Inter's Financial Situation

Il Drago

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I reckon with the need to raise huge amounts of money every single summer we can stay competitive for one, maybe two years tops. I mean competitive in the sense that we have some chances of fighting for scudetto. The reason for that is simple, we still have a young core of good players, even if we sell one or two.

But forget about properly spending your money meaning not spending big, just hoping we spend it smart and competing for scuddetto in a long run. Best case scenario with that strategy is you become new napoli, consistently in cl but always failing to get a big one. You need to spend big and smart if you want that kind of goals, as we saw with our example in these past few years.

In other words, you need your lukakus (spending big) and your skriniars (spending smart).

One other thing with spending money smartly and not relying on huge funds is you're gonna take risks, so garbage will come whether we like it or not.
We can blame the management for not spending smart. They have made mistakes. But at the end of the day it comes down to the strategy of the club ownership. I don't see any club in Europe that has to make money from sales every summer and manages to challenge for titles in a consistent basis. You may do it in 1-2 seasons when others underperform or make bad decisions but in the long term money wins.

The most successful example of this model is probably Atletico but they don't make money from sales every summer and they have won just 2 titles in the last decade despite having the same top coach all these years.

I am sure people will bring up Liverpool but they're a special case. They have PL income, they have a world class coach who gets the best out of the squad and most importantly they reinvest money they get from sales. Despite Klopp smart signings in the end they needed Barcelona money to compete for titles.

In Germany you have Dortmund who have challenged for the title just once since Klopp left. Leipzig reinvest money they get from sales and they're basically the German version of Atalanta. They made a bad decision with Nagelsmann replacement and they're back to fighting for fourth place.

In France, there are Monaco and Lille who had one super season and then returned to mediocrity. I don't even remember the last time Lyon were competitive.

Even in Italy, whoever tried a similar model didn't have a great success. Palotta's Roma only have to remember a CL semifinal from that model. Zero tituli and it was in a period both Milan and Inter were in a terrible state. They didn't even manage to fix the financial situation of the club. Napoli actually reinvest most of the money they get from sales so even a Napoli strategy would be an improvement over what we currently have. After few exciting seasons with CL qualification, Atalanta missed on CL and they're going to need investments in the summer if they want to stay competitive.

We already have Juventus who are financially backed by the richest family in Italy. If Milan new owners are serious about the club then it's game over for us if Suning demand money from sales every summer. We can forget about being competitive in the long term no matter how smart our signings are and we will be back to fighting for 4th place. I am sorry if it sounds harsh and pessimistic to some but that's the reality in our current situation.
 

CafeCordoba

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I think the directors have talked about bigger numbers when they've complained about the COVID and empty stadiums. Of course, it hasn't been 100% stadiums this season either, but in normal season, can we make 70m€ from the stadium?
 

.h.

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The 40m maybe doesn't include season tickets? Dunno
 

sdvroot

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Tuttosport calculated how much the Scudetto and the Italian Cup will cost:
Scudetto - 17.6 million
2nd place: 14.8 million
Winner of the CA: 4.5m + 3m for the final
Loser - 2 million + 3 million for the final.
In addition, winning at least one of the two tournaments will allow you to participate in the Italian Super Cup, which opens the season on August 22-23, 12, with a relative fee of 1.2 million (1.8 to the winner). In short, there's almost 7 million difference between winning it all or finishing second.
 

.h.

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thanks for the post

that also ignores everything like prize money, tv revenues, etc I assume too
 

Capo

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alright lads, I am unsure of the finances and what model the club uses. So silly question;

Worst case scenario, how does Inter become bankrupt?

I dont know much but i assume, Inter is managed within the rules of FFP and have some form financial backing to continue each season in Serie A.

So how broke is the club? Comments suggest we are on the brink of bankruptcy.

Or is it Suning that is broke and keep taking a operating divdend for their own purposes and the club is not making money and not losing money, meaning we're never really going to get ahead.
 

.h.

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Let's be clear - Suning have never taken a single penny out of Inter. They've only put money in.

We run at a loss of something like -100m a year - some of that is non-cash (e.g. amortisation/depreciation), but a lot of it is cash because of, e.g., high wages.

We need to stop signing crap players and paying them ludicrous salaries, and instead, adopt a more Milan-like model.

