Chinese Football Clubs and Their Mandate

Chinese Clubs are taking over and are poaching talented players all over Europe at ridiculously high prices; many fans following the major European leagues are amused at how these Chinese clubs can afford to pay astronomical fees for players. Guangzhou Evergrande reportedly paid £31million for Jackson Martinez, another club – Jiangsu spent £38million on Alex Teixeira and an extra £21million to lure Chelsea’s Ramirez.

 

Shanghai SIPG broke the record for the first time in January this year with their £13.9million recruitment of Brazilian striker Elkeson from fellow Chinese League side Guangzhou. Amongst the other high profile players to have moved to China are Gervinho, Fredy Guarin, Paulinho, Tim Cahill, Demba Ba and Asamoah Gyan.

 

The President + Wealthy Owners Factor

It is common knowledge that the Chinese President is a huge football fan and has personally encouraged Chinese football to become one of the best in the world. President Xi also announced, among other things, a national endeavour to create a domestic sports economy worth about $850bn by 2025; this would include plans and preparations for future World Cup bids.

Having a strong domestic league is very helpful for a good World Cup bid – having the infrastructure in place, for example, makes your case quite strong while bidding to host the World Cup as a country.

The Chinese Super League, which is the centerpiece of Chinese sporting strategy, is set to become massive considering how much the wealthy owners of these clubs are willing to splash on their teams.

  • Guangzhou Evergrande, the most successful Chinese club in recent years, is bankrolled by Evergrande Group (60%), one of China’s biggest construction firms, and Alibaba (40%)
  • Jiangsu Suning is owned by the Suning Commerce Group, one of China’s biggest privately owned retailers
  • Beijing Guoan’s primary shareholder is the CITIC Group, a state-owned investment company of the People’s Republic of China.

 

These are companies with deep pockets. Although there have been instances of non-payment of dues in the past – for example, Shanghai Shenhua couldn’t pay the salaries of Drogba and Anelka, which made them leave the club. However, since then, the owners have changed. 

This is basically seen as a bad precedent which, given the increased spotlight on the league, the owners will try to avoid.

It is speculated that political favours go hand-in-hand with football investment. In a rather opaque country (in terms of politics) like China, it is quite possible that this is the case. The easiest (and laziest) way to show you’re investing in football is by splurging millions on famous players.

One major difference to previous upstart leagues is that the Chinese Super League (CSL) is buying players who are in their prime, as opposed to the Arabian leagues, MLS and the J-League a few years back.

 

Increased revenue streams

The CSL recently signed a TV deal worth $1.25 billion for 5 years, which means that the league will receive around $200 million in 2016, up from $9 million in 2015. This is a massive jump though it is significantly low when compared with the EPL’s new TV deal worth around 1.7 billion pounds a year!

  • The MLS competes with the NFL, NBA, MLB and the NHL (not to mention college football, basketball and other similar groups). The Indian football leagues compete with cricket. There’s no other sport with a large audience other than football in China.
  • The Chinese Super League does not compete with the Premier League/La Liga or other European Leagues for ratings. The local matches happen at far more ‘normal’ times for Chinese audiences as opposed to European games which take place very late in the night/early morning in Chinese time zones.
  • There is no competition from other Asian leagues. The Chinese League already dwarfs most of them and it will continue to do so.
  • Chinese population – with a population of 1.35 billion people, scaling of entities in China is quite unique. That figure is nearly double the entire population of Europe and around 4 times that of the US.

 

The TV viewership of the league within the nation can go up exponentially; if it achieves even a partial market penetration within the country, viewer figures will be comparable to that of the NFL. With huge viewership comes huge sponsorships. The match day revenue is also increasing exponentially.

 

Increased attempt at professionalism in the league

  • Football education in China – China’s football league has a rule which allows for only 5 foreign players in a team and only 4 of these players can be on the pitch at any point. This means that homegrown talent is also a premium at this point. This has reflected in the transfer market, where rather mediocre domestic players are going for massive sums of money. In the long run, though, things could be different, schools are being made to increasingly emphasize football as part of a more balanced education. China suffers from lack of a massive team sport uniting the nation, unlike football in most nations or cricket in South Asia.
  • Academies are being given a boost as well. Guangzhou Evergrande revamped theirs with help from Real Madrid, and the premium on homegrown talent ensures the usage of academies as a sustainable way to get players. But the results will be evident only after 5-10 years and not immediately.

 

This article was written by Segun Olarinmoye; Culled from Issue 14

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