Football is becoming increasingly driven by money, with private equity investors playing a bigger role than ever before. The takeovers of clubs such as AC Milan, Chelsea and Olympique Lyonnais show that investors now see football as an attractive growth market.
In Cleats & Cashflows, we explore this trend. What opportunities does it create for clubs? And what risks come with it?
This is the third installment in our series on Inter. In the previous chapter, we explained how the club financed its return to the top of Italian football through bond issues, debt refinancing and increasingly complex financing structures. In this chapter, we look at what happened when that financial model began to unravel.
The Turning Point
Suning's downfall at Inter did not happen overnight. It was the result of a process that unfolded over four years. It began when China started pulling back from overseas football investments and accelerated as the financial impact of the COVID-19 pandemic took hold.
The first cracks appeared in 2020, laying the foundations for what would eventually become Oaktree's takeover of the club. Suning was one of several Chinese conglomerates hit hard by a combination of domestic economic challenges, the real estate crisis, the pandemic and China's broader effort to reduce corporate debt. Companies that had spent years expanding internationally with borrowed money suddenly found themselves with far less financial flexibility.
Suning faced additional problems of its own. Its retail business was already under pressure, reporting losses of around RMB 3.9 billion (approximately €490 million). As a result, it became increasingly difficult to continue supporting Inter financially. With the shareholder no longer able to inject significant capital, the club had to look elsewhere for funding.
The Oaktree Loan
That funding arrived in May 2021.
Oaktree, a global investment manager specializing in distressed assets, provided Suning with a €275 million loan. The loan carried a 12% annual interest rate and had a three-year maturity. It was issued to Grand Tower S.à r.l., the Luxembourg-based holding company through which Suning owned Inter.
This structure was crucial. The loan was not taken on by Inter itself but by the holding company above the club. As a result, neither the debt nor the interest payments appeared directly on Inter's balance sheet. Instead of using players, matchday revenue or other club assets as collateral, Suning pledged the shares of the holding company. If the loan was not repaid, Oaktree would become the owner of the holding company—and automatically gain control of Inter.
Two aspects of the deal stand out.
First, the interest rate. At 12%, it was significantly higher than the rates on Inter's earlier bond issues, reflecting the greater risk Oaktree was taking. Repayment depended not on the club's financial performance, but on whether Suning could refinance the loan, sell the club or raise fresh capital.
Second, the loan's short three-year term left little room for error. Without a clear refinancing plan, only two realistic outcomes remained: either Suning would sell Inter and use the proceeds to repay the loan, or Oaktree would take control of the club. There was hardly any middle ground.
Pressure increased further in 2022. Inter Media & Communication refinanced its outstanding bonds with a new €415 million bond issue carrying a 6.75% interest rate, while Suning's financial position in China continued to deteriorate. Selling Inter increasingly looked like the only realistic way out.
The Failed Sale Process
In September 2022, several media outlets reported that the Zhang family had hired Goldman Sachs to find a buyer. The asking price was around €1.2 billion—roughly the same amount RedBird had paid for AC Milan. The Financial Times later reported that Raine Group had also been brought in to assist with the sale.
The objective was straightforward: sell Inter for enough money to repay the Oaktree loan, allow Suning to recover most of its investment and, ideally, generate a profit.
On paper, Inter remained an attractive asset. The club was still one of Italy's biggest football brands, enjoyed a global fan base, continued to grow its revenues, won two Serie A titles in four seasons and reached the UEFA Champions League final in 2023.
Financially, however, the picture was much less appealing. The club's bond program placed significant pressure on future cash flows, while the debt owed to Oaktree continued to grow because of the high interest rate and the payment-in-kind (PIK) structure, under which unpaid interest was added to the outstanding loan balance.
There were also structural challenges beyond the club itself. Revenue from Italian domestic broadcasting rights showed little growth, and Inter did not own its stadium. The club shared San Siro with AC Milan, while the stadium itself remained owned by the City of Milan. For potential investors, that meant fewer opportunities to create additional value through stadium ownership or real estate development.
As a result, buyers were not looking at a financially healthy elite club, but at an organization with substantial debt, limited growth opportunities, no control over its stadium and a cost base still built around years of heavy spending to achieve sporting success. Interest existed, but ultimately no buyer came forward.
The Creditor Takes Control
After the failed sale process, Suning made one last attempt to refinance the Oaktree loan. According to multiple reports, discussions were held with U.S. investment manager PIMCO. However, the proposed refinancing would reportedly have carried another exceptionally high interest rate. Even if the deal had gone through, it would likely have done little more than delay the inevitable. In the end, either a sale of the club or a forced transfer of ownership remained the most likely outcome.
The Oaktree loan also demonstrated how quickly expensive debt can snowball. By the time the loan matured in May 2024, the original €275 million had grown to approximately €395 million because of the PIK structure. Suning was unable to repay it.
The decline in the value of Suning's stake also highlighted how dramatically its position had weakened. The company wrote down the value of its 68.55% shareholding in Inter from €586 million to just €148 million—a reduction of roughly 75%. In effect, Suning acknowledged that most of the shareholder value had already disappeared. Inter still possessed a powerful global brand, sporting prestige and worldwide appeal, but the heavy debt burden had almost completely eroded the value of the equity.
On 22 May 2024, Suning failed to repay the loan. Oaktree exercised its rights under the collateral agreement and took control of Inter. This was not a traditional acquisition in which a buyer purchased the club on the open market. Ownership changed hands because a creditor enforced its security.
That may well be the defining lesson of the Suning era. Debt did not just finance Inter's sporting ambitions—it ultimately determined who owned the club.
Conclusion
Suning did not lose Inter overnight. Control gradually shifted through the club's financial structure: first toward bondholders and ultimately to Oaktree. By the time Oaktree enforced its collateral in May 2024, the outcome had become almost inevitable.
In the next installment of this series, coming in early August, we examine the Oaktree era. How does an investor best known for distressed debt manage one of Europe's biggest football clubs? And how is Inter trying to move from debt-fueled growth to a more financially sustainable model?
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