The Italian Job Case Study Essay

The Italian Job Case Study Essay

Scenario: The Italian Job

The Background

The Indonesian business tycoon Erick Thohir acquired a 70 percent share in the famous Italian football

club Inter Milan in 2013. The previous owner of Inter Milan, Massimo Moratti, retained the remaining

share. Thohir thus became the first Indonesian businessman to buy a leading European team, and only

the second foreign owner of a top Italian club. A sports fan, Thohir had previously set up the Indonesian

basketball association, but then he became interested in U.S. sports, which are much more business

oriented. He invested in the Philadelphia 76ers basketball team in 2011, and in the Washington major

league soccer team, D.C. United, in 2012.

The Problem

In 2013, Inter Milan had an estimated enterprise value of around €375 million but was heavily in debt.

Inter Milan had won five Italian championships between 2006 and 2010, and also won the Champions’

League in 2010. Since then, however, the team’s performance had been poor, finishing only fifth in Italy’s

premier league (known as Serie A) between 2011 and 2013. The team’s fans were disappointed. The

club culture was heavily “Italo-centric,” using Italian players and management. Italy’s “hardcore” football

fans—the “ultras”—had a reputation for xenophobia, racism, and violence.

In 2013, with €169 million in revenues, the club dropped to fifteenth in the Football Money League

produced by the accounting group Deloitte. The Serie A league had a reputation for being corrupt and

inward-looking, and it was only now opening up to overseas investment. Few clubs made significant

profits, and ageing stadiums were not suitable for families and corporate hospitality. Inter Milan was one

of six teams under investigation by the governing body, the Union of European Football Associations

(UEFA), for breaching “financial fair play” rules.

The Solution

As the new owner, Thohir wanted to develop a different approach to running the club:

Football is changing. I want to use the US model, where sport is like the media business, with income

from advertising and content, mixed with the consumer goods industry, selling jerseys and licensed

products.

Thohir’s goal was to turn Inter Milan into one of the world’s 10 biggest revenue-generating clubs.

However, he had to change the club’s organization culture, as well as fixing the finances. He decided to

recruit British and American executives with experience in media as well as sport. Michael Bolingbroke,

previously chief operating officer at Manchester United (one of the most profitable football clubs in the

world), was appointed as chief executive. Thohir recruited a marketing director from Apple iTunes, a head

of global partnership from the U.S. sports and entertainment group AEG, and a chief financial officer from

D.C. United.

Inter Milan had 280 million fans around the world, 60 percent of whom were in Asia, with 18 million in

Indonesia alone. Thohir and his new management team, therefore, wanted to focus on Asia, where Inter

Milan was not as popular with middle-class football fans as Manchester United, Liverpool, and Real

Madrid. Thohir saw growing opportunities in Asia to develop the Inter Milan brand, increase merchandise

sales, sign country-based sponsorship deals, and generate more revenue from close-season tours. When

he recruited Nemanja Vidic’ from Manchester United in 2014, Inter Milan fans asked what this ageing

defender could do for their club. The answer was that Vidic’ was “a good brand for the Asian market.” The

management team asked, “Will this player help us compete on the field, and what about on the marketing

side?” Considering the pressure from fans and the Italian sporting media, Thohir commented, “When

you’re standing on top of the hill, the wind blows hard.

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