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Erick Thohir interview with Financial Times

Via the Financial Times (reg. req.), an interview with D.C. United Managing Partner Erick Thohir. It covers his approach to Inter, and is pretty high level, but passing it along.

'When Inter Milan owner Erick Thohir arrives for our meeting at an expensive Italian restaurant in Jakarta, his entourage is notable – by its absence.

Most Indonesian tycoons dare not cross the street without a coterie of security guards and fawning assistants. But Mr Thohir arrives alone, true to his down-to-earth reputation. "This is my character," he says. "I cannot change just because I become well-known."

In a dark blue suit and no tie, with slicked back hair and a boyish perma-grin, he looks relaxed. Yet he is a man on a mission to turn one of Italy’s top football clubs from fading icon into a thriving multinational business.

"It happens in many companies," Mr Thohir says of the decline of Italian football on the pitch and in financial terms. "When you’re on top, you’re comfortable, you get fat and lazy and then suddenly there’s another company and it’s working hard and fighting to compete. In our case it was the English Premier League and Germany’s Bundesliga."

The son of Teddy Thohir, one of Indonesia’s biggest conglomerate bosses, the 44-year-old started out as an executive for his father’s Hanamasa barbecue restaurant chain. With his older brother (Garibaldi, named after the 19th century Italian nationalist leader) designated "crown prince" of the family business empire, Mr Thohir decided to branch out on his own.

He bought Republika, Indonesia’s largest Muslim newspaper, which was in financial difficulties in 2000 and moved into magazines, radio and TV, working with tycoons Tomy Winata and the Bakrie family, who have attracted

controversy for their political and business dealings.

A sports fan, Mr Thohir dabbled in basketball, helping to run the sport’s Indonesian association and setting up a Southeast Asian league. But he viewed his support for sport as "corporate social responsibility" rather than business.

That changed when he entered the highly commercial world of US sport, by investing in the Philadelphia 76ers, a National Basketball Association team, in 2011 and DC United, the Washington Major League Soccer team, in 2012.

Then last year he moved into the sporting big time when he and Handy Soetedjo, his Indonesian business partner, acquired 70 per cent of Inter Milan from Massimo Moratti, the Italian energy tycoon whose family retain the remaining share. The deal gave the heavily indebted club an enterprise value of about €375m, according to people familiar with the deal, although the figure has not been publicly disclosed.

Following the acquisition, Mr Thohir sold his stake in the 76ers to concentrate on football in Italy and the US and Mahaka Group, his Indonesian media business which owns TV and radio stations, magazines and newspapers.

With Indonesia’s media industry growing rapidly, turning Inter round is his biggest challenge. After winning five Italian championships from 2006 to 2010 and the Champions League, Europe’s top club competition, in 2010, Inter has failed to live up to fans’ high expectations. It finished no higher than fifth in Serie A, the top Italian league, in the past three years.

It has also fallen down the financial rankings in Europe, coming 15th in the latest Football Money League produced by Deloitte, the accounting group, with revenues of €169m in 2013.

While the Premier League became more like a plaything of global billionaires and fund managers years ago, Italy’s corruption-riddled, inward-looking Serie A is just opening up to foreign capital now. Mr Thohir is only the second foreign owner of a top Italian team, following a US buyout of AS Roma in 2011.

He is also the first of an increasingly outward-looking generation of Indonesian moguls to buy a top European club. But although he is a big sports fan, he insists he took over Inter for business, as was the case for his sporting investments in the US.

Mr Thohir sheepishly laughs off a dictum of Silvio Berlusconi, former Italian prime minister and owner of rival AC Milan, that as a proprietor "you spend loads of money and earn nothing".

"Football is changing," he says. "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."

Even in the more successful European leagues, few clubs make big profits. The challenge is even harder in Italy, with its underperforming teams and ageing

stadiums that are ill-suited to families and corporate hospitality.

New "financial fair play" rules from Uefa, the European game’s governing body, give added impetus to Mr Thohir’s plans. The organisation has started sanctioning teams that make unsustainable losses and has launched an investigation into Inter and six other teams for potential breaches of these regulations.

Before he can fix the finances, Mr Thohir must change the club’s organisational culture. In a dramatic change from Inter’s Italo-centric past, he has brought in highly regarded anglophone executives from sport and media.

Michael Bolingbroke, former chief operating officer of Manchester United, one of the world’s most profitable clubs, took over from Mr Thohir as chief executive in August. Mr Thohir has also brought in a marketing director from Apple’s iTunes, a head of global partnerships from AEG, the US sports and entertainment group that owns London’s O2 arena, and a chief financial officer from DC United. "There are a lot of good people inside the company but they need new examples to follow," he says. "Many Indonesians who buy a foreign business think ‘I own this now so I will bring in Indonesians’. I know I need to bring in good people with a good background from different industries."

One of the main areas of focus for the management team will be Asia, where Inter and the other top Italian clubs have lagged behind teams such as Manchester United, Liverpool and Real Madrid in tapping the large and growing market of middle-class football fans. Of 280m supporters of Inter around the world, 60 per cent are in Asia, with 18m in Indonesia alone, says Mr Thohir.

He sees big opportunities to boost merchandise sales, sign country-based sponsorship deals and generate more revenue from close-season tours, thanks to Inter’s brand power in Asia.

The Asian market is vital if Inter is to fulfil Mr Thohir’s ambitions to make it one of the 10 biggest revenue-generating clubs, and attract the funds needed to become a serious challenger again in the Champions League.'

Mr Thohir has been honest with the Inter fans about this, telling them he signed ageing defender Nemanja Vidic from Manchester United partly because he was a "good brand for the Asian market", for example. "I talk to Mr Moratti and then sit down with the management and ask, will this player help us compete on the field and what about on the marketing side?" he says. "It’s like a credit committee in a bank."

Despite the profound changes under way, Mr Thohir has been spared the invective of the unforgiving Italian sporting media and the nastiest racial insults from the"ultras", Italy’s hardcore fans who have a reputation for xenophobia. "There’s still a lot of pressure," he says. "When you’re standing on top of the hill, the wind blows hard."

But Mr Thohir is clearly enjoying himself. As gets up to leave, he proffers one business card for his media business – "this is the real one", he says – and one for Inter: "This one is to show off."

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