Crossroads: past or future?
Written by Umberto Pelà (06.08.2023)
Inter Milan’s situation is a tricky one to objectively analyze. Whilst I have tried to delay my analysis as much as possible, the 2023-2024 season is rapidly approaching and it is now time to examine the club’s successes and failures in terms of performance, strategy, and stability.
Even though this season was remarkable and a full swing of emotions for fans of the Milanese club, not everything is sunshine and rainbows at the moment for the Nerazzurri. After years of struggle, most notoriously between 2012 and 2017, Inter find themselves at yet another crossroads. It finds the need to modernize and choose between a path of success or fall into deterioration due to an aging team and financial dilemmas.
This situation reminds me vividly of 2011, the year after the club succeeded in completing the historic treble. With an aged team, a questionable manager appointment in Rafael Benitez (perhaps not the charismatic figure the team needed and had found in Jose Mourinho), and a lot of cash flowing in from domestic and international success, the board embarked on a path of decisions which led Inter towards downfall. Excluding the occasional gems like Philippe Coutinho, Mateo Kovacic, Samir Handanovic, and Mauro Icardi, the club from there on would become known for poor strategic decisions on the transfer market. Whilst these may have been limited by the restricted financial ‘budget’ (former President Massimo Moratti had already refinanced and injected a lot of cash into the business, thus implying that the cash inflow from the historic treble winning season couldn’t be all re-invested), scouting and creativity on the market was at an all time low. Strong bets were made on players like Diego Forlan, Ricardo Alvarez, Jonathan, Ezequiel Schelotto. All of these, if reminded to fans of the Meneghino club, will bring back nightmares. The club’s culture had gone out the window and various changes of ownership (first from Massimo Moratti to Indonesian magnate Erick Thohir, and second from the latter to current owners of the Zhang family), saw Inter stuck in the mud for years.
This was until it finally got back up onto its feet in 2018 thanks to a historic Matchday 38 win against Lazio. Vecino’s header in the dying minutes got the club got back into the Champions League and excitement started to come back around again. In this climb back to stability and out of their ‘banter era’ Inter fans need to thank various individuals. Amongst these, there’s three I would put on a pedestal: Steven Zhang, Luciano Spalletti, and Giuseppe Marotta. The three, together, built strong brand vision and brought just what Inter needed. Character, charisma, and a strong strategy. Yes, it wasn’t all sunshine and rainbows, but since then, the past 6 years have seen Inter bring home a Scudetto, 2 Coppa Italia, 2 Supercoppa Italiana, and one UCL Final. Not too bad of a comeback.
Now, let’s dive into the present. Inter’s season gives me a remarkable mix of emotions. Whilst international success was quite flabbergasting, the way things looked in early 2023 were not promising at all. #InzaghiOut was trending all over social media in January and the team failed to be consistent in the league — even risking not qualifying for next year’s Champions League. Napoli ran off with the title and the club’s decisions were constantly questioned. In fairness, not all of Marotta’s bets paid off: Bellanova, Asllani, and Correa to name a few. At the same time, Acerbi, Dzeko, and Darmian were great pick ups for low prices (despite their ages) by Inter’s Sport CEO.
To me, what shines above all, is that Inter have a promising future – on the field at least – thanks to Inzaghi’s playing style. There is an established core of players and a fundamental ideology that works in Europe and can work in Italy too — it is now simply about creating squad depth whilst balancing the books. That is, of course, easier said than done.
Full Circle
Going full circle, we can see why Inter find themselves in a similar situation to 13 years ago. Back then, the team only had 6 players listed under the age of 26. This season, they reached the Champions League final with a team that had an average age of 31.3 years old. At the time, Moratti had made huge financial efforts bringing in the likes of Diego Milito and Thiago Motta from Genoa — leaving little room for future investments in the following seasons. This year, Inter found itself in yet another year of losses and little financial wiggle room due to 2020’s huge disbursements with Antonio Conte (Lukaku, Hakimi, Vidal, Sanchez etc.) — the effects of which are still showing to this day.
