Hoping to get promoted: real estate firm is ploughing money into Guangzhou club
In a week in which Chinese businessman Kenny Huang dropped out of the bidding for Liverpool FC, and Manchester City’s Abu Dhabi bosses took their summer spending spree to £130 million, the ownership of English football clubs now seems to have become as much of a talking point as what happens on the field.
Surprisingly the same is true of China, where the coverage in the local media has been extensive lately. But unlike in England where club owners are typically individuals like Russian billionaire Roman Abramovich or Formula One supremo Bernie Ecclestone, what has piqued Chinese press interest is why real estate companies have piled into club ownership.
Dalian Wanda, Hangzhou Greentown and Changchun Yatai are all owned by property firms; as are Henan Construction and Shaanxi Zhongjian Chanba.
Chengdu Blades is owned by an Englishman (Kevin McCabe, see WiC64) who has property interests in China. And most recently, Evergrande Group bought Guangzhou’s high profile team.
Evergrande’s decision, in particular, raised eyebrows. That’s because the real estate giant bought a club that had just been demoted from the Chinese Super League as a punishment for match-fixing. It has committed big bucks to resuscitating the team’s fortunes, paying a club record $3.5 million for Brazilian footballer Muriqui – who made his debut last month scoring four in his opening game. Evergrande also lured back the Chinese football captain Zheng Zhi (from Scotland’s Celtic) in a deal that reportedly sees Zhi get a salary of Rmb5 million per year (see WiC68).
But Evergrande are not alone in their largesse. Changchun’s owner Jilin Yatai has committed to spend Rmb80 million on players to try and win the Super League this year. Henan – owned by Jianye Group – acquired a new stadium for Rmb118 million and has budgeted Rmb60 million for signings. Zhongjian have forked out for a former Inter Milan player, as well as four high profile domestic stars.
It’s all the more strange when you consider that Chinese football has long been mired in scandal. As has been extensively reported in WiC (see issues 8, 21, 31 and 39), corrupt refs and rigged scorelines (on one occasion, a bribed player even attempted to score a last minute own-goal from the halfway line) crop up with depressing regularity. With its own share of badly behaved players and rioting fans, China’s beautiful game has often left a sour taste.
So why would any company want to associate its brand with it?
Sports Weekly reckons property developers and football clubs make decent bedfellows. Both industries raise the ire of the general public (jokes abound about the state of Chinese football while the developers are blamed for high property prices that have made it hard for ordinary folk to buy). The magazine cites a recent media survey that ranked industry groups by their perceived integrity: it put property developers and football clubs at the bottom.
But the Beijing News makes the case that football clubs are not such a bizarre investment. Admittedly they are not immediately profitable (and rarely turn out well over the longer-term either, as many club owners soon realise) but they do have some ancillary benefits. Wanda, which bought Dalian’s team six years ago, has successfully used the team’s brand to become a household name (see WiC40, Who’s Hu). Greentown has taken a similar approach, and both firms have built property projects across the country. “Money invested in football has been made back in real estate,” comments Gu Chenguang of Shandong Normal University.
He adds that owning a city’s club also improves relations with local officials, which can make it easier to obtain prime land and get approvals.
It currently costs around Rmb50 million per year to run a club – a small outlay for the accrued advantages. And there are some who think the trend is no bad thing. Cash-rich real estate firms could help to transform the game, through an infusion of finance and more professional business management.
Not all are convinced. Given there is (probably) a bubble in the real estate market itself, some worry that developers are not stable owners. Sports Weekly says there’s a risk of firms going bankrupt as their access to bank loans dries up and the market for apartments cools (sales of new homes in Shanghai were down 48% in the first seven months of the year). The danger, it says, is that if a developer goes bust it will take its football team down with it.
That’s not a problem Abu Dhabi or Manchester City are likely to face…
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