I dont think there's risk of bankruptcy - the question will be whether we default on the loan or not (in which case Oaktree take over the club). There's still good cashflow overall coming into the club and that will allow us to borrow for operational costs if needed.
 

Il Drago

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Let's be clear - Suning have never taken a single penny out of Inter. They've only put money in.

We run at a loss of something like -100m a year - some of that is non-cash (e.g. amortisation/depreciation), but a lot of it is cash because of, e.g., high wages.

We need to stop signing crap players and paying them ludicrous salaries, and instead, adopt a more Milan-like model.

I dont think there's risk of bankruptcy - the question will be whether we default on the loan or not (in which case Oaktree take over the club). There's still good cashflow overall coming into the club and that will allow us to borrow for operational costs if needed.
I don't think a Milan's model would work in our situation. They keep wage bill low but they spend money on transfer market and they keep their players till the end of their contracts instead of selling them. There's no money to do these things. If we want to achieve financial sustainability we need to adopt a proper selling club model. Invest on youngsters, develop them and sell them on a profit while we stick with the same coach/tactical philosophy for years.

Problem is we also want to be competitive but we can't have both. Especially in Italy. And that's why we end up with a mess of a plan from management. Selling core players on one hand while bringing experienced players with high salaries and no resale value. We need to sort out our priorities.
 

.h.

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Our amortisation bill is way, way higher than theirs tbh.
 

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Capo

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Let's be clear - Suning have never taken a single penny out of Inter. They've only put money in.

We run at a loss of something like -100m a year - some of that is non-cash (e.g. amortisation/depreciation), but a lot of it is cash because of, e.g., high wages.

We need to stop signing crap players and paying them ludicrous salaries, and instead, adopt a more Milan-like model.

I dont think there's risk of bankruptcy - the question will be whether we default on the loan or not (in which case Oaktree take over the club). There's still good cashflow overall coming into the club and that will allow us to borrow for operational costs if needed.

On comparison, is R Madrid, Bayern, City or PSG making a loss of -100M?

Be interested to understand the ownership models, and euopeant football operating models vs American Football/NBA. From my limited knowledge it seems football clubs can never actually get an operating profit when challenging, this mainly due to transfers and wages...
 

.h.

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On comparison, is R Madrid, Bayern, City or PSG making a loss of -100M?

Be interested to understand the ownership models, and euopeant football operating models vs American Football/NBA. From my limited knowledge it seems football clubs can never actually get an operating profit when challenging, this mainly due to transfers and wages...

IIRC PSG lost a huge amount of money last season, nearly comparable to Inter's losses, but I dont know off hand what they do in a typical year.

Real Madrid made a profit in the worst year in COVID, so I'd assume they're still profitable even now?

Bayern generally are extremely healthy financially, but I dont know the specifics if they made a profit or not.

I'd be less concerned about PSG/City comparisons due to the inherent owner funding models they have - its a bit unfair


The one thing I do want to be clear on before answering your question is the difference between operating profits and overall profit. I'm very passionate that our club should be operationally profitable - e.g. cash in less wages and other costs is a positive number. If we then choose to invest that money into stuff (e.g. signing players), that's fine. There's no obligation for a football club to be profitable, but I think its critical for their survival to be operationally profitable (e.g. you can run the club without continual owner financing).

This was the issue that nearly caused us to go bankrupt a few times under Moratti - he was pretty much having to open up the check book just to turn on the lights. In a world where at least we are a functional, standalone football club without the owner, owner investment then is true investment - e.g. investing into the club to try to improve it, rather than just keeping the lights on.



It's a slightly academic/theoretical definition of course because amortisation schedules are a key part of what drives losses/profitability, and every football club (unless they only bring through academy players) has an amortisation schedule, "profitable excluding amortisation" doesnt make a whole lot of sense, but I think its the best way to describe the jist of what I'm looking for.




From that side, Inter is very unhealthy. Many clubs took losses in COVID because of one offs/exceptionals (e.g. deferred revenue, matchday closure, writedowns in sponsorship, etc). Inter would still be losing like 50m a year just to keep the lights on even in a good year. For years we've been trying somewhat artificial means to keep our finances healthy (e.g. extension of contract of players on higher amortisation schedules just to reduce their cost) which has led to bad things for us (having to provide golden handshakes or being unable to sell them).


It's vitally critical in my mind that, under our next management, we have a strong focus on getting back to operationally healthy. That doesnt preclude massive investment in the team, for exmaple, but I want to see a real drive towards increasing commercial revenues and reducing the expenditure on our very mediocre rotation players at high wages.



