Serie A Sees 15% Salary Reduction Over Five Years: Only Two Black-and-Blue Clubs Buck the Trend, Oak Tree Capital's Primary Goal Revealed

A recent report by the renowned global consulting firm Alix Partners highlights a significant trend in Serie A over the past five years: salary reductions. The analysis reveals that major Serie A teams were once controlled by wealthy Italian entrepreneurs or politicians who invested heavily in football out of passion and regional pride. However, times have changed, and the influx of foreign investment in Serie A, especially after two major crises (the pandemic and the Eastern European conflict), has transformed the landscape. These investment funds prioritize economic returns over trophies, fundamentally altering the nature of Serie A.

The direct result is that nearly all Serie A teams have reduced their payroll, with an overall reduction of 15% compared to the 2018-19 season. Only two clubs have bucked this trend: Inter Milan and Atalanta. Juventus, for example, saw their salary expenses drop from €301 million to €255 million, a 15% decrease, though they remain the highest-paying club in Serie A by a significant margin. AC Milan reduced their payroll from €169 million to €149 million, a 12% cut. Roma's salary expenses fell from €165 million to €154 million, a 7% reduction. Napoli made the most significant cuts, decreasing from €132 million to €106 million, a 20% reduction.

In contrast, Inter Milan's salary costs increased from €163 million to €197 million, a 21% rise, making them one of the few clubs to increase spending during this period. Atalanta followed a similar path, raising their payroll from €54 million to €77 million, a substantial 42% increase. This divergence in financial strategy has led to notable consequences. Both Inter and Atalanta have achieved remarkable success on the pitch. Inter won the Serie A title twice in the past five years, along with several cup trophies and a run to the Champions League final. Atalanta secured their first-ever European trophy, winning the Europa League.

However, the increased payrolls have constrained both clubs' ability to spend heavily in the transfer market. Over the past five years, Juventus has had a net transfer investment of €326.2 million, AC Milan €312.4 million, and even Roma and Napoli have spent over €100 million each. In contrast, Inter's net transfer investment was only €57.59 million, and Atalanta's was a negative €44.8 million. Both clubs have been among the top three in Serie A for player sales revenue, with Inter earning €471 million and Atalanta €399.8 million from player sales during this period.

This report, which covers up to 2023, suggests that Inter's payroll will continue to rise. This summer, several key players, including Lautaro Martinez, Alessandro Bastoni, Nicolò Barella, and Federico Dimarco, have secured significant contract renewals with substantial pay increases. This trend is expected to continue, making it challenging for Inter to invest heavily in new signings, even though the team has pressing needs in positions such as forward and defense. Additionally, with high salaries for key players, Inter will be cautious about the wages offered to new squad players, which explains the hesitation in signing players like Mario Hermoso who may not be guaranteed starters.

Under the ownership of Steven Zhang, Inter's salary costs have consistently risen. Looking ahead, with Oak Tree Capital now involved, there is speculation about a potential strategic shift similar to the American-owned AC Milan, which focused on reducing salaries and investing in mid-tier players. However, Italian media, under the headline "Oak Tree Capital's Primary Goal," suggests this might not be the case. Reports indicate that Oak Tree Capital does not intend to make long-term changes but aims for a smooth transition. Their primary goal is not to win trophies but to balance the books by June 30, 2025.

This summer, Oak Tree Capital is not expected to sell Inter's star players actively, nor will they heavily invest in major signings. They won't force salary cuts or halt key player renewals, but they also won't support signing high-wage new players. In the medium term, Oak Tree Capital plans to profit through lending. For example, if Inter faces a €40-50 million operating deficit in the 2023-24 season, Oak Tree Capital may provide loans to cover this shortfall, which Inter will have to repay with high interest, similar to practices seen in the past with former owners like Erick Thohir.

Ultimately, all these "patchwork" measures aim to make Inter more attractive to potential buyers. The optimal strategy during this transitional period is for Inter to continue achieving success with the help of figures like Beppe Marotta and Simone Inzaghi, increasing the chances of finding a suitable new owner. Additionally, Oak Tree Capital will likely push forward with plans for a new stadium and developing the U23 squad, as these projects can enhance the club's appeal, even if Oak Tree Capital's tenure as owners is temporary. Inter hopes that Oak Tree Capital will leave a lasting positive impact on the club's infrastructure and future prospects.

In conclusion, while most Serie A clubs have seen a significant reduction in salaries over the past five years, Inter Milan and Atalanta have taken a different path, increasing their payrolls and achieving notable success on the field. The involvement of Oak Tree Capital in Inter's ownership brings new challenges and strategies, focusing on financial stability and preparing the club for a future sale. The upcoming years will be crucial for Inter as they navigate these financial and strategic complexities, aiming to maintain their competitive edge while ensuring long-term sustainability.