owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

Chinese entrepreneur

2024-05-25 21:33Published on the official account of Beijing "China Entrepreneur" magazine

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

Text: "Chinese Entrepreneur" reporter Li Xiaotian

Edited by Yao Yun

Image source: Visual China

The day has finally come.

On May 22, Oaktree Capital announced that due to Zhang Kangyang's failure to repay the debt of 395 million euros for three years on time, the Inter Milan football club (hereinafter referred to as Inter Milan) owned by him officially changed hands.

This means that Inter Milan's 8-year Suning era has been completely brought to an end. With Suning and Zhang's father and son out of European football, there are only two Chinese companies left that have been in the top five European leagues - Fosun's "Wolves" in the Premier League and Mingcheng's "Granada Club (hereinafter referred to as Granada)" in La Liga. Now that the contemporary Mingcheng has "put on a star and a hat", Granada is in a situation of being stocked and may seek to sell at any time; Wolves are relatively stable, although there are reports that Fosun is expected to sell a number of overseas assets, including a stake in the Portuguese commercial bank, but Wolves are not among them.

In the latest social media photos released by Inter Milan, Oaktree Capital has entered the club, and Zhang Kangyang is nowhere to be seen. In his last game before leaving Inter Milan, fans unfurled huge banners in the stands of the home stadium Meazza Stadium with the slogan "Thank you Stephen" (Stephen is Zhang Kangyang's English name). You must know that in European football, fans and club management have always been-for-tat, and it is rare for fans to spontaneously "see off" the club president.

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

Source: Screenshot of Zhang Kangyang's ins

In June 2016, Suning acquired a 68.55% stake in Inter Milan for 270 million euros; In the same year, a five-member delegation elected by Suning was stationed on the Inter board of directors, with Zhang Kangyang as the chairman. Zhang Kangyang, born in 1991, is the son of Zhang Jindong, the former chairman of Suning Holding Group, and the youngest chairman in the history of Inter Milan. The 25-year-old attended the Inter Milan shareholders' meeting for the first time and made a bold statement: "We can do it when we come." ”

Now, there is only sighing.

The doomed ending is to repay 375 million euros with interest over three years

In 2021, Zhang Kangyang received a three-year, 12% annual interest rate and a total of 275 million euros from Oaktree Capital, a US fund. For Inter Milan led by Zhang Kangyang, this loan can be called an all-or-nothing gamble.

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

Source: Oaktree Capital's official website

Before borrowing, Inter Milan's finances were already in trouble. Judging from the financial report released by Inter Milan, the club's revenue in the 2020/21 financial year was 364.7 million euros, recording a loss of 245.6 million euros. This was also explicitly mentioned in Oaktree's announcement: "Inter Milan recorded a record loss in the 2020/21 financial year, and Oaktree Capital provided the necessary funds for the team to continue operating. ”

As for why a century-old wealthy family is in such a predicament, Zhang Kangyang may have to find problems from inside and outside.

Internally, the high salary of the players has dragged down the team. According to the statistics of "Milan Sports Newspaper", the total pre-tax salary of Inter Milan's first-team players in the 2020 season has reached 197 million euros, which is second only to Juventus of Ronaldo, who has a sky-high salary, in Serie A, and 82 million euros higher than AC Milan, the arch-rival of the same city. So much so that at the end of the season, Zhang Kangyang personally persuaded the players and coaches to give up their 2 months' salary, which was unanimously refused, but Inter was unable to pay the salary and could only be in arrears.

In addition, Inter Milan also has a lot of bad debts in terms of sponsors. At the end of the 2020 season, Inter Milan also ended a 20-year partnership with their main sponsor, Pirelli, which agreed that from the 2021/22 season, Pirelli would no longer appear on the chest of Inter Milan's shirt.

At the time, the market for Inter Milan's chest tag seemed to be excellent. In the 2020 season, Zhang Jindong and Xu Jiayin appeared in the stands of Inter Milan together, and then the Italian media reported that Evergrande would spend 30 million euros to buy the chest logo and become the club's main sponsor. At that time, some social media even posted a spy picture of the 2021/22 Inter jersey, with "China Evergrande Group" printed on the chest of the blue-black jersey. This dwarfs Pirelli's 13 million euros sponsorship fee, and at that time, the scandal objects of "competition" with Evergrande for Inter Milan's chest logo were Samsung and Hisense.

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

Spy photos of Inter's 2021/22 shirt. Source: footyheadlines

But in the end, the scandal did not come true, and the main sponsor of Inter Milan in the 2021/22 season was won by a virtual currency company DigitalBits, and the two sides signed a four-year 85 million euro main sponsorship contract. This also laid a hidden danger for Inter Milan's finances, and by 2023 Digitalbits owed 30 million euros in sponsorship fees to the team, and Inter Milan sued its parent company to court. According to Inter Milan's semi-annual report for the 2022/23 fiscal year, Inter Milan only received 5 million euros of DigitalBits in the first year of the sponsorship fee of 85 million euros from both sides. The subsequent 24 million euros in sponsorship agreed by the two parties for the 2022/23 season, Inter Milan did not receive a penny.

