Category: East Asia

Following the most recent Chinese takeover of a European club, Part 1 took a look at what Southampton fans can expect from their new owner. Part 2, below, will analyze what the latest policy moves from Beijing mean for the future of Chinese investment in football – and why future deals may or may not happen. 

Reading the impulsive press headlines over the past few weeks, it would be easy to conclude that Gao Jisheng‘s purchase of an 80% stake in Southampton FC could just be the last Chinese takeover for a while.

China clamps down on buying spree in sports (CNN)

China to limit overseas investments in…sports (AP)

So now it’s official: The brakes are on when it comes to Chinese investment in…sports (Variety)

Recent headlines have proclaimed “the end of Chinese transfers”, with the purchase of Southampton FC by Lander Sports’ Gao Jisheng appearing to sneak in just under the deadline. Part 1 (below) will take a look at what the Gao deal means for Southampton – and what fans can reasonably expect – while Part 2 will analyze the wider implications of Chinese takeovers following the latest developments and regulations. 

The transfer of Southampton FC into Chinese hands – the second Premier League club after West Brom to be Chinese-owned – is a big deal.

Granted, it’s not a glamor club like Manchester United or Liverpool – and so doesn’t quite get the headlines to match – but Southampton is a solid top-tier club. Apart from a fall from grace in 2005-12, when the club fell out of the Premier League and even spent two seasons n League One before back-to-back promotions, Southampton has been in the top division of English football since 1978.

The club’s last four finishes has been 8th, 7th, 6th and 8th, qualifying for the Europa League in each of the last two seasons. Outside of the rotating top six clubs of Man Utd, Man City, Liverpool, Chelsea, Arsenal and Spurs, only Everton could make a case for a being a bigger club, on both recent and historical form.

So, again, it’s a big deal and certainly the biggest in a wave of acquisitions of English clubs by Chinese investors. But what are the prospects for Southampton? And just who is this Gao Jisheng fellow, whose daughter Nelly has apparently become BFFs with Katharina Liebherr?

Late on Wednesday night, the Chinese Football Association (CFA) released details of two new rules that the Chinese Super League (CSL) must follow. Both rules are significant and have immediate consequences, not just for Chinese football, but for the global transfer market. Let’s break down the what and the why of Chinese football’s latest brainwaves, before examining what consequences are likely. 

Chinese football is no stranger to controversy and those in charge don’t always handle things well – from handing out widely inconsistent bans for similar incidents to radically changing the league’s transfer policy in the middle of a transfer window, fans have come to expect the unexpected. Even so, the CFA‘s twin edicts – issued at 9:56pm and 10:01pm on Wednesday night – came from way, way out of left field.

In a nutshell, here’s what they said:

Starting from the summer transfer window (i.e. immediately), any club that is “in debt” – presumed to be all clubs in the league – must pay into a development fund a sum equivalent to the transfer fee paid for any new foreign signing. In other words, pay Chelsea $50m for Diego Costa and you must also pay an additional $50m into the fund.

Clubs in the top two divisions must, from the start of next season, play as many U23 Chinese players as foreigners in any one match. It’s presumed that you can play more U23s if you want, but few, if any, teams are likely to do this.

Money is often thought of as synonymous with power and influence – in sports as elsewhere – but it’s not often we see such a clear example of a sponsor brazenly attempting to assert their influence as we’ve seen recently in China. 

Alisports, the sports wing of Chinese ecommerce giant Alibaba, last year announced  a $150 million investment into eSports through a partnership with the International eSports Federation (IeSF). That was followed up by a 10-year deal to promote the Chinese city of Changzhou as an eSports hub, with the city set to host a number of World Electronic Sports Games (WESG) events, offering total prize money of $5.5 million, while another Chinese city, Suzhou, was also designated by Alisports as a major international sports city, with eSports also a central part of that aim.

Meanwhile, the IeSF is aiming to get eSports recognized as an official sport and has also lobbied the IOC over possible future inclusion in the Olympics, with the IeSF also looking to be accepted into the Global Association of International Sports Federations (GAISF), which links more than 90 Olympic and non-Olympic sports federations, as a first step on the road towards Olympic recognition.

That’s understandable, given that the IeSF is the sport’s governing body. In fact, you could argue that it would be failing in its duty to its members if it did not do such a thing. What is more surprising, however, is that Alibaba and its offshoot Alisports is taking such an active role in the process.

But it seems to be working.

Chinese basketball legend Yao Ming may be best known for his on-court exploits, but he’s now facing a challenge of a very different sort as he looks to reform Chinese basketball. In a Chinese sports version of Bannon vs. Kushner, the big man is battling “the establishment” in order to gain influence behind the scenes. But the obstacles he’s facing may be so entrenched that the entire sports industry in China is affected.

Rumors started to circle earlier this year that Yao Ming would be appointed as the new head of the Chinese Basketball Association (CBA), and despite resistance in certain quarters – including this editorial from state-run news agency Xinhua which called him too young and too inexperienced [link in Chinese] – he seemed the obvious candidate.

