Two cheers for Inter finances

Despite the success on the pitch, Inter’s ownership changed hands in May 2024, when Oaktree Capital Management became the new majority shareholder, increasing the number of American owners in Italy.

This was because the previous owners, the Chinese conglomerate Suning Group, had failed to repay a loan from Oaktree by the agreed deadline. Suning president, Steven Zhang, had been attempting to negotiate a loan with US fund Pimco in order to pay off the debt, but the talks came to nothing.

In May 2021 Oaktree had provided what it described as “rescue capital” to stabilise Inter’s financial situation, as it was confronted by huge losses.

This enabled the club to pay its players and staff, but this lifeline came at a price in the form of a €275m 3-year loan at 12% interest, which had grown to a hefty €395m at maturity. In the event of default, Oaktree would get their hands on the club, which is exactly what happened.

Suning had acquired their majority share (68.6%) in June 2021 for around €270m at a time of much Chinese investment into European football clubs. However, the Chinese government subsequently imposed restrictions on overseas spending, leading to problems for the club owners.

In Inter’s case, this has resulted in the exit of Suning and arrival of Oaktree, so what sort of financial situation has been inherited by the new owners?

There was a significant improvement in Inter’s bottom line last season, as the pre-tax loss reduced by around €50m from €77m to €27m (€36m after tax).

The improvement was largely driven by higher profit from player sales, which more than doubled from €28m to €65m. Revenue also rose €11m (3%) from €396m to €407m, a new club record, while operating expenses were €2m lower at €462m.

Net interest payable also fell €2m (5%) from €37m to €35m, though this is still a huge interest burden, taking the club into a loss-making position. Indeed, it’s worth underlining the fact that Inter were actually profitable before charging interest.

Inter have come a long way since the massive €246m loss in 2020/21, which gave them the unwanted honour of registering Italy’s record loss, just ahead of Juventus €239m and Roma €219m (both from 2021/22).  In fact, the Nerazzurri are responsible for almost half of the 14 worst ever losses in Serie A.

Big but reducing losses

However, it’s worth noting a couple of points here:

• Inter have reduced their losses three years in a row, cutting their net deficit from €246m to €36m.
• The €261m they lost in the last three years was much smaller than Juventus and Roma – though Milan have done even better, making money in each of the last two seasons.

That said, the fact remains that Inter have still lost over quarter of a billion Euros in that period, which is nothing to write home about.

Inter have lost an amazing €840m in the last 10 years (pre-tax), including €644m in the eight years under Suning’s control.   That said, the trend is clearly Inter’s friend here, as the losses have been getting smaller since the annus horribilis in 2020/21, reducing by around 90% since then from €239m to “only” €27m.

The last time that Inter posted a profit was back in 2013/14 with €33m - and even that would have also been a massive loss without the inclusion of a once-off €139m gain from selling the club’s brand to Inter Media & Communications.

Player sales

Inter’s improved financial result in 2023/24 was largely driven by profit from player sales increasing from €28m to €65m. The largest gains last season came from the sales of André Onana to Manchester United €42m, Marcelo Brozovic to Al Nassr €15m, Samuele Mulattieri to Sassuolo €4m and Facundo Colidio to River Plate €3m.   This was a pretty good performance, well ahead of Milan €45m and Juventus €22m last season, and only surpassed by Napoli’s €80m in 2022/23,

However, unless there are some major disposals in the January transfer window, this season will be much lower, as there were very few sales for money in the summer, the largest deals being Gaetano Oristanio to Venezia €4m, Lucien Agomé to Sevilla €4m and Mattia Zanotti to Lugano €2.5m.

Overall, Inter have done well in player trading in recent years. Even before last season, their €134m profit in the three years up to 2022/23 was the second best in Italy, only beaten by Atalanta’s €181m, though Fiorentina and Napoli were not too far behind with €131m apiece.

Although Inter have grown their revenue in the last five years, they were still outpaced by Milan, whose income shot up by €184m, so the two great rivals now have almost exactly the same revenue at just over €400m.   In contrast, Juventus have seen their revenue significantly reduce in this period, falling by €123m (25%).

Champions League

It is imperative that Inter qualify for the Champions League in order to boost broadcasting income, as Serie A TV rights are so low at €1.1bln. That is only above Ligue 1 in the “Big Five” leagues, but more importantly it is around half of La Liga and nearly €3 bln less than the Premier League’s mega deal.    Inter earned €66m for reaching the Champions league last 16, while Napoli and Lazio received €69m and €61m respectively for getting to the same stage.   This was €35m less than the prior season’s €101m, when they reached the Champions League final (for the first time since 2010), which included €58m prize money.    They have earned a substantial €392m in the last six years, during which they have reached two European finals, compared to just €22m in the preceding 6-year period

This season, Inter will benefit from the new Champions League deal that will result in a 20% uplift in the revenue available for distribution. In addition, they will earn extra money from being one of Italy’s two representatives in the expanded FIFA Club World Cup (along with Juventus).

Inter now have the highest match day incomes in Italy.   Inter once again had the highest average attendance in Italy with 72,838, which was more than Milan 69,461, followed by Roma 62,970. Juventus were far behind with only 39,416.

One big success story last season was Inter’s commercial income, which rose €40m (38%) from €107m to €147m. This was largely because the previous season was deflated by the non-payment of the shirt deal with cryptocurrency firm DigitalBits, but new partnerships also helped drive an increase in sponsorships from €54m to €80m.   The club has announced some valuable deals, which should further increase sponsorships from €80m to €96m in 2024/25.

Inter’s wage bill was virtually unchanged at €227m, which is €35m (13%) lower than the €262m peak in 2020/21. Since then, the club has taken decisive action to reduce wages by moving on many of the high earners, even terminating player contracts and allowing them to leave for free in some cases.  Inter’s €227m wage bill is now clearly the second highest in Italy, though still a fair way behind Juventus €264m, but comfortably ahead of Milan €189m and Roma €173m (2022/23 figure).

Inter’s wages are on the low side in the wider European arena, which highlights how well they have done recently. They gave Manchester City a really good game in the 2022/23 Champions League final, even though their opponents’ €486m wage bill was more than twice as much as Inter’s €227m.

As a result of last season’s decrease, Inter’s €427m gross debt is no longer the highest in Italy, as it is now below Roma’s €497m (as at June 2023), though it is still far above Juventus €279m, while Milan’s debt is only €99m.  Even after the fall, Inter still have one of the highest financial debts in Europe, e.g. in 2022/23 only four clubs had more, namely Barcelona €1.7 bln, Real Madrid €1.1 bln, Tottenham €1.0 bln and Manchester United €705m. All but one of these were driven by funding major stadium redevelopment.

Inter deserve some praise for the improvement in their finances, including growing operating revenue to record levels, cutting the wage bill, lowering debt and significantly reducing the overall loss.

However, we should also acknowledge the fact that Inter still posted a large €36m loss, while noting that much of last season’s improvement was on the back of high profits from player sales, which are one-off in nature. Furthermore, their debt and interest charges remain very high.