The US-educated Zhang, who turned 29 last year, was regularly on the ground in Milan before the pandemic hit. A modernising force, he recognised Inter’s potential as a lifestyle brand (the club is about to announce a new logo) and entertainment studio. Zhang set up Inter Media House, seeing value in football clubs as unique content providers.
Suning’s project was about to go to another level. Inter were moving into new offices in the stylish, regenerated Porta Nuova district of Milan. The training ground at Appiano Gentile was in the process of being upgraded and a partnership was struck with Milan to work on a new stadium. Giuseppe Marotta, the chief executive credited with re-establishing Juventus at the top of the Italian game, joined the executive team. Inter were beginning to look like the complete package, every inch a “super club”.
Marotta’s arrival gave them a chance of appointing Conte, as close as you get to a sure thing when it comes to turning a contender into a champion. Spalletti delivered Champions League football again, but he was sacked nine months into his new deal. Unless the Tuscan took another job or came to a settlement in the meantime, he’d remain under contract at Inter. That decision is listed as an exceptional charge on their accounts at the eye-watering figure of €25.8 million.
And Conte doesn’t come cheap either. He is not on Diego Simeone money. No one is on Diego Simeone money. But Conte is the highest-paid coach in Serie A, with his reported €11 million salary apparently being as much as what Juventus’ Andrea Pirlo, Atalanta’s Gian Piero Gasperini, Roma’s Paulo Fonseca and Milan’s Stefano Pioli all earn put together.
But Conte was not Inter’s only star signing. Unshackled from their FFP settlement, the transfer strategy that summer was aggressive. Some deals had already been arranged, such as the one for free agent Diego Godin, who arrived on big wages from Atletico, and Valentino Lazaro, bought for €22 million from Hertha Berlin.
If that purchase has largely been forgotten about, it’s because it paled in comparison with the others that were completed over that window. Inter made Cagliari midfielder Nicolo Barella their club-record signing, an honour he didn’t hold onto for very long, as
Romelu Lukaku then signed from Manchester United for €74 million.
A system change, but above all, a culture change, led to Icardi, Radja Nainggolan and Ivan Perisic being put up for sale. Raising funds for them was a challenge. After originally fretting that the €110 million clause in Icardi’s contract was too low, he ended up being loaned to Paris Saint-Germain, who then negotiated his permanent transfer down to half that figure. Perisic moved to Bayern Munich and won the treble — but has since returned — and Nainggolan, after being bought for €38 million
plus Nicolo Zaniolo, was loaned to Cagliari in consecutive seasons for personal reasons (his wife is Sardinian and was undergoing treatment for breast cancer).
Conte left the impression Inter had done a lot in the market but still weren’t ready to contend. After Inter went to Borussia Dortmund, played superb football for an hour then faded and lost just as they had done in Barcelona, he memorably said it was hard to expect more of the team when the club was buying him players from Cagliari (Barella) and Sassuolo (Stefano Sensi). So the club went Christmas shopping in the Premier League. Along with Ashley Young from Manchester United, Inter organised the rental of Victor Moses, who was reunited with his old Chelsea boss.
Neither of them, however, got a photoshoot at Milan’s world-famous opera house, La Scala. That was reserved for Christian Eriksen, who was welcomed as the playmaker Inter had lacked since the days of Wesley Sneijder.
The €27 million that Inter committed in fees doesn’t seem all that high — except the Dane could have been signed for free when his contract with Tottenham Hotspur expired at the end of the season. The fee on top of the wage package Inter agreed, making Eriksen one of the highest earners at the club and, by the same token, in Serie A, was considerable for a player nearing his thirties who had no obvious role in Conte’s scheme. In the meantime, the pandemic engulfed Lombardy before any other major European region.
What’s been the impact of the pandemic?
Stadiums closed, which was a problem for Inter, whose average gate of 65,800 at San Siro was the biggest in Serie A. For this season, the club estimates a negative impact on match-day revenue and cash in the region of €60 million. Sky Italia withheld the final €130 million installment of last season’s TV money from the league.
Other stresses included the non-renewal by some sponsors of existing contracts or renegotiations and renewals at less advantageous figures. Inter’s longstanding and iconic shirt sponsor Pirelli will not feature on next season’s jerseys for the first time since 1995, with the club seeking a more lucrative deal than the one that paid €11 million last season. The failure to increase revenues from sponsorships and advertising as envisaged in the club’s prospective plans, and the increase in the collection times for payments due to the adverse economic context in which Inter’s customers operate, has also compounded matters.
A €102 million loss was posted in their latest financial results, one of the biggest in European football, and there aren’t many levers left for Inter to pull to ease the strain on their accounts, which include a lot of debt that is due to mature in 18 months.
“The project stopped in August,” Conte recently said as the €40 million deal struck with Real Madrid for Achraf Hakimi was done at the end of June. Almost all the other incoming business Inter conducted afterwards was free or for nominal fees. Other clubs were able to dump some of their high earners, but Inter’s wage bill, which has increased by €74 million in the last four years, went up slightly again. Alexis Sanchez’s move from Manchester United was made permanent and other well-paid veterans like Arturo Vidal and Aleksandar Kolarov rocked up at San Siro.
Raising funds through sales was trickier than it’s ever been before, with the market undergoing a severe contraction. As Greg Carey of Goldman Sachs told the Financial Times’ Business of Football summit last month:
“A lot of the clubs use the transfer window to basically replenish their cash flow. Well, nobody has any money right now.”
