AS the old adage tells us, if something looks too good to be true, it usually is, or words to that effect. China’s appetite for European football clubs and players seems to have dissolved, a fleeting moment in time when money from the world’s second biggest economy seemed to signal a shift in the balance of power. Chinese business people, corporates and their football clubs threatened to change the face of football, but the macro-economic situation, government priorities and, more recently, covid-19 has put paid to their ambitions.
The latest symptom of change came when Gao Jisheng sold his stake in Southampton to Serbian media mogul Dragan Salak for £ 100 million. Anyone who assumed Jisheng was looking to make a killing by treating Southampton as a “pig to be fattened”, was wrong. He made a £ 110 million loss on his original investment.
After the flurry of activity that saw clubs like West Bromwich Albion, Reading, Aston Villa, Atlético Madrid, AC Milan, Slavia Prague and others either purchased or invested in by Chinese individuals or companies, the flame has clearly gone out. The only Premier League side with Chinese backing is Wolverhampton Wanderers, who are owned by Fosun, a multi-tentacled company that also has strong links with super agent Jorge Mendes.
China’s government was keen to encourage investment abroad, mostly because the country had designs on becoming a major football power. The country’s prime minister, Xi Jinping, is a big football fan and would dearly love China to not only host the World Cup, but also win the competition. However, the national team is way behind many of their Asian rivals and since China discovered their football aspirations, they have yet to qualify for the World Cup. Their only appearance was in 2002 when they lost all three group games and failed to score a goal.
So the investments made by China at home and abroad have yet to yield dividends and the government is feeling a little short-changed. With China’s economic growth slowing – GDP looks set to rise by 5% in 2022 – people are wondering if the money spent abroad might be better used at home. The Communist Party, for example, wants investors to pull out of European football, and government officials is now calling for the focus to be on developing local talent.
In 2017, there were 20 Chinese-owned clubs across Europe, now there are just 10. Owners such as Wang Jianlin (Atlético Madrid) and Ye Jianming (Slavia Prague) were encouraged to sell their holdings. No surprirse given China’s 14th five-year plan proposes money from outward investment should return home.
Naturally, the economic situation has affected the Chinese Super League (CSL). Many clubs are in financial trouble and 12 of the 16 clubs who took part in 2020-21 have fallen behind with players’ wages and most have serious cashflow problems due to a lack of liquidity and a reluctance to lend from the banking sector. One of the most influential corporates in the CSL, Evergrande, has recently been on the brink and has only pulled clear of danger because of a debt relief deal.
Inter Milan’s owners, Suning, had huge debt problems, and closed down their club Jiangsu, but according to the company, the crisis has now subsided due to help from the government. They have to pay £ 157 million to the Premier league over a legal case related to TV rights. Suning, who own PPTV, agreed a three-year deal with the Premier, but they failed to pay the first two instalments of their agreement. The deal was subsequently cancelled and settled in court.
Players were attracted to the CSL because of the obscene wages. Brazilian midfielder Oscar, left Chelsea at the age of 25 to join Shanghai SIPG, reputed to be earning £ 400,000 oper week. The move, which earned Chelsea £ 50 million, was something of a shock because Oscar was in his prime. He is now looking to return to Europe, possibly Barcelona. Other players saw China as a cash cow or a pension fund deal.
The CSL has had two seasons of empty seasons, but before the pandemic, attendances had risen to just under 25,000 – it is likely that momentum will be lost and they will have to work to build its football back to pre-crisis levels. For the time being, European clubs will no longer be able to look to China for a convenient takeover. The country is still in love with the game, but they now realise how difficult it is to buy credibility. They will be back, that is almost a certainty.