Around 2020, Zhang Kangyang continued to seek external financing, but the results were not ideal. In the end, only Oaktree Capital took the initiative to go to Inter Milan with an annual interest rate of up to 12%, that is, 3 years, and the condition of repaying 375 million euros with interest. Therefore, even if it is mixed with the "overlord clause" and the ultra-high annual interest rate, Zhang Kangyang still chose to join hands with Oaktree Capital without hesitation.

Zhang Kangyang was able to leave the scene with dignity

"Sky Sports" and "Milan Sports Newspaper" have successively disclosed some clauses in the contract between Suning and Oaktree Capital, two of which are particularly conspicuous:

(1) If Suning seeks other third-party financing loans during the three-year period of the loan, Oaktree Capital will unconditionally receive a fine of 50 million euros, which will increase Suning's total repayment to 425 million euros in addition to the principal interest originally repayable by Suning.

(2) If Suning sells the club during the loan period and the price is more than 800 million euros, Oaktree Capital will participate in a premium share of up to 20%.

Judging from these two clauses, perhaps at the beginning, Oaktree Capital was not aiming for a 12% annual interest rate, but a 20% premium share.

On the eve of Zhang Kangyang's loss of Inter Milan, the front page of the Milan Sports newspaper carried a long article titled "Chaotic Celebration", which said that Zhang Kangyang was still doing his best to keep Inter, but it was unlikely that he would win the war. In February, Mr. Zhang was trying to persuade Oaktree to defer payment for one year and to raise the interest rate to 15 percent, but the offer was rejected by Oaktree on the grounds that Suning could not repay the extension.

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

The front page of the newspaper "Milan Sport" long article "Celebration of chaos". Source: Milan Sports Newspaper

Among Mr. Zhang's efforts, the negotiations with Pimco, a Pacific investment management company, came closest to success.

Several media outlets have reported that Zhang Kangyang and Pimco are close to agreeing on a two-and-a-half-year, 12% annual interest rate for a total of 430 million euros. If the three-party loan is successful, Zhang Kangyang will give priority to repaying the loan from Oaktree Capital. But the loan ultimately didn't go through. On May 18, Zhang Kangyang released an open letter in which he denounced Oaktree Capital for obstructing and maliciously obstructing the loan process.

"We went to great lengths to find a reasonable solution to get Oaktree Capital to get a full financial return through various channels," Zhang wrote. Unfortunately, all our efforts have been in vain due to Oaktree's unilateral legal threats and malicious obstructions. Not only is this deeply disappointing and angry, but it will also seriously jeopardize the future stability of the club. ”

Orange Cat, a media person who has participated in the merger and acquisition of Chinese overseas clubs, told "Chinese Entrepreneur" that in the process of changing hands at Inter Milan, Oaktree Capital did not care about the 12% annual interest rate at all.

On the other hand, Oaktree Capital expects Suning to sell the club at a high price - after all, at the time of the loan, Inter Milan was still a wealthy club in arrears. But three years have come and Inter Milan now have the Serie A title and Champions League runners-up in their hands, with the club's deficit falling from a record €245.6 million to €85 million in the 2022/23 financial year. Valuations have also risen from €400 million in 2020 to €1.2 billion in 2023. If Zhang Kangyang can successfully sell Inter for 1.2 billion euros, then Oaktree Capital will get a one-time premium share of 80 million euros.

Zhang Kangyang is not without thinking about selling Inter Milan. In 2021, British private equity investment fund BC Partners quoted 750 million euros for Inter, but this did not match Zhang Kangyang's psychological price of 950 million euros, and in 2023, "Torino Sport" reported that Rennes Group led an investment fund in the Middle East to offer 1.3 billion euros to Inter, but at that time, Inter's financial situation had improved year by year, and the Zhang family began to hold Inter Milan for a long time as the primary goal.

According to Orange Cat's analysis, Suning and Zhang Kangyang have at least two opportunities to leave the game with dignity during their 8 years at the helm of Inter Milan.

The first was in 2018, when the regulation of the outbound investment industry changed, and in 2015, Wanda bought a 20% stake in Atletico Madrid for 45 million euros. On February 14, 2018, Wanda announced the sale of all its shares in Atletico Madrid. It is understood that the change will be officially implemented on March 1, 2018. And also in 2018, Wanda's new Wanda Metropolitano Stadium for Atletico Madrid has just been put into use.

Wanda's decisive retreat is a microcosm of most Chinese capital in European football.

But Suning did not retreat, but continued to increase its investment in Inter Milan in 2019, first firing coach Spalletti and his coaching staff with 25.8 million euros in liquidated damages, and then signing Italian champion coach Conte at the helm of the team with a sky-high annual salary of 12 million euros, and promising his 200 million euros summer transfer budget.

The second is the sale after borrowing from Oaktree Capital, if Suning does not take long-term holding as the primary goal, but seeks to sell and retreat early in 3 years, it will not end up in the situation of being "kicked out" of the club in embarrassment. After all, a parent company that has long been in debt in China cannot transfuse blood for the club, and has long been unable to carry Inter Milan forward.