Take the case of Eriksen. The Dane has suddenly and unexpectedly become an integral part of Conte’s team but was on the transfer market barely a year after touching down in Milan and was pretty much unmoveable. Finding buyers willing to match big wages and pay the kinds of fees that prevent you from absorbing a loss on a player is nearly impossible at the moment. A firesale would not work and besides, a significant part of Inter’s value lies in having a competitive team that can compete at the highest level. That helps explain why Martinez revealed this week he has an agreement in principle to sign a new contract. Rather than selling stars, the best bet is to find a way of keeping them while moving on high-earning non-contributors instead. But that can take time as those guys often can’t find as good a deal elsewhere.
What else has happened?
Well, in January, a notice appeared on the website of CONI, the Italian Olympic Committee and governing body of Italian sport, to say Eriksen’s agent is taking Inter to arbitration. And then there was a report in Corriere dello Sport alleging tension between Real Madrid and Inter over the first instalment of Hakimi’s transfer, which in turn led the Spanish giants to release a statement describing the story as “completely false”. Inter’s reaction to that and another story this week about an alleged missed bonus payment on Lukaku’s transfer from Manchester United is to insist they will respect all agreements.
What might happen next for Inter?
After Zhang initially called reports of Suning selling the club “entirely baseless”, the stance has softened. At the end of a conference call to announce Inter’s latest financial results on February 26, the last item on the agenda was an update on the search for a new partner. “As part of ongoing capital structure and liquidity management, the business and our ownership are in talks to provide solutions in this respect.”
One of them, as reported by the Financial Times, is the rush to raise $200 million in emergency cash. Another would be to give up a controlling or minority stake in the club just a couple of months before Inter could be crowned champions. “Suning has confirmed its commitment to the ongoing financial support of the club with or without additional external support, but it is also sensible and prudent to look outside,” the call concluded. “With that in mind, Suning appointed key advisers in Asia to find suitable partners, be that with an injection of equity capital or otherwise. Talks with key potential partners in this respect remain ongoing.”
Is there interest in buying Inter?
The London-based private equity group BC Partners was in talks with Inter but the exclusivity period to agree a deal has expired. After carrying out due diligence on the club’s accounts, BC is at an advantage in that any other prospective investor would need time to conduct its own examination of Inter’s affairs and that would take precious time.
But private equity’s interest in the club divides opinion. One industry expert tells
The Athletic: “I don’t really see how they can make it work from a returns perspective. The numbers just don’t work. How can you pay €700 million or a billion, whatever the price they want is, for something that is loss-making in the hundreds of millions? How can you make a return and assume that you can get this sold at two or three times the money? This is what private equity requires for an investment to be approved. You have to show a case to your investment committee that shows you can double or triple the money in four or five years.”
Others are more bullish and see huge potential in Inter, which is another reason Suning would perhaps be reluctant to let go of the club. An experienced M&A adviser
The Athletic spoke to even counters that the club could be worth €3 billion over the same timeframe. There is a view Serie A clubs are undervalued compared with the Premier League and a pathway to profitability exists at Inter under more disciplined management.
But how?
This ultimately comes down to where you think the industry is headed. Serie A’s president Paolo Dal Pino aims to double the league’s revenues and its clubs will vote on whether or not to sell a 10 per cent stake in a new entertainment company, valued at €1.7bn, to a private equity consortium fronted by CVC, Advent and FSI, who argue they have the expertise to help Italy’s top flight achieve that goal.
The likelihood of that proposal winning approval has recently been thrown into doubt amid concerns that 1) the partner would have too much influence compared to its equity stake and 2) a clause in the term sheet could damage Serie A revenues since it relates to “unexpected changes in format”.
This has been presented in some quarters of the Italian media as a “European Super League clause” even though it does not specifically refer to it. The clause could just as easily relate to another entirely hypothetical scenario like, let’s say, the north of Italy breaking away from the south or the return to some pre-unification land of independent city-states.
Whether it’s a Super League or not a Super League, you’re going to have a suped-up, even more lucrative Champions League, whatever format it will be. As a three-time winner and one of the world’s biggest clubs, Inter would be well-placed to be a founding member of any new competition.
Another way to look at it is geographic. Milan is a very modern and dynamic city — the third wealthiest city in Europe and the Italian capital of fashion, media and finance. The place has transformed since the Expo in 2015 and if you’re one of the world’s leading architects and you don’t have a project in the city, something is wrong. In AC Milan, Inter have a stable, well-run partner with whom to build a new stadium and the city’s corporate community has the resources to pay for naming rights, season tickets and hospitality boxes for the events it would showcase.
That’s all in the future, though, and a Super League has been talked about for decades without happening. For now, it’s hard for Inter’s players and fans to focus on anything other than the present, particularly when the scudetto is within grasp. “When you’re at a club like Inter, aside from anything else, you’ve got to keep your mind on the pitch,” Conte said after the weekend’s win over Genoa. “I can only influence what I’m able to influence. It’s useless wasting energy on what we can’t. We must stay focused on what we can determine.”
He really had next until the lifestyle caught up with him and became more injury prone. Also Fergie saw him as a hinderance for leading Giggs astray. But if history has shown Giggs didnt need anyone to lead him astray he could do all that himself.
**me** "checks current forum again" ..
