Italian football club Inter Milan starts looking for a buyer

Bankers will start looking for a buyer for Inter Milan this week, making it the latest top-flight football club up for sale, according to people familiar with the matter.

US boutique bank Raine Group, which handled Chelsea’s record-breaking £2.5 billion auction this year, and Goldman Sachs are working on the sale process, the people said.

Inter has been owned by Nanjing-based electronics retailer Suning since 2016, which acquired the club amid a wave of investment into European football from China.

A number of Chinese owners have since sold or reduced their involvement as mounting domestic economic woes and waning political support for the project prompted a rethink.

Suning, one of China’s largest brick-and-mortar retailers, is struggling as consumers switch to online shopping.

The company’s large pile of short-term debt also made it vulnerable to tightening credit conditions in the Chinese economy.

In February last year, Suning rushed to raise new funding to fill Inter’s funding gap caused by the coronavirus pandemic, resulting in a $275 million loan from distressed debt specialist Oaktree Capital.

Then, in July, Suning itself was bailed out by local government and shareholder Alibaba in a $1.4 billion bailout, adding to speculation about the long-term likelihood of retaining ownership of Inter. In January this year, Inter returned to the bond market.

Last month, Inter’s board of directors signed the club’s latest accounts, which showed an increase in revenue to €440m and a loss of €140m for the 2021/22 financial year. The club said that the majority shareholder had “officially expressed its commitment to support the group by ensuring asset support”.

Inter is run by President Steven Zhang, the son of Zhang Jindong, the founder of Suning, who paid €270 million for a controlling stake in the Nerazzurri in 2016.

Suning is ready to raise 100 million in capital this year. The person pointed to previous guidance that Suning is open to new partners and would consider selling a minority stake.

The banks and Inter Milan declined to comment.

Italian football has become an increasingly popular destination for international investors. Roma, Atalanta, Fiorentina and Genoa are among several clubs now controlled by American owners.

This year, US investment group RedBird Capital bought Inter’s local rivals AC Milan for €1.2 billion, a record for a European football club outside of the English Premier League.

However, compared to other European leagues, Italian football presents a number of challenges to investors.

Serie A has the second-lowest broadcast earnings of the so-called ‘Big Five’ leagues, with Italian football’s international rights bringing in around €230m a year, according to Enders Analysis, well below Spain’s figure of €900m.

Many Italian clubs are also in dire need of stadium upgrades or replacements. Inter shares its home with AC Milan – the San Siro. There are plans for a new 65,000 stadium, which is expected to cost around 1.3 billion euros and is expected to last many years.

The shared stadium model has a disadvantage for potential investors as the double the number of games makes it much harder to generate revenue from other events.