Inter Milan, the esteemed Italian football powerhouse, currently ranks as top five performing European team according to 90Min (Source: Power Rankings: The best teams in Europe). Nationally, Inter continues to lead the Series A, where Juventus, the second ranking team is struggling to keep up. Despite Inter impressive on-field achievements and favorable prospects in the Champion’s League, the club finds itself grappling with a staggering debt of approximately US$900 million as of December 2023 (Source: OneFootball.com-Inter-Milan on the Verge of Bankruptcy).
Adding to the complexity of Inter Milan’s financial situation is the impending repayment deadline in May 2024. The club’s majority owner, Zhang, a Chinese investor holding a 70% stake, is facing the need to repay a substantial $400 million loan (approximate figure) to OakTree Capital, the US investment fund that provided crucial financial support two years ago, with a substantial annual interest rate of 10%. Numerous potential investors have been rumored to express interest, but the steep asking price of $1.3–1.5 billion by the Chinese owners has deterred any concrete agreements (these numbers are rumored in different media outlets and are based on the estimate needed by the owners to repay their debts and wald away with a profit).
As the deadline approaches, Inter Milan stands at a crucial juncture where strategic decisions must be made to avoid potential loss of control, possibly resulting in a full American ownership of the team. Several viable alternatives for investors have surfaced, including the Saudi Public Investment Fund (PIF), the Qatari Investment Authority, and Bahrain Investcorp. PIF, known for assertive investments in sports, especially football, has made notable acquisitions of top-tier players and coaches. It has invested massively on football since 2021 to acquire players such Ronaldo, Benzema, Neymar and Mane, to privatize 3 of its leagues top teams, and to invest in stadium infrastructures. It is also investing robustly to secure the FIFA world cup in 2034. Qatar, owner of Paris Saint-Germain, recently expressed interest in acquiring Manchester United, and in 2022 has successfully hosted the FIFA World Cup which cost the Al-Thani Family (the royal leadership) US$ 220 billion (Source: Michigan Journal of Economics-The Finances Behind the 2022 World Cup). Bahrain, the least football assertive GCC country, has been on the lookout for sport assets through its Investcorp as its appetite for acquiring Italian football teams increases (Source: Middle East Economy-Bahrain’s Investcorp seeks to score big with Inter Milan). This interest matches these countries needs to diversify their economies away from oil and gas, and to ensure brighter future to their young population.
Speculations aside, the most probable scenarios for Inter Milan involve renegotiating the loan with OakTree Capital, which would undobtley be costly, or integrating a minority strategic investment. The latter could come from a Gulf Cooperation Council (GCC) country, injecting a much-needed $300 to $400 million to stabilize Inter’s finances. This injection could prove crucial for the club’s performance in the national league, enhancing their chances of winning and maximizing the lucrative returns from the Champion’s League.
For potential investors, Inter distressed finances presents an opportunity to capitalize on the long-term financial and brand potential of Inter Milan. Leveraging the crisis to acquire a distressed asset could prove beneficial, especially for Arab petrodollars. As the football world watches, Inter Milan stands at the intersection of financial challenge and untapped potential, awaiting a visionary investor to steer the club towards a brighter future.
Conclusion: Despite Inter’s financial challenges, we should applaud the adept manner in which Inter Milan navigated the heightened economic uncertainties brought on by the pandemic. Zhang (Inter owner), Inzaghi (the Coach), and the Inter Management exhibited resilience and resourcefulness, achieving notable finacial success despite constrained resources, positioning the club as a formidable force in both Italian and European football. Although upcoming months will present challenges, particularly with the Chinese owners addressing short-term debt with Oak Tree Capital (the American leander), Inter’s allure to investors, especially those from oil-rich nations that must diversify their economies, remains strong. A strategic investor from the Gulf by Inter’s side could unlock the full potential of the Inter Milan brand beyond the playing field, potentially establishing a massive fan community of 100 million strong.