The Sunday Mail
HULK had quite the welcome to China.
| Shortly after his plane landed at Shanghai’s Pudong International Airport, hundreds of chanting fans mobbed the Brazilian soccer star as he pushed his way through the crowd on June 29. |
Hulk, who recently inked a record-breaking deal with Shanghai SIPG, is just the most recent soccer star to sign up.
Long a soccer backwater, China has gone on a buying spree unprecedented in the history of the game.
Chinese money, of course, has been flowing into all sorts of sectors: technology, health care, retailing, you name it.
And now it’s soccer, a move that follows Middle Eastern and Russian investments into the game.
What differentiates China is the speed and scale of the country’s new-found appetite for all things soccer.
Chinese companies have invested US$1,7 billion in sports assets – the vast majority soccer-related -since the beginning of 2015, according to Bloomberg data.
As recently as five years ago, that number was zero.
“It’s insane,” said Brazil-based sports lawyer Marcos Motta, who’s worked on several player trades to China. “I have never seen anything like this before.”
Rich Men
Led by some of the country’s richest men, including Dalian Wanda Group Co founder Wang Jianlin and Alibaba Group Holding Ltd.’s Jack Ma, Chinese businesses are at the table for almost every soccer asset up for sale.
In recent months, a dizzying array of deals have roiled the industry – from signing soccer players and coaches to Chinese investments in storied clubs and buyouts of sports-media businesses.
Next year the Milan derby, one of European soccer’s most-prestigious games, will feature two teams recently purchased by the Chinese, assuming both deals conclude without a snag. Nanjing-based Suning Holding Group Co. in June paid 270 million euros ($298 million) for a 70 percent stake in 18-time Italian champion Inter Milan, while a separate consortium is nearing an agreement to acquire 80 percent of AC Milan, a seven-time European champion, from former Italian Prime Minister Silvio Berlusconi.
“There will be more acquisitions and of very famous teams,” said Feng Tao, chief executive officer of Shankai Sports, a Beijing-based consultant that has advised on deals, including Wanda’s $1,2 billion purchase of Swiss-based sports-marketing company Infront Sports & Media AG.
Imported Talent
Most striking of all, though, has been the sudden rush by teams to pay huge sums on importing talent.
Chinese Super League clubs outspent those from any other country this past winter, spending a combined US$280 million for European soccer stars.
And Shanghai SIPG, a team owned by the Shanghai International Port Group, just broke the Chinese record again with its trade to acquire Givanildo Vieira de Sousa, popularly known as Hulk, for US$61 million.
Hulk’s first game for the Shanghai club was short, but eventful.
He scored after nine minutes on Sunday before leaving the field on a stretcher 12 minutes later. Still, Chinese fans are likely to see more new faces like his, as agreements with soccer’s top agents pave the way.
Alibaba’s sports unit has a partnership with Cristiano Ronaldo’s manager Jorge Mendes.
The dollars doled out to China-bound players and coaches are infinitely greater than they could command elsewhere, according to Motta.
It’s common for top imports to get seven million or eight million euros, more than five times what players of a similar standard would get in Europe, he said.
Motta is working on a deal that will pay one player 13 million euros per year, he added – and that’s after taxes.
Audacious Goal
China’s president Xi Jinping, an avid soccer fan, is fueling the spending spree. He’s eager for China to improve its global soccer standing: The national team is ranked 81st, just after Jordan and before Bolivia.
And he covets hosting a World Cup – and winning it by 2050.
That’s providing the green light for Chinese businesses, eager to please the government, to open their wallets.
Coinciding with Xi’s zeal for the game is an effort on the part of the government to promote sports and exercise to the new urban working class, recently transplanted from farms.
A national plan announced last year contains the audacious goal of spurring an industry worth five trillion-yuan (US$747 billion) by 2025, when 50 000 schools are expected to offer specialised soccer training.
Fifa Deal
The Chinese are spreading out all over Europe with open cheque books.
On a visit to the U.K. in October 2015, Xi, accompanied by prime minister David Cameron, visited Manchester City, the English soccer team owned by the Abu Dhabi royal family.
He posed for a selfie with Cameron and City’s star Argentine striker, Sergio Aguero. Two months later City Football Group, which owns the team, announced a US$400 million investment from China Media Capital for a 13 percent stake.
That same month, a unit of Alibaba paid an undisclosed amount, believed to be in the tens of millions of dollars, to become title sponsor of soccer governing body Fifa’s annual Club World Cup. In March, Wanda signed a US$150 million agreement to become Fifa’s first Chinese sponsor.
The two companies are the only new sponsors to engage Fifa since the US department of justice unveiled an industry-rocking indictment that accused several senior FIFA officials of “rampant corruption” dating back more than two decades.
Wanda has also bought a minority stake in Atletico Madrid, last season’s Champions League finalists. That deal was followed by a slew of Chinese companies investing in European clubs to buy soccer expertise China doesn’t have and to help develop young players.
Buyers are popping up in every corner of the country’s business elite, from the owner of a monosodium glutamate company buying England’s Aston Villa to a consortium led by hotel entrepreneur Chien Lee taking control of France’s OGC Nice.
Nice Hotel
For Nice co-owner Lee, the club’s training academy, which has nurtured players including French national team captain Hugo Lloris, is a model to export to the mainland.
“I see this as a big opportunity. Our plan is to bring the Nice academy to China, to open a training center in China.”
Soccer investors such as Lee and Guangdong province-based toy car-maker Rastar Group, which controls Spanish club RCD Espanyol, say they see opportunities to profit from their country-men’s growing interest in the sport, and their increasing willingness to spend on overseas travel.
“Our goal is not just to promote OGC Nice, but to promote the whole city of Nice to China,” said Lee, who co-founded hotels investor Plateno Group Ltd. He said he has been scouting locations for a hotel in the French city.
Rastar has started organising tours to Espanyol’s facilities in Barcelona for Chinese children and soccer fans since buying a controlling stake in the team in November, and the weakening of the euro following the Brexit vote will further sweeten the deal, its board secretary Yang Nong said in an interview.
European Backlash
Still, Chinese investors risk facing a backlash for overreaching in Europe.
Portuguese soccer fans cried foul earlier this year when Chinese LED light manufacturer Ledman Optoelectronic Co made sponsorship of a soccer division there contingent on top teams fielding Chinese players.
Ledman backed off its demands.
The buying spree isn’t limited to players and teams. A bidding war ended with a unit of China Media Capital paying US$1,3 billion for a five-year contract to broadcast China’s national league. That’s about 13 times the amount the contract was worth in 2015.
“It’s a very unique moment,” said Adolfo Bara, marketing director of Spain’s top league, which has attracted significant Chinese investment recently. “There’s so much money in China.” – Bloomberg.