This is the part where Inter can choose which direction to go in. They can commit the same mistakes as years prior: doing little to match revenues to costs or alternatively build a strong player trading strategy to start their climb back up to financial stability. This is because, we must remind ourselves that Inter is operating at losses constantly and is still heavily financed by debt. Whilst these aren’t inherently bad, they carry consequences. In particular, Inter’s debt has interest (and a lot of it: almost 50M or 12% yearly per year from the Zhang family to Oaktree Capital), and operating at a loss for numerous periods (that being years) can lead to failure. Whilst the next financial statement may see Inter operating at positive due to income yielded by International success, domestic success, and player trading, it still remains an extremely precarious situation.
The Real MVP: Don Beppe Marotta
Luckily, Giuseppe Marotta – Inter’s Sport CEO – is a true gem. Whilst I may not agree with every move he pulls off on the transfer market, I believe that the direction he is bringing the club in is promising. He is managing yearly costs wisely, and I admire that. On top of that, his eye for low-cost, unique opportunities is like no other.
Capital gains on Andrè Onana, whilst painful, were of huge importance. The player joined for free last season and only cost the club €4M gross (€3M net to the player, and €1M in taxes thanks to the law ‘Decreto Crescita’ which sees tax reductions) and was then sold for €55M + €5M in performance related bonuses. Players who were costly in terms of wages (keeping in mind that the club pays for their employees’ taxes unlike NBA contracts) were offloaded. Gagliardini, D’Ambrosio, Handanović, Brozović, and Dzeko. All out. These were players that cost an approximate gross of €24M per year to Inter’s finances.
To balance this, Marotta came in with new, fresh (and cheaper) options — especially in terms of salaries. Yann Auriel Bisseck, Marcus Thuram, Davide Frattesi, and the newest addition – and one close to my heart – Lazar Samardžić, who I wrote about in my ‘Underrated Series’ this year. Furthermore, it is worth noticing that all players have been signed to multi-year deals, thus making the amortizement more reasonable and less expensive on a yearly basis. For example, Lazar Samardžić’s €20M fee will be spread over 5 seasons. For those who are confused, this means that Samardžić will cost Inter €4M per season plus his gross salary (which hasn’t been reported yet) until his contract expires.
Like other years, Marotta has also looked to add more experienced players to the roster. These came in the form of Yann Sommer, and, surprisingly to all Italian football fans, Juan Cuadrado. The transfers line up perfectly with Marotta’s strategy: make the squad younger whilst keeping a certain level of leadership. Having said that, I can’t completely agree with all choices and Sommer in particular. I have questions in regards to his size as a keeper and ability on the ball, something crucial to Inter’s play style as observed by Guardiola just a few months ago when he deconstructed Inter’s build up and praised keeper Andrè Onana. Nevertheless, his experience is in fact undeniable and I hope to be pleasantly surprised.
Finally, in regards to this year’s mercato, I find it worth mentioning the club’s firmness in abandoning the Romelu Lukaku route. The Belgian striker was an ideal candidate for the position on paper and someone who appeared to love the club. However, his antics off the field (negotiating with rivals Juventus and AC Milan) were simply too much to take — and the club recognised just that. Letting go of him and sending the clear message that no player is bigger than the club was crucial. Personally, I’m glad things have gone this way. He would’ve represented a huge financial burden and, seeing his injury proneness, this would have likely been a very risky move.
What could be done differently?
Having said all of this there are a few things which I would’ve liked to see done differently. First of all, whilst I love Lautaro Martinez’s appointment as captain, I fear that raising his wages to a reported €8M going into next season will become too much of a burden financially. This might force him or other key players (Bastoni or Barella to name a couple) out the door in the following seasons. Having two strikers (Thuram and Lautaro) costing almost €20M gross is a rather risky bet. Moreover, I don’t agree with the strategy adopted in regards to Denzel Dumfries. Dumfries is a player that strives in Inzaghi’s system due to his low involvement on the ball. However, the day in which a formation change, or worse, a manager change comes, will alter his fit for Inter notably. Cashing in last season should’ve been a must — especially if we consider that Chelsea was offering close to €50M. Not only would that have been a massive capital gain considering Inter’s disbursement of €22M in 2021, but would also have allowed the club to snatch up promising players like Wilfried Singo of Torino, a player who’s been on my watch list for time now.
