If Suning sell Inter that would be a decision borne out of necessity more than a choice due to the financial effects of the pandemic Italian media reports today.
This according to the print edition of Rome based daily newspaper Corriere dello Sport which detail how Suning have encountered difficulties at the end of 2020, difficulties that together with the restrictions put in place by the Chinese government are described as an effect more than the cause of said difficulties.
According to the report the Covid-19 pandemic jammed a machine that was already slowing down in 2019. Despite the continued growth in turnover, Suning’s competition was cutting their margins on commercial products.
Although China is about to overcome the pandemic, with an economy that still is growing by 2%, the distribution chain has been turned completely upside down.
Competition has become stronger while consumers have reduced their spending. The economic engine of Suning Group, Suning.com shows losses of $153 million USD for the first 9 months, with sales going down and cash flow being negative.
In addition to that there have been problems with the real estate sector, problems that have spread across other sectors due to cross-holdings.
These are all economic difficulties that are projected into the world of football where for example, Cosmin Olaroiu, the coach of recently crowned Chinese champions Jiangsu Suning, has turned to FIFA for unpaid salaries.
At the same time the Premier League has sued Suning’s broadcasting company for €180 million after the group allegedly broke their contract to broadcast the EPL in China.
The report continues that the Chinese economy is still a dynamic economic system where changes can be as dramatic as sudden. The growth of an industrial group can be interrupted and thereby trigger financial downward spirals.
According to what is reported widely in Asian media, Corriere continues, Suning have pledged all their shares in Suning to Taobaba, the e-commerce division of Alibaba whose owner Jack Ma is in a conflict with the Chinese government.
At the same time, according to Bloomberg, the personal fortune of Zhang has decreased by 30% which means that should Suning fail to repay on their loans, the Suning Group, together with Inter, could fall into the hands of Taobaba, now controlled by Alibaba.
After the large amount of sum invested in Inter, Suning could settle for a lower evaluation in exchange for a quick exit, maybe keeping a minority stake, in order to make a buck for future sale of the club by the new owners, the report continues.
The negotiation with BC Partner could be a way out, although they are not the sole interested party, as there is also a vague interest from Qatar.
Also, a minority stake is not how BC Partners usually operate and it would not make sense to take the role as a minor partner in a project without a financial investor, Corriere concludes.
