China Business

Chinas $2bn football buying spree has fans fearful of result

Clubs in Europe question whether new owners have the commitment needed to seek long-term
success

Antoine Griezmann of Atltico Madrid, Mauro Emanuel Icardi of Inter Milan and Kevin De Bruyne EPA; Reuters
AUGUST 26, 2016 by: Ben Bland in Hong Kong

AnobscureChineseinvestorbuysanunfashionablePremierLeaguefootballcluband
promisestotransformtheirprospects,makingthembiginChinabysigningleadingChinese
playersandsealinglucrativesponsorshipdealsthankstohisguanxi,orconnections.
ButthereignatBirminghamCityFC(http://next.ft.com/content/444794182d3a11e6a18d
a96ab29e3c95)ofCarsonYeung,aformerhairsalonownerwhobecamethefirstChinese
proprietorofanEnglishtopflightteamin2009,endedinignominy.Theteamwasrelegated
tothesecondtierofEnglishfootball,YeungwasjailedinHongKongformoneylaunderingin
2014andtheclubremainsbarelyknowninChina.
TheChinesetycoonswhohaveinvestedmorethan$2bninEuropeanfootballclubssincethe
startoflastyearandthefanswhosupporttheseteamsarehopingthatthistimeis
different.
KeentofulfilPresidentXiJinpingsambitiontoturnChinaintoafootballpowerhouse,and
supportedbyreadyfinancingforacquisitionsofoverseasassets(http://next.ft.com/content/a

2be15f03daf11e69f2c36b487ebd80a),Chineseentrepreneurshaveembarkedonan
unprecedentedbuyingspreeofforeignclubs.
[Chinais]thelargestconsumermarketintheworldandtheyarelookingtoleveragebrands
fromEuropeandbringhometheassociatedexpertiseinrunningfootballclubs,saysSteve
Horowitz,apartneratInnerCircleSports,aUSbasedboutiqueadvisoryfirmthathasworked
onseveralEuropeanfootballdeals.
ChinesegroupshaveinvestedinoracquiredfamousclubsincludingItalysACMilanandInter
Milan,EnglandsManchesterCityandAstonVilla,andastringoflesserteamsacrossEurope.
Manymoreclubs,includingLiverpool(http://next.ft.com/content/3a4a580a670111e6ae5b
a7cc5dd5a28c)andHullCity,areunderconsiderationbyChineseinvestors.
Someofthebuyersarepoliticallywellconnected,financiallywellendowedgroupssuchas
DalianWanda,FosunInternational(http://markets.ft.com/data/equities/tearsheet/summar
y?s=hk:656)andChinaMediaCapital.
OthersarelittleknowneveninChina,includingAstonVillasnewownerTonyXia(http://nex
t.ft.com/content/86e008f21da211e6a7bcee846770ec15),whorunsalossmakingproducer
offoodadditives,andLaiGuochuan(http://next.ft.com/content/471e39905b1a11e68d054
eaa66292c32),whoacquiredWestBromwichAlbionthismonthfor150m200mand
previouslybuiltacompanyhedescribedastheIBMoflandscapegardening.

WiththePremierLeagueinEnglandandothertopleaguesnowmorecompetitivethanever,
fansandfootballexecutivesarequestioningwhetherthesenewlyarrivedChineseownershave

thepersonalandfinancialcommitmentneededtofightforlongtermsuccess,orwhetherMr
XisChinesefootballdream(http://next.ft.com/content/3a4b5e92e5e411e5bc31138df2ae9
ee6)willturnintoanightmareinEurope.
Investmentbankerssaythereisabigdifferencebetweenthefirstdivisionacquirerssuchas
WandaandFosun,whichhavedeeppocketsandabroaderplantodeveloptheirsportsand
mediabusinesses,andtheseconddivisionofinvestors,whoofferfewersynergiesandwhose
financesarehardertotrace.

ThetoptierofChineseinvestorsseeanopportunitytobuildintegratedsportsbusinessesthat
cansatethehungerforentertainmentintheworldssecondbiggesteconomy,inadditionto
satisfyingthewhimsofMrXi.
LastyearWandaboughta20percentstakeinSpainsAtlticoMadridfor$52mandacquired
SwisssportsrightsagencyInfrontMedia(http://next.ft.com/content/92157ce8b07011e4a2
cc00144feab7de),inadditiontocontinuinginvestmentsinthefilmandthemepark
industries.
ChinaMediaCapital,whichboughta13percentstakefor$400mintheparentcompanyof
ManchesterCity(http://next.ft.com/content/feb69226980311e595c7d47aa298f769)last
yearafteravisittotheclubbyMrXihimself,hasalsoacquiredthebroadcastrightstothe
ChineseSuperLeagueandlaunchedafilmmakingjointventurewithWarnerBrothers,ontop
ofitsothermediabusinesses.

Everbright(http://next.ft.com/content/45d4a9bc677b11e6ae5ba7cc5dd5a28c),whichhas
approachedLiverpoolaboutapossibleinvestment,previouslyacquiredjointcontrolofMP&
Silva(http://next.ft.com/content/f631e7a8f2ac39549672d646a67245f1),anothersports
rightsgroup.