I'm trying to dig it up, cant find it, but there was a nice graphic that showed wages + amortisation as a % of revenue for all clubs in the CL, (with a view to the new UEFA 70% compliance rule), and IIRC, we were the worst of any club.
 
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Capo

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IIRC PSG lost a huge amount of money last season, nearly comparable to Inter's losses, but I dont know off hand what they do in a typical year.

Real Madrid made a profit in the worst year in COVID, so I'd assume they're still profitable even now?

Bayern generally are extremely healthy financially, but I dont know the specifics if they made a profit or not.

I'd be less concerned about PSG/City comparisons due to the inherent owner funding models they have - its a bit unfair


The one thing I do want to be clear on before answering your question is the difference between operating profits and overall profit. I'm very passionate that our club should be operationally profitable - e.g. cash in less wages and other costs is a positive number. If we then choose to invest that money into stuff (e.g. signing players), that's fine. There's no obligation for a football club to be profitable, but I think its critical for their survival to be operationally profitable (e.g. you can run the club without continual owner financing).

This was the issue that nearly caused us to go bankrupt a few times under Moratti - he was pretty much having to open up the check book just to turn on the lights. In a world where at least we are a functional, standalone football club without the owner, owner investment then is true investment - e.g. investing into the club to try to improve it, rather than just keeping the lights on.



It's a slightly academic/theoretical definition of course because amortisation schedules are a key part of what drives losses/profitability, and every football club (unless they only bring through academy players) has an amortisation schedule, "profitable excluding amortisation" doesnt make a whole lot of sense, but I think its the best way to describe the jist of what I'm looking for.




From that side, Inter is very unhealthy. Many clubs took losses in COVID because of one offs/exceptionals (e.g. deferred revenue, matchday closure, writedowns in sponsorship, etc). Inter would still be losing like 50m a year just to keep the lights on even in a good year. For years we've been trying somewhat artificial means to keep our finances healthy (e.g. extension of contract of players on higher amortisation schedules just to reduce their cost) which has led to bad things for us (having to provide golden handshakes or being unable to sell them).


It's vitally critical in my mind that, under our next management, we have a strong focus on getting back to operationally healthy. That doesnt preclude massive investment in the team, for exmaple, but I want to see a real drive towards increasing commercial revenues and reducing the expenditure on our very mediocre rotation players at high wages.



I'm trying to dig it up, cant find it, but there was a nice graphic that showed wages + amortisation as a % of revenue for all clubs in the CL, (with a view to the new UEFA 70% compliance rule), and IIRC, we were the worst of any club.

Thanks mate, this is where the devil is in the detail. And i agree about management looking to focus more on the commercial side of the game. But to be fair, I think Serie A need to do this as a whole. I feel like all european leagues will disappear because all the top players will move to the EPL.
 

.h.

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Ish. You have to remember, the CL is where the prestige is at, and while the premiership offers only 4 slots to qualify, you can only have maybe 60-100 players who are CL standard in the premiership. Top players will want to play in the top tournaments, and while I agree that there will be natural gravitation to the UK (though new rules around brexit/etc may dampen that a bit), the top sides in Italy, Germany, Spain, etc, will always have at the very least a good set of up and coming talents who are capable of being at the top level. How long they remain there for is a different question.
 

Il Drago

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Bayern generally are extremely healthy financially, but I dont know the specifics if they made a profit or not.

Bayern made a (marginal) profit even in 2020 during closed stadiums when everyone else was bleeding money. They have huge commercial income.
 

.h.

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Bayern made a (marginal) profit even in 2020 during closed stadiums when everyone else was bleeding money. They have huge commercial income.
Yeah exactly

If Brehme was here he'd point out a bunch of it is fan-injected money via subscriptions, IIRC, but still - even making 0 in COVID is impressive considering, in two years, we lost like 350m.
 

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Yeah exactly

If Brehme was here he'd point out a bunch of it is fan-injected money via subscriptions, IIRC, but still - even making 0 in COVID is impressive considering, in two years, we lost like 350m.
They make ~15m from the subscriptions but it has an avalanche effect. It's not just the direct revenue. Whomever sponsors Bayern caters to 300,000 unique club members on top of the club's brand and dynamic domestically and internationally.
 
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