Inter Milan scores landmark €230m loan

The Indonesian-owned Italian football club has achieved its goal of securing a uniquely structured club loan to repay its debt and fund operations.

Inter Milan, the Italian football club majority owned by Indonesian business tycoon Erick Thohir, has secured a €230 million ($313 million) club loan mid-June in order to repay its existing debt and fund operations.

The club loan — used to clear €180 million worth of outstanding debt — was secured using Inter Milan’s underlying assets such as media rights and sponsorship contracts, a source familiar with the matter said.

Being the first loan involving a European sports team backed by media rights, the source added that this type of structure is popularly used by sports organisations in the US.

In order to effectively structure the loan, Inter Milan had to split its company into two entities: one that owns the rights to receive all the revenues from the media and sponsors, and another that collects match revenues such as ticket sales.

This division essentially enables the football club to refinance its debt obligations and provide ongoing liquidity to its operations in a manner that didn’t interfere with its day-to-day business.

“The debt was raised against the most secure part of the revenue base,” the source told FinanceAsia. “This structure allows for the separation of the media company and the team, so there are no restrictions of the sporting activity of the team.”

Inter Milan’s loan was syndicated globally — in Asia, Europe and the US — across the highest quality institutional investor base, the source said without specifying details as it was all private. The debt instrument was priced at Euribor plus 550bp.

According to the UK’s HM Revenue and Customs, football clubs have more recently issued bonds to refinance their debts. Manchester United, for example, raised a $425 million seven-year callable bond in 2010.

Last November, Indonesian investors from the International Sports Capital consortium, owned by Thohir, paid €75 million and took all of Inter Milan’s €180 million debt in exchange for a 70% stake in the Serie A football club, according to Reuters. Former owner Massimo Moratti, who ended his 18-year reign at the club, owns the remaining 30%.

Forbes pegged the team’s value at $483 million in May, making it the fourteenth most valuable football club in the world. The list is topped by Real Madrid ($3.44 billion), FC Barcelona ($3.2 billion) and Manchester United ($2.8 billion).

Thohir, chairman of Inter Milan, is the first Asian to own a stake in an NBA team as part of a consortium that purchased the Philadelphia 76ers in 2011.

He is also one of three partners who own Washington’s Major League Soccer franchise DC United and has now followed in the footsteps of the American consortium, led by Thomas DiBenedetto, which broke new ground by purchasing Roma in 2011.

Goldman Sachs served as sole mandated lead arranger and structuring advisor for Inter Milan’s facility.

¬ Haymarket Media Limited. All rights reserved.
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