Lai Guochuan, the new owner of West Bromwich Albion, poses with a fan Reuters

ButAlexanderJarvis,whosecompanyBlackbridgeCrossBordershasadvisedonseveral
footballdealsinvolvingChineseinvestors,saysthatmanysmallerChinesecompaniesappear
tobeactingonimpulseeventhoughtheyhavenoexperienceoffootball.
Headded:Somefootballtypeswillselltheirgrannytodoadeal,sotheresariskoftheclubs
andtheChineseinvestorsgettingduped.
AnadviserwhoworkedonthesaleofWestBromwichAlbionsaysthatroughlyadozen
Chineseinvestorslookedattheclubbutonlyfourhadthefinancialcapabilityandagood
rationaletoproceedwiththedeal.
Itsverydifficulttoassessthequalityofpotentialbuyersunlessyouhavehandsandfeeton
thegroundinChina,hesays.
FengTao,chiefexecutiveofShankai,aChinesesportsmarketingcompany,saysthatsome
entrepreneursbelievetheycanmakequickprofitsbybuyingunderperformingEuropeanclubs
withalargefanbaseandturningthemround,eventuallycapitalisingonahighervaluationby
injectingthemintoChineselistedcompanies.

TheEnglishPremierLeagueisseenastheholygrailforinvestors.Ithasthehighestrevenues
ofanyclubfootballcompetitionintheworldwith17ofthe20clubsgeneratingoperating
profitsonthebackoftherapidlyrisingvalueofbroadcastrights.
ButthenewChineseownersofsecondtierEnglishclubsAstonVilla,BirminghamCityand
WolverhamptonWanderers(http://next.ft.com/content/7a7f3d4a4fc911e68172e39ecd3b8
6fc)willnotfinditeasytosecurepromotiontothetopdivision.
MrJarvissaysthatthesebackerswillneedtoinvestsignificantlyinplayersandcoaches,while
managingtheexpectationsofthefansandtryingtoboostincomeandcovertheirfinancing
costs.Itis,hesays,anexerciseakintoamonkeydancingonarazorblade.

KeithWyness,therecentlyinstalledchiefexecutiveofAstonVilla,admitsthatgettingintothe
PremierLeagueiswithoutdoubtoneofthehardestfootballchallenges.
HeaddsthatMrXiafullyunderstandsthisalthoughtheownerhasbeensomewhatmore
quixoticinhispublicstatements,tellingtheclubwebsitethatmylongtermaimistomake
AstonVillathegreatestclubintheworld.
LikeothersrepresentingthenewwaveofChinesefootballtycoons,MrWynessarguesthat
AstonVillacanuseMrXiasconnectionstogainaccesstothebestemergingChineseplayers
andtapcommercialopportunitiesinChina,sayingthatbeingontheinsidegivesusabig
advantage.
ButMarkDreyer,anindustryexpertwhorunsablogcalledChinaSportsInsider,saysthe
ideathatclubswillbebiginChinajustbecausetheyhaveaChineseownerisnonsense.
Headds:EveryclubacrossthebigleaguesistryingtoappealtotheChineseaudience
throughTV,socialmediaandpreseasontours.
Someofthesepurchasesaregoingtoendintears.
AdditionalreportingbyArashMassoudiinLondonandChuckPanginHongKong
Printasinglecopyofthisarticleforpersonaluse.Contactusifyouwishtoprintmoreto
distributetoothers.TheFinancialTimesLtd.

Read latest
Global Market Overview

London at record as bourses kick o 2017 on front foot

AN HOUR AGO

Related stories
Analysis Travel & Leisure

China aims high with Liverpool FC

approach
Potential Chinese investment in football club highlights
ambition
Retail & Consumer

Chinas Suning takes Inter Milan football stake

Retailing groups purchase of majority holding is latest Chinese foray into European sport
Travel & Leisure

Silvio Berlusconi sells AC Milan to Chinese group

Consortium in deal valuing Italian football club at 740m

Latest on China Business

Global Market Overview

London at record as bourses kick o

2017 on front foot
Bond yields jump as better China data help oil to 18-month
high
AN HOUR AGO

China Business

Chinese investors shrug o forex scrutiny

Market professionals query eectiveness of rules on use of foreign currency purchases
Banks

ANZ sells stake in Shanghai bank for A$1.8bn

Deal is latest step in Australian lenders retreat from Asia retail banking

Special Report Index Investing

Scandalous past still haunts forex industry

Banks and regulators have put in controls since wrongdoing was exposed
Special Report Investing 2.0: Unlocking Yield

Hunt for yield pushes more investors into riskier assets

Pension funds and insurers have increasingly embraced alternative investments

Latest in Travel & Leisure

Science & Environment

Ride-sharing cabs give cities chance

to slash taxi numbers
New York study shows 13,000 vehicles could be slashed to
just 3,000
FT Investigations

Airbnbs edge on room prices depends on tax advantages

Up to one-third of price gap with hotels is due to tax treatment, FT nds
Companies

Airbnb faces $400m lost bookings in London crackdown

Research highlights cost of enforcing annual limit of 90 nights on hosts

Follow the topics mentioned in this article

Travel & Leisure
Fosun International

FC Internazionale Milano
English Premier League
Birmingham City FC

Follow the authors of this article

Ben Bland
Take a tour of myFT