Suning’s looming debt repayment to Oaktree Capital could spark a historic ownership shift for Serie A giants Inter Milan.
The Chinese owners of Inter Milan seek to repay their debt to OakTree Capital of approximately $400 million (298 million in principle plus interest) by May 2024. As the team was provided as collateral to secure the taxing loan which carried at 12% interest rate, failing to repay will result in transfer of the team ownership.
Allegedly, Oaktree Capital Management declined to extend the repayment of $298 million to 2026 at a 16 % rate as proposed by Sunning.vOakTree Capital’s argument for the rejection is that the team value can decrease over time, making debt repayment even more difficult.
Serie A Powerhouse Inter Milan In American Hands?
The US is the largest stakeholder in Italian football. As 13 teams are owned by American Private Equity funds and family offices. These are teams across Serie A, B, C and D. Among the most famous American owned Italian teams are AC Milan, Fiorentina, Roma.
The US are targeting Italian football teams as they see large lucrative opportunities across the entire football cycle as some of these teams are in financial trouble. Additionally, the US investors are seeking to monetize other sectors such tourism, hotel infrastructure, logistics and stadiums.
For instance, AC Milan American owners (RedBird Capital), want to take the lead in building a new stadium. However, they wish to do so also for all other Serie A’s teams that don’t own their own stadium. Which is the majority of Serie A clubs, with Juventus the most glaring exception.
What’s Next For Inter Milan?
If, as the markets expect, Sunning will fail to meet the May 20th repayment deadline, a transfer of ownership of Inter from China to the US will occur. Then a valuation estimate will occur. Inter could return an evaluation of $1billion. At this point, Oaktree can close the transaction. Thus pocketing a large intermediation fee. Suning will recoup some money. However, there is an obligation to Construction Bank Asia which is one of the largest claimants.
Gulf Countries Angle
With three Gulf Sovereign Wealth Funds with almost $1 trillion dollars of cash at their disposal, we could expect them, particularly PIF, or Abu-Dhabi Investment Authority to take a stake into Italian football. Abu-Dhabi, through its City Football Group already owns Palermo. Meanwhile, PIF is reportedly interested in AC Milan, Inter Milan as well as Roma.
Additionally PIF could spend $70 billion a year to fuel the diversification of its economy away from oil. Football is a strategic sector for the Saudi which could account for 3% of national GDP by 2030. In conclusion, the current situation heavily leans towards Inter Milan becoming US-owned. This would further strengthen the American presence in Italian football, potentially impacting the league’s dynamics and future direction.