Zhang Kangyang’s New Loan and Simone Inzaghi’s Contract Extension: The Intriguing “2027 Bind”

Following Inter Milan's 5-0 thrashing of Frosinone, Simone Inzaghi granted his team a four-day break, allowing the squad to enter a quasi-vacation mode. This break aims to recharge the players ahead of the upcoming Copa America and UEFA European Championship. However, the Inter Milan management hasn't been idle. Two significant pieces of news have been confirmed, bringing optimism to the fans.

Firstly, both Sky Sports and financial media have confirmed that Zhang Kangyang has secured a loan of €420-430 million from PIMCO to repay the outstanding loan with Oaktree Capital. This deal is set to be announced soon, spanning a term of three years with an estimated interest rate of 12%, ensuring that the Zhang family retains control over Inter Milan. According to Sky Sports, the announcement is expected on Tuesday or Wednesday. Concurrently, representatives of Oaktree Capital on Inter Milan’s board will be removed, eliminating their influence over the club's decisions.

Financial media further elaborate that the agreement between Inter Milan and PIMCO extends beyond a simple equity mortgage and financing loan. It includes provisions for new shareholders to enter the club, details of which will be disclosed upon the official announcement. Financial experts suggest that replacing Oaktree Capital's loan with PIMCO's marks a significant shift, potentially paving the way for new ownership. Unlike Oaktree Capital, which primarily focused on earning interest, the new financing institution is expected to actively promote external investments, such as those from Middle Eastern entities, potentially leading to equity or majority ownership of Inter Milan.

The second piece of news is that multiple journalists close to the team have confirmed that Simone Inzaghi has agreed to a contract extension with Inter Milan. Inzaghi will sign the extension after the season ends before heading off for his vacation. Inzaghi initially joined Inter Milan in June 2021, signing a contract that lasted until June 2023 with an annual net salary of €4 million. In June 2022, he renewed his contract, extending it by one year and increasing his salary to €5 million. In September 2023, Inzaghi renewed again, extending it by another year with a salary rise to €5.5 million. This time, his contract will be extended until June 2027, with a salary increase to €6 million, plus an easily attainable bonus of €500,000, separate from championship bonuses.

Italian media emphasize that over the past three years, each contract renewal for Inzaghi has included a slight salary increase, which is seen as a well-deserved reward. However, unlike previous renewals, this time the contract extension period is longer, raising curiosity about the significance of the "2027 bind." What’s the intrigue? The new loan agreement between Zhang Kangyang and PIMCO is set to mature in 2027. High-ranking officials like Marotta, Ausilio, and Antonello have also signed contract extensions with Inter Milan until 2027. Following Inzaghi’s historic achievement of winning two stars, his contract is also set to expire in 2027. This “binding” of the three parties to the 2027 timeline is intriguing and raises questions about its necessity and implications.

Reflecting on history, when the pandemic caused Inter Milan to suffer record-breaking annual losses, the club was in a dire situation. In an interview with Gazzetta dello Sport, Zhang Kangyang candidly expressed, "If Inter Milan cannot cut costs and reduce losses, there will be no external investment." His words sparked much speculation about what he meant by "external investment." Did he refer to sponsorships, minority shareholders, or perhaps a powerful consortium acquiring Inter Milan? Interpretations varied widely.

Today, Inter Milan continues to cut costs and improve efficiency, with on-field performance enhancing significantly. The sponsorship situation has fundamentally changed compared to three years ago, making the possibility of "external investment" more plausible. Additionally, three years ago, Zhang Kangyang leveraged 68.5% of Inter Milan’s shares to secure financing from Oaktree Capital, amounting to €275 million. With accrued interest, the debt has now reached the €400 million level. Even if the interest rate remains unchanged, the pressure to repay principal and interest has increased significantly. This situation underscores that using high-interest loans to service other high-interest loans is merely a temporary measure and not a sustainable long-term solution. Given the current state of Suning, national policies, and the international landscape, the possibility of Inter Milan changing ownership within the next few years cannot be ruled out.

Under these circumstances, it is not surprising that the new financing agreement might include provisions for potential ownership changes. Consequently, it is challenging for Inter Milan to develop a five-year mid-to-long-term plan or speculate on what might happen a decade from now, as the future risks and uncertainties are evident and unavoidable. Against this backdrop, the alignment of the owner, management, and coach around the summer of 2027 creates a stable period for Inter Milan’s decision-making, which is a significant positive.

One fan told me, “I don’t even dare to imagine what Inter Milan will look like after 2027...” But why worry about that now? The current focus should not be on speculating about the distant future but on dealing with present challenges effectively. When Conte left and rumors of Inter Milan’s collapse were rampant, who could have imagined that Inter Milan would be in a much better position today than 2-3 years ago? If Inter Milan can continue on this upward trajectory until 2027, who can predict whether the future holds disaster or opportunity for the club?