Saturday, June 12

Inter Milan Is Threatened by Challenges at Suning, Its Chinese Owner


HONG KONG — The new, high-rolling Chinese owner was supposed to return Inter Milan to its glory days. It spent heavily on prolific scorers like Romelu Lukaku and Christian Eriksen. After five years of investment, the storied Milan soccer club is within striking distance of its first Italian league title in a decade.

Now the bill has come due — and Inter Milan’s future is suddenly in doubt.

Suning, an electronics retailer that is the club’s majority owner, is strapped for cash and trying to sell its stake. The club is bleeding money. Some of its players have agreed to defer payment, according to one person close to the club who requested anonymity because the information isn’t public.

Inter Milan has held talks with at least one potential investor, but the parties couldn’t agree on a price, according to others with knowledge of the negotiations.

Suning’s soccer aspirations are crumbling at home, too. The company abruptly shut down its domestic team four months after the club won China’s national championship. Some stars, many of whom chose to play there instead of in Chelsea or Liverpool, have said they have gone unpaid.

China has failed in its dream of becoming a global player in the world’s most popular sport. Spurred in part by the ambitions of Xi Jinping, China’s top leader and an ardent soccer fan, a new breed of Chinese tycoons plowed billions of dollars into marquee clubs and star players, transforming the economics of the game. Chinese investors spent $1.8 billion acquiring stakes in more than a dozen European teams between 2015 and 2017, and China’s cash-soaked domestic league paid the largest salaries ever bestowed on overseas recruits.

But the splurge exposed international soccer to the peculiarities of the Chinese business world. Deep involvement by the Communist Party make companies vulnerable to sharp shifts in the political winds. The free-spending tycoons often lacked international experience or sophistication.

Now, talks of defaults, fire sales and hasty exits dominate discussions around boardroom tables. A mining magnate lost control of A.C. Milan amid 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 shed its stake in Slavia Prague after its founder disappeared.

Suning’s plight reflects “the whole rise and fall of this era of Chinese football,” said Zhe Ji, the director of Red Lantern, a sports marketing company that works in China for top European soccer teams. “When people were talking about Chinese football and all the attention it got in 2016, it came very fast, but it’s gone very fast, too.”

Suning paid $306 million in 2016 for a major stake in Inter Milan. Suning is a household name in China, with stores stocked with computers, iPads and rice cookers for the country’s growing middle class. While it has been hurt by China’s e-commerce revolution, it counts Alibaba, the online shopping titan, as a major investor.

Then, in February, it shut down its domestic team, Jiangsu Suning, nearly four months after the team won China’s Super League title against an Evergrande-controlled team. At least one of the team’s foreign recruits has hired lawyers to help recoup unpaid salary, according to a person involved in the matter.

One former Suning player, Eder, a Brazilian-born star forward, set the soccer world buzzing after media reports quoted him saying Suning had not paid him. On Twitter, Eder said the comments had been taken from a private, online chat without his permission. His agent did not respond to requests for comment.

To save itself, Suning took a step that could complicate Inter Milan’s fortunes. On March 1, it sold $2.3 billion worth of its shares to affiliates of the government of the Chinese city of Shenzhen. The deal gave Chinese authorities a say in Inter Milan’s fate.

Greater financial pressure looms for Inter Milan. It must pay out a $360 million bond 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 as much as $215 million, according to one of the people close to the club.

Inter Milan officials are looking for financing, a new partner or a sale of the team at a valuation of about $1.1 billion, the person said.

The club until recently was in exclusive talks with BC Partners, the British private equity firm, but they were unable to agree on price, said people with knowledge of the talks.

Without fresh capital, Inter Milan could lose players. If it can’t pay salaries or transfer fees for departing players, European soccer rules say it could be banished from top competitions.

“We are concerned but we are not frightened yet about this situation — we are just waiting for the news,” said Manuel Corti, a member of an Inter Milan supporters club based in London.

“Being 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 contributed reporting from Hong Kong.





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