The disappearing Suning sports map

7 championships in 8 years and 1 return to the Champions League final, this is the answer sheet handed over by Zhang Kangyang at the helm of Inter Milan.

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

In 2022, Inter Milan won the Italian Cup, and Zhang Kangyang won the cup. Source: Screenshot of Zhang Kangyang's Weibo

In those years, in addition to international football, Suning's investment in the sports world blossomed in full swing: at the end of 2015, Suning bought the Chinese Super League team Jiangsu Shuntian Club for 525 million yuan, and promised the team a transfer fee of 66 million yuan.

The following year, PPTV Juli Sports, which had long been acquired by Suning, began to develop sports rights, first winning the exclusive rights of the Premier League in Chinese mainland and Macau from the 2019 season to the 2022 season at a total price of 721 million pounds over three years. plus the copyrights of La Liga, Bundesliga, Serie A, etc., which have long been won by PPTV. This means that PPTV has collected all the rights of the five major European leagues. But this is not enough, in March 2017, PPTV invested 1.35 billion yuan to become the exclusive partner of the 2017 Super League New Media, with the new media broadcast rights of all games.

At the same time, in December 2016, Suning established the SN E-sports Club to fully enter the e-sports industry.

This is also the most drastic period of change in all walks of life under the impact of the mobile Internet. In 2015, the O2O industry giants merged: and Ganji merged to become the largest classified information website; Kuaidi taxi and Didi taxi merged to become the travel boss; Ali invested 5.6 billion to buy Youku, and Tudou completed the merger and acquisition. The boundary between online and offline has also begun to disappear, and e-commerce has turned around and begun to explore new retail and start physical stores; In the face of the impact, brick-and-mortar businesses continue to explore online.

Zhang Jindong is not a sports fan, and there is a lot of speculation about his enthusiasm for sports investment, such as investing in the future based on the judgment of industry trends; For example, because of the "craving" for sports after not being able to interject in a certain dinner. These reasons may only be known to Zhang Jindong himself, and what is certain is that he has indeed invested a lot of money in the sports sector.

owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

Source: China Attempt Library

In 2015, Zhang Jindong began to test the waters to invest in the sports field, and PPTV bought the rights to La Liga for 250 million euros. But this is far from enough for Suning, domestic, with Evergrande winning the AFC Champions League in 2013, the real estate corps dominated by Evergrande, Greenland and Kaisa has fully entered the Chinese Super League. Overseas, in 2015, Wanda acquired a 20% stake in Atletico Madrid for 45 million euros, and in the same year, CITIC Capital and Chinese Culture acquired a 13% stake in Manchester City's parent company, City Football Group; In 2016, Espanyol in La Liga and Aston Villa in the Premier League both became Chinese-funded teams. Zhang Jindong's old acquaintances have entered professional football, and he can't sit still anymore.

The Super League ticket did get it.

In January 2016, the Chinese Football Association announced through the official website that Jiangsu Guoxin Shuntian Club was officially transferred and renamed Jiangsu Suning Football Club. After the transfer, Suning Electric Appliance Group Co., Ltd. accounted for 100% of the equity of Jiangsu Suning Football Club Co., Ltd.

In the 2020 season, the fifth year of the name change, Wu Xi, the captain of Jiangsu Suning at the time, personally lifted the championship trophy. But Zhang Jindong was nowhere to be found, and only issued a commendation order within Suning, which did not mention the winning bonus, but wrote: "The championship is not the end, but a new beginning." ”

But this "new beginning" did not usher in a new beginning. Just two years after Jiangsu Suning won the championship, the players who had not had time to prepare for the new season received a notice of the dissolution of the club. Until 2022, Inter Milan won the Italian Cup, and Wu Xi also asked Suning for salary on Weibo.

PPTV, which once bet heavily on sports rights, has also ended up in a mess.

The Premier League rights bought in 2016 were supposed to be paid on time, but the first installment of PPTV of 275 million was not paid, and in 2020, due to financial problems, the second installment of 160 million pounds was also not paid, and the Premier League immediately stopped cooperating with PPTV. Subsequently, PPTV was taken to court in a complaint, and in 2022, the High Court of London ruled that PPTV must pay at least $213 million in compensation to the Premier League.

As for the SN esports team, after reaching the finals in the 2020 S10 League of Legends World Championship, it was acquired by Weibo the following year and renamed the WBG team.

So far, Zhang Jindong's sports layout is only supported by Inter Milan overseas - he won a number of honors including the Serie A championship and the Champions League runner-up in the next three years, becoming his only "high-quality asset" in the sports sector. Now, the last piece of Zhang Jindong and Suning's sports empire has also been lost.


Inter FY2021 Investor Briefing, Inter Milan official website

"Inter Milan 2023 Financial Year Results Briefing", Inter Milan official website

Inter Milan's Financial Statements for the Year Ended 30 June 2022, Inter Milan Official Website

"Celebration of Chaos", Milan Sport

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  • owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew
  • owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew
  • owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew
  • owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew
  • owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew
  • owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew
  • owed 395 million euros in debt, and Suning's "young owner" who did not retreat withdrew

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