’m not telling lies.”
Suning’s football bets were bad. The Chinese government has begun to worry that large conglomerates are borrowing too heavily, threatening the country’s financial system. A year after the Inter Milan agreement, Chinese state media criticized Suning for his “irrational” acquisition.
Then the pandemic hit. Although Inter Milan won on the field, he lost gate evidence from his San Siro stadium, one of the largest in Europe. Some sponsors ran away due to their own financial pressures. The club lost about $ 120 million last year, one of the biggest losses a European football club has reported.
Back in China, Suning was hit by e-commerce as well as the coronavirus. The problems escalated in the fall when he decided not to demand a repayment of a $ 3 billion investment in Evergrande, a real estate developer and China with the largest debt.
Suning’s burden is going to get heavier. This year, it has to pay $ 1.2 billion in bonds. The company declined to comment.
Suning began taking drastic steps. Last year drop it his broadcasting contract with the Premier League.
Then, in February, he closed down his domestic team, Jiangsu Suning, almost four months after the team won China’s Super League title against a team controlled by Evergrande. According to one person involved, at least one of the team’s foreign recruits hired lawyers to recover unpaid salaries.
One former Suning player, Eder, a Brazilian star forward, made the football world buzz after media reports quoted Suning as not paying him. On Twitter, Eder said the comment was taken from a private, online chat without his permission. His agent did not respond to requests for comment.
To save himself, Suning took a step that could complicate the fortunes of Inter Milan. On March 1, it sold $ 2.3 billion of its shares to subsidiaries of the government of the Chinese city of Shenzhen. The deal has put Chinese authorities in charge of the fate of Inter Milan.
Greater financial pressure awaits Inter Milan. It must pay out a $ 360 million mortgage next year. A minority investor in Hong Kong, Lion Rock Capital, which acquired a 31 percent stake in Inter in 2019, could, according to one of the people close to the company, exercise an option that requires Suning to stake its stake for as much as $ 215 million buy. club.
Inter Milan officials are looking for funding, a new partner or a sale of the team at a valuation of about $ 1.1 billion, the person said.
Until recently, the club was in exclusive talks with BC Partners, the British private equity firm, but they could not agree on price, people with knowledge of the talks said.
Without fresh capital, Inter Milan could lose players. If it cannot pay salaries or transfer fees for departing players, European football rules say it can be banned from top competitions.
“We are worried, but we are not afraid of this situation yet – we are just waiting for the news,” said Manuel Corti, a member of an Inter Milan supporters club in London.
“Because we are Inter fans,” he said, “we are never sure of anything until the last minute.”
Alexandra Stevenson reported from Hong Kong, and Tariq Panja from London. Cao Li contribution from Hong Kong.