Dances with Wolves

China’s tycoons are buying English soccer teams

Wolverhampton Wanderers v Swansea City - Pre Season Friendly

Representatives of Wolves new owners, Fosun attend a home match

When the footballers of West Bromwich Albion were first acquainted with China in 1978, the players were said to be close to mutinous about having to tour there at the end of a long season.

Bemused when their hosts offered them half-time ice cream, the team made little effort to enjoy the sightseeing, including a visit to one of China’s most famous tourist spots.

“When you’ve seen one wall, you’ve seen them all, haven’t you?” griped John Trewick, a midfielder at the club, although he later complained that the comment was meant to be tongue-in-cheek.

West Brom’s new owners will be hoping for less of a culture clash in the years ahead, after an investment firm called Yunyi Guokai took control of the club at the start of August.

The deal is another of the Chinese investments in English football clubs in the West Midlands, a region around Birmingham, the country’s second largest city. Apart from the West Brom takeover, Aston Villa – newly relegated from football’s top tier – was sold to Tony Xia in May (see WiC326), while Wolverhampton Wanderers (usually known as Wolves) has just been acquired by Fosun International, another investment group.

The acquisitions reflect the broader inflows of Chinese capital into the British economy, as well as the commercial realities of the English game, where many clubs are already foreign-owned. Takeover activity in the Premier League has been busy in the lead-up to the new season, which started this month, with American investors grabbing a controlling stake in Swansea City and an Iranian billionaire purchasing half of Everton. In this regard, the Chinese aren’t trailblazers and they have been trying to make up lost ground since Citic Capital and China Media Capital bought 13% of Manchester City’s parent firm for $400 million last December, shortly after China’s leader Xi Jinping had visited the club during a diplomatic tour.

Why the surge in Chinese investment in soccer? Interest in football has taken on a political dimension, stirred by Xi’s professed love for the game. Commercial momentum has picked up further since the central government started championing a 50-point plan to promote grass roots spending and get millions more people playing the sport. A chief hope: that the national team will become a soccer superpower (perhaps a tall order – China made its solitary appearance at the World Cup Finals in 2002, failing to score a single goal).

That hasn’t stopped businesses trying to get on the score sheet in the domestic league, with companies such as property firm China Evergrande and e-commerce goliath Alibaba moving into team ownership. Commercial revenues have also been growing (see WiC302), although not enough to support the crazy money that teams have been spending on transfer fees for international stars (see WiC313).

But the takeovers in the West Midlands don’t seem to be premised on the same kind of money-pit mentality adopted by billionaire owners like the Russian mogul Roman Abramovich at Chelsea and Manchester City’s main shareholder, Abu Dhabi’s Sheikh Mansour.

Instead the bidders have been focusing on smaller, less expensive teams in the top flight like West Brom, as well as clubs in the league immediately below, such as Wolves and Aston Villa, in the hope that the latter two might earn a speedy promotion to the riches of the English Premier League.

All three clubs have established stadiums and solid fan bases. And if the strategy works there is decent money to be made, in light of the huge hike in the Premier League’s latest television deals – they are worth £8 billion ($10.6 billion) for the next three years (£5.1 billion was paid for the UK broadcasting rights, the rest sold internationally). That should put all but the most profligate clubs on a more profitable footing, while Leicester City’s shock victory in last year’s competition will have other teams dreaming that they might be champions next.

The recent round of Chinese interest may have been more hardheaded too, capitalising on the fall in sterling after the vote for Brexit.

While the fans are hopeful that their Chinese owners will splash the cash on new players, most of them are in the dark on the backgrounds of their new bosses, as well as how they have made most of their money.

Some of the answers are unexpected: Lai Guochuan, the newcomer in the boardroom at West Brom, is said to have made his fortune in landscape gardening. Tony Xia, Aston Villa’s owner, is another student of landscape design, although he earned most of his money selling food additives.

Carson Yeung, a Hong Kong national with mainland ties, was best known for hairdressing when he bought Birmingham City – another club from the Midlands. However, he has been in the process of selling the team since he was convicted of money laundering in 2014.

Wolves fans at least know that their new owner is one of China’s most prominent billionaires: Guo Guangchang (albeit one who mysteriously disappeared in December as part of an anti-graft investigation – though nothing untoward seems to have come of the incident). Russ Evers, who runs Wolves biggest supporters club, told the Guardian: “The main things that’s changed has been optimism. We used to be linked to players from Barnsley and Oxford; now they’re talking about us signing a £20 million player from Benfica. It’s all about hope and the new owners have given us that.”

This week the speculation has been running red hot on another – even bigger – deal for an English club, with state-backed financial group Everbright said to be interested in Liverpool, one of the crown jewels of the European game (according to the Financial Times, it has the ninth highest revenues of any football team globally).

That means that any takeover would be a much higher profile affair, although Fenway Sports Group, the current owner, says that no offer has been received and that it isn’t actively looking for a buyer.

Of course, there has been talk of the Chinese acquiring the Anfield club in the past (see WiC62 for an example), but none of it has ever come to fruition. Nonetheless, the FT is reporting that Fenway has hired advisors to look at the possible sale of a stake to a strategic partner.

More deals look likely. Indeed, Professor Simon Chadwick of Salford Business School told the Guardian it was about more than the just clubs themselves and the individual business cases they might (or might not) present: “It’s post-Brexit diplomacy. Football is being used, in part, as a lever in Britain’s relationship with China.”

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