Finally, I would also like to touch on the poor level of planning in regards to bringing in a heavyweight striker for Inzaghi. If the Lukaku situation had been sorted out earlier, Dzeko would perhaps not have had to leave, and Inter would not have been forced to veer towards a myriad of options with little success up to now (e.g. Scamacca or Taremi). On top of this, I strongly disagree with purchasing another technical, rapid striker in Folarin Balogun. Whilst his talent and promise is notable, he isn’t the profile Inter need. In other words, if Marcus Thuram gets injured, or worse, doesn’t fit into the system as a striker who is able to hold up the ball for the team to raise their lines and occupy opponents’ penalty box, Inter find themselves with no alternative. Lautaro, Correa, and potentially Balogun all present similar characteristics — characteristics which Inter don’t necessarily lack at the moment.
Off the Field
On the topic of off-the-field decisions, I am also glad to see that the club has struck another partnership with Nike worth €240M over 8 seasons and has finally found a reliable kit sponsor in Paramount Plus, in a deal worth €60M for 3 seasons. Not quite Manchester City numbers (€70M per season from Etihad) for that matter, but still impressive. Especially considering rivals AC Milan ‘only’ get €12M per season from Emirates as the main shirt sponsors and league winners AC Napoli get €9M per season from Lete. Further, this is even more important if we consider that the funds promised by Digitalbits.com (€25M) were lost as the company showed to have no structure and ability to fulfill those promises this year. These are important funds that will help grow revenues and push the club towards operating positively (revenues being greater than costs) soon enough. On top of this, another extremely positive note is that Inter’s fans keep showing loyalty. This season, the club brought in €44M in matchday revenue, as the Meneghino club had the highest average attendance in Italy and have already sold out the Giuseppe Meazza Stadium for Matchday 1 of the 2023/2024 season against AC Monza.
Talking about stadiums, I can’t avoid mentioning that Inter still don’t own their stadium and pay rent to the city of Milan for the stadium. A huge loss in potential revenue and a form of expansion which sporting businesses – because clubs are businesses – nowadays almost require. A few examples of clubs which have started and are close to completing their new stadium projects in the next few years are Barcelona, Real Madrid, Liverpool, and Everton. Whilst it seems like a new area just outside Milan, Rozzano, has been identified as a suitable candidate for the new stadium, I’m confident that Italian bureaucracy will slow down this process and we won’t see a new stadium until at least 2030.
Finally, I would also like to mention Inter’s great performances digitally. Inter’s Media House has produced remarkable numbers and their partnership with Paramount Plus has been great to see. Since 2016, the club’s Social Media presence has grown by over 250%, with the rebranding and modernizing of the club’s crest in recent years also being embraced by Nerazzurri fans. The club has been able to expand their presence notably across the globe, most recently shown with their successful tour in Japan this summer where thousands of fans attended the games and met their favorite players at organized events. This is a testimony to the club’s growth from an intrinsic perspective — even though that’s not the only type of growth it has experienced. In fact, this year’s Football Benchmark Club Valuation report showed that Inter, over the past 7 years, has been in Europe’s top 5 clubs for Enterprise Value growth: 215% growth and now being valued at €2,158Bn. Almost 25% yearly growth and only second to Tottenham Hotspur in terms of % growth, who recently built a new stadium, thus increasing the value of its assets by a notable amount. I invite you to read Football Benchmark’s report for further analysis and a more detailed explanation of how the metric was put together — extremely interesting.
In conclusion, I believe Inter’s financial and corporate future is really dependent upon the next few seasons. Whilst these words may worry many Inter fans, I don’t think they should necessarily be as scared as media outlets make it seem like: Chairman Alessandro Antonello knows what he’s doing. I am beyond curious to see how the club performs in Europe next year considering how ‘lucky’ many may deem their path to the final to have been. Players have gained valuable experience, which, as a fan, I hope will help translate to great performances in all competitions which Inter will find itself in.