Oaktree Capital, an American investment fund, announced on Tuesday (May 22) that it will take over Inter Milan Football Club, owned by Chinese company Suning, due to Suning’s failure to repay loans and interest on time.
This marks the end of the Suning era and signifies the downfall of China’s involvement in the peak period of European football. It is also the first time an American company has taken control of Inter Milan.
Suning acquired a majority stake in Inter Milan in 2016, which was seen as one of the most notable moves by Chinese billionaires entering European football.
Subsequently, the Chinese authorities imposed restrictions on overseas sports acquisitions. Suning’s business also took a heavy hit due to the COVID-19 lockdown measures.
Facing difficulties in debt repayment, Suning received an emergency financing plan of €275 million from Oaktree Capital in 2021, with an annual interest rate of 12%, to help Inter Milan survive the pandemic crisis.
This loan, secured by Suning’s stake in Inter Milan, matured on May 21, 2024.
According to documents seen by Bloomberg, the agreement stipulates that in case of default, the creditor or their representative has the right to “immediately” enforce Suning’s commitments, including seizing the collateral in case of non-payment.
This means that if Suning fails to repay approximately €375 million with interest on time, Oaktree Capital has the right to enforce the mortgage on Inter Milan’s shares and become the new owner of the club.
Oaktree stated in a press release on Tuesday, “Oaktree Capital is committed to working closely with Inter Milan’s current management team, partners, leagues, and governing bodies to ensure the club’s success on and off the field.”
Reuters reported, citing an insider, that Oaktree Capital does not intend to sell Inter Milan immediately but is preparing to be a “patient investor,” waiting for the right opportunity.
According to Bloomberg, the new owners seem prepared to make changes to the club’s board, introducing more Italian and European members.
Oaktree Capital is renowned for its distressed debt investment. In 2020, it acquired the struggling French team Stade Malherbe Caen and subsequently exited its stake. Steve Kaplan, co-founder of Oaktree Capital, is also an investor in the Welsh team Swansea City.
Suning has not commented on the matter.
In a letter to fans published on the Inter Milan club’s website last Saturday (18th), Zhang Kangyang, son of Zhang Jindong, Inter Milan’s chairman and Suning’s founder, warned that the club faces risks due to the failed attempt to reach an agreement with Oaktree Capital.
Inter Milan won its 20th Serie A league title in April and it is the second league title under Suning’s ownership.
However, despite reaching the Champions League final, Inter Milan still incurred an annual loss of €86 million in the 2022-2023 fiscal year.
Founded in 1908, Inter Milan is one of Italy’s traditional football powerhouses and the home of top players like Lautaro Martinez and Nicolo Barella.
There have been precedents of capital companies taking over football clubs in the past. In 2018, Elliott Management, a US hedge fund, acquired Inter Milan’s local rivals AC Milan. After Chinese businessman Li Yonghong failed to make payments to the club, Elliott gained control of AC Milan.
In 2022, Elliott eventually sold AC Milan to the American investment company RedBird Capital Partners for €1.2 billion.