He’s played professional basketball in both the US and China, he’s been an owner of the Shanghai Sharks in the CBA since 2009, he’s studious, respected for his achievements both on and off the court, hugely popular and is a towering presence in more ways than one. The only obstacle was that every previous CBA head had been a government official,  but once the decision had been made to break with that tradition, there could be only one – and no one was holding out for Stephon Marbury to take the job, now that’s his six-year stint with the Beijing Ducks has come to an end.

But for all the talk about Yao being the man to bring about much-needed reform to Chinese basketball, there is now a real danger that he will end up being little more than a figurehead in a cat-and-mouse game between reformers and traditionalists – something that could have wider significance outside just basketball.

Chinese basketball: 2 for the price of 1

A second division Spanish club taking a small stake in a third division Chinese club won’t make global headlines, but it could see the start of a wave of foreign investment in Chinese football, now that outbound acquisitions have effectively been stopped.

A year ago, Chinese companies were rushing full steam ahead to invest in – or buy outright – soccer clubs from around the world. From Aston Villa and West Brom to Espanyol and Inter Milan, the first waves of investment appeared to herald many more deals. This headline in The Telegraph from September last year, for instance, claimed that another 30 Chinese billionaires were looking to buy clubs.

How quickly things change.

Late last year, some leaked policy guidelines implied that restrictions on capital outflows were a greater priority to the Chinese establishment than advancing the President’s football agenda, at least as far as foreign acquisitions were concerned. For those not seeing the initial signs, a number of senior Chinese officials have stated this more explicitly in recent weeks:

Pan Gongsheng, head of the State Administration of Foreign Exchange (SAFE) hit out at Chinese firms for using overseas club acquisitions as a cover to transfer assets overseas, saying these M&A deals “can resemble roses among thorns”.

A large contingent of NHL executives made the trip out to China this week to announce the league’s first initiatives in the country: preseason games between the LA Kings and the Vancouver Canucks in Shanghai (Sept 21) and Beijing (Sept 23), kicking off an eight-year slate of games, which could be upgraded to regular season match-ups as early as 2018. Let’s take a look at some of the factors that might help the NHL in China, as well as the obstacles that lie ahead.

Why hockey will make it in China

1) The timing is right. With less than five years to go to the 2022 Olympics, the government is making a serious push to develop winter sports, and it’s no accident that Chinese President Xi Jinping has been featured in very lengthy segments on the national nightly news touring Olympic venues on more than one occasion this year. As I told the Globe and Mail after the announcement was made, there are actually a lot of indications that the government is moving away from soccer at the moment, and making winter sports its No. 1 priority within the sports industry.

2) Changing demographics coupled with maturing social trends in China are seeing more and more parents choosing to push their kids into sport, rather than force them to study after hours. In partnership with the government push to develop sport (see point 1), it’s a potentially explosive combination. Granted, these social changes are not specific to hockey, but hockey can certainly ride the wave as long as it lasts. 

3) Hockey is an expensive sport – it requires far more equipment than most others, plus there are rink costs and travel fees that balloon the better you become – but money is not something that the Chinese middle class lacks. For the early adopters, it also opens up a potential new route to a prized college education in the US, with universities keen, perhaps, to give places – or even scholarships –  to a new breed of sporty Chinese students.

It clearly takes a lot to tempt Italian coaching legend Marcello Lippi out of retirement for one last job, but fortunately for him there are some very deep pockets in China.

While Lippi will be officially announced as the new coach of China’s national soccer team on Friday, reports have revealed that he and his team – of whom former Everton star Li Tie will be a part – will collect 20 million euros annually over an initial two-year term.

Given China’s precarious state in the final round of AFC qualifying – bottom of Group A after four games – it’s less like a final throw of the dice than a refusal to accept that the die has already been cast.

In the video below, China Sports Insider’s Mark Dreyer discusses the Lippi hiring on CCTV News, with Yan Qiang, Tian Wei and Simon Pusey:

Lippi may have led Italy to the World Cup title ten years ago, but guiding China to the World Cup Finals in Russia from this position would arguably be a greater achievement.

10 games over the next 12 months will determine whether or not China can qualify for the FIFA World Cup for just the second time in history. 

The third and final round of AFC qualifying for the 2018 World Cup gets underway on Thursday evening, and China couldn’t face a tougher start. An away game in Seoul against South Korea (Asia’s second-ranked team) will be followed by a home game in Shenyang next week against Iran (the continent’s top-ranked team).

12 teams have been split into two groups, listed below. They will play home-and-away in a round-robin format until September next year, with the top two in each group automatically qualifying for the 2018 World Cup in Russia. The two third-place teams will then face each other over two legs, with the winner playing the fourth-placed team from the fifth round of CONCACAF qualifiers in a two-legged playoff for the final chance to make the World Cup.

Group A: Iran (FIFA ranking 39), South Korea (48), Uzbekistan (55), China (78), Qatar (80) and Syria (105).

Group B: Japan (49), Australia (57), Saudi Arabia (61), the UAE (74), Iraq (113) and Thailand (120).