(Chinese Version)

On June, 6th, 2016, Suning officially announced that its subsidiary Suning Sports Group had entered into an agreement with Italian football club Inter Milan to pay €270m ($307m) for 70 per cent stake in the club in a joint press conference in Nanjing.

The deal enables Suning to become the biggest shareholder at the club, while Erick Thohir’s International Sports Capital will retain the rest 30 per cent stake.

There wasn't much time for Suning to decide 

However, Suning had already been negotiating with Inter Milan since the beginning of this year. After the first meeting with Inter Milan’s chairman Thohir, before Spring Festival in February, Mr. Zhang, Suning’s chairman Jindong, became very interested in the club.

After some research, we found that Mr. Thohir invited Mr. Zhang Jindong to a high-profile visit in Milan a month ago in order to make a good impression on Suning’s boss. When Mr. Zhang visited Stadio Giuseppe Meazza in Milan in April, he told the media:

“Many Europeans began to know Suning when we imported two European football players a year ago. If we continue to forge closer relationship with European football clubs and import prominent foreign football players, I have confidence that we shall be able to further promote our brand in the European market.”

Founded in 1908, Inter Milan has won three UEFA Champions League trophies and 18 Italian Serie A league titles. The collaboration between Suning and Inter Milan will help Suning better promote its brand among fans of one of the world’s largest sport events, and help bring Inter Milan capital and resources.

It is worth noticing that the total sales of Inter Milan have been gradually declining for the past three years: €201m for the 2012-13 season, €167m for the 2013-14 season and €146m for the 2014-15 season. According to Jiemian.com, Inter Milan’s debt has been steadily accumulating (€45m as of last season), and Mr. Thohir has been trying almost everything he could to attract investors: he’s no longer willing to invest in a football club whose total debt has already reached over €400m.

"I'm very excited to have Suning in the team. Top soccer clubs such as Inter Milan need strong partners for capital support and business operations to better compete in the international arena and serve fans globally. Suning’s investment will not only facilitate the commercial operation of the club, but also financially support the development of the football team," Mr. Thohir told the media at the press conference.

This is of course not the first time Suning eyes on the sports industry. Near the end of 2015, Suning officially took over Jiangsu Sainty Football Club. Mr. Zhang has also stated that cultural and creative industries would become one of the primary focuses of Suning in 2016. After the past few years, Suning has already established an overwhelming sports ecosystem ranging from Chinese and foreign football clubs, media platforms, commercial retailing to sport events management, young football players training, etc. Some analysts estimated that Suning had already spend RMB 8 billion ($12.2b) in the sports sector: RMB 523 million ($79.8m) to acquire Jiangsu Sainty Football Club, and RMB 100 million ($15.3m) to import prominent European football players. Now, Suning chose to invest in Inter Milan, which will certainly cause huge pressure on its cash flow.

At the beginning of this year, Suning officially established its international headquarter and initiated a new round of international development. Up till now, Suning has already entered Japan and the US, and it would soon enter south east Asia and Europe.

"Collaboration with Inter Milan is a milestone for the development of Suning Sports, and even for China's football history," Mr. Zhang Jindong said.

Chinese enterprises are eyeing the football industry

This is also not the first time Chinese enterprises overseas football industry. Last January, Wanda bought a 20 per cent stake in Atlético Madrid football club for €45m. According to Beijing Business Today, driven by Several Suggestions on Expediting the Development of Sports Industry and Boosting Sports Consumption issued by the State Council in October, 2014, several Chinese enterprises have invested in overseas football clubs. For example, United Vanson Sports Group invested €8m in ADO Den Haag, Restar Group invested €60m in RCD Espanyol, LEDUS invested €7m in FCSM, China Media Capital teamed up with CITIC Capital and invested $400 million in Man City, etc.

As a matter of fact, Inter Milan’s rival AC Milan is also embraced by Chinese investors. It is reported that AC Milan’s owner has been under negotiation with a consortium of Chinese investors, including Evergrand Group, Baidu Group, Kweichow Moutai Group, China Fortune Land Development Co., Ltd, Alibaba and Huawei, and that the consortium plans to acquire 70 per cent stake of AC Milan together, and owned around 10% each. However, no party has confirmed such negotiation yet.

According to Guo Bin, director of China Sports Industry Research Center at Peking University, Italian Serie A league is comparatively speaking more conservative than the other four major football leagues in Europe. Owing to the economic recession in Italy and the declining investment in football sector, the golden time of Italian Serie A league, once referred to as “Minor World Cup”, has already passed. Yet, its brand and fans are still quite strong. As Italian Serie A league has been steadily carrying out reform in recent years, Chinese investors begin to have the opportunity to play a role.

“On the one hand, an earlier entry in the industry will enable Suning to gain the upper hand in a market where competition will only get more and more fierce; on the other hand, Suning will be able to learn a great deal from the experience to run a world-famous football club, further introduce such experience to the Chinese sports market and even explore more business values. The investment will greatly boost Suning’s soft power,” Mr. Guo commented.

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Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.