Final season

Property falls, football follows

Final season

For sale: property firm Greentown to sell its Hangzhou soccer team

News that Chelsea’s Nicolas Anelka is on the verge of signing with Shanghai Shenhua shows that there is still plenty of cash available in football – for the players, at least.

Media reports in the UK speculate that the famously taciturn French striker has been offered $9.4 million a year to move to Shanghai, although a spokesman for the club said that details were still to be finalised.

“In five days, we’ll definitely have news on whether it is ‘Yes’ or ‘No”, the club told reporters, hinting that Anelka’s agent (his brother Claude) is working overtime to eke out the best possible terms in Shanghai.

If so, he might also want to take note of events at nearby Hangzhou Greentown, another team playing in the Chinese Super League.

The Hangzhou club is named after its owner, the property developer Greentown Group, which first invested in the club through its football-mad chairman Song Weiping, 13 years ago. Song’s long relationship with the club has been a costly one, with an estimated Rmb1 billion spent on the team since 1998, reports CBN. But his tenure at Greentown football club could be coming to an end after he confirmed that he is looking to sell the club if he can find a buyer willing to keep the team in Hangzhou.

Of the 16 teams in the Super League, 15 have owners who are either property developers or involved in the real estate industry. Most bought teams for publicity purposes or as a way to earn brownie points from local officials. But with the Chinese property market apparently on a downward trajectory, some are now said to be reviewing their commitments, which could then have a financial impact for the top end of Chinese football.

Greentown is not the first developer to retreat from football this year. Hubei Zhongbo announced its plans to climb the Super League at the beginning of the year, with the help of backing from Zhongbo Real Estate – a medium sized developer based in Hubei. But less than six months before starting to play in the top division, Zhongbo Real Estate has pulled out, saying it gave up after its business was affected by goverment tightening policies in the property sector, reports CBN.

Greentown is a larger player but is in serious financial trouble, earning the bottom score of just one out of 100 in a recent credit risk assessment from StarMine, a Thomson Reuters investment service.

Accordingly, it has been looking to raise cash by selling off existing projects and has also committed to reducing new starts by up to half next year.

In that kind of environment, investors aren’t likely to look kindly on further investment in the company football team.

Still, at least Greentown can point to a major new project with two respected investors, sovereign wealth fund China Investment Corp and private equity firm Blackstone Group. CIC will take a 60% stake in the new venture, which will focus on retirement and holiday homes, with Blackstone taking 10%.

“Locking in investment from CIC offers a huge boost to investor confidence,” says Z-Ben Advisors, a Shanghai-based consulting firm.

How about Anelka’s own confidence in a multi-million dollar future in Shanghai? Perhaps brother Claude is using the five-day deadline to check up on Shenhua’s own owners. He will have been cheered to discover that majority shareholder Zhu Jun made the bulk of his money in online gaming with Nasdaq-listed The9, and not from real estate (see WiC83).

But Zhu also has a colourful reputation. The Chinese press reported in 2007 that he forced the team’s manager to name him in the squad for a friendly match against Liverpool (he made a five-minute appearance as a substitute). And in May last year he was in the news again, with comments that he was making a bid to buy the famous Mersey team. (He didn’t).

Zhu has also earned fan disapproval this year for selling some of Shenhua’s best players. At the time, he insisted that the club was building for the future by concentrating on a nucleus of young, Chinese talent. It was also the sensible financial choice, team bosses said, and as late as last month they were insisting that a deal for Anelka was beyond budget too.

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