Saturday, October 15, 2016

China has more than one goal in English football investments

Chinese interest in football goes back nine centuries as illustrated in this painting depicting Emperor Taizu Song playing cuju (i.e. Chinese football) with his prime minister Zhao Pu and other ministers, by the Yuan dynasty artist Qian Xuan (1235–1305). Wikimedia Commons.

Why four so-so teams within a 15-kilometer radius of the Midlands city of Birmingham are now owned by Chinese businesses

When English football club Aston Villa play local rivals Wolverhampton Wanderers on Saturday, it will be the 108th time the two teams have met.

The first game on Saturday September 8, 1888, was the opening weekend of the first football league in the world. It was also the genesis of professional football that today is worth more than £4 billion (US$4.87 billion) a year in combined revenues to the clubs in the top English league alone, according to Deloitte’s Annual Review of Football Finance.

The game has come a long way from its humble roots but the essence of English football — a gritty yet glamorous game that fuses together a potent cocktail of flair, passion and bitter historic rivalries — has endured, making the game in England not just the most lucrative on the planet but also the most watched. The English Premier League reaches an audience of more than 3 billion people, according to 2014/15 numbers from sporting data analyst, Repucom.

In that first game 129 years ago the Villa and Wolves teams had to change in a nearby blacksmith’s shed before playing on a patch of park in front of 2,500 people. The game has changed beyond recognition from those days, but one development those 19th century Victorian fans could not have foreseen is that both clubs now have Chinese owners.

Aston Villa was bought by the enigmatic Dr Tony Xia Jiantong’s Recon Group in June 2016 for close to £75 million while Fosun International, a vast Shanghai-headquartered conglomerate, paid £45 million for Wolverhampton Wanderers in July 2016.

Guo Guangchang the founder and chairman of Fosun hails from Dongyang, in China’s eastern Zhejiang province while Xia was born in Quzhou, also in Zhejiang province and just up the road — in China terms, a neighborly 150 kilometers — from Dongyang which makes this, the 108th Villa-Wolves fixture, a West Midlands and an East China derby.

If working class Victorians would have struggled to understand this, then what would they have made of the area’s other two local teams, West Bromwich Albion and Birmingham City, also being Chinese owned.

In September 2016 West Bromwich Albion were bought for £175 million by Guochuan Lai from Guangdong province, whose listed business interests are landscaping and urban redevelopment, while Birmingham City ownership has just, in October 2016, been transferred from Birmingham International Holdings Limited (initially incorporated by Carson Yeung who is currently in jail in Hong Kong after being convicted on money laundering charges) to Paul Suen Cho-hung and Daniel Sue Ka-lok’s Trillion Trophy Asia, also Hong Kong-based, for approximately £37 million.

Only one of this quartet of Midlands teams, West Bromwich Alnion, currently plays in the top tier English Premier League — the others are in the second tier Championship league. Aston Villa fell from the top league last season for the first time in 30 years, while Wolves and Birmingham have, for the last three decades or more, yo-yoed up and down the English divisions.

Yet, because of their past successes, strong fan bases and long histories — West Bromwich were, like Villa and Wolves, one of the 12 founding members of the English league, while Birmingham joined just a few years later in 1892 — these clubs remain seminal to England’s rich football narrative.

It’s not hard to fathom out why four so-so teams within a 15-kilometer radius of the Midlands city of Birmingham are now owned by Chinese businesses.

“Being an influential football national enables a country to exert soft power”

Just combine their back stories with the fact that the English Premier League announced at the start of the 2016/17 season that club TV revenues, in line with increased viewing figures, would drastically rise with each of the 20 clubs looking to receive an average of £120 million per season in shared TV revenues alone, according to the UK’s Daily Mail. That figure does not feature ticket sale revenue, or replica shirt deals or indeed any possible China-wide sponsorship or endorsement contracts.

“Sitting at football’s top table brings global acceptance”

However, Simon Chadwick, Professor of Sports Enterprise at the University of Salford, says there is a lot more to the Chinese takeover scenario than the mere amassing of money.

“Football is the global game, the people’s game,” he says. “Most nations play it and love it. Therefore, at one level, football is a means of engaging with the rest of the world. At another level, sitting at football’s top table brings global acceptance. And on a further level, being an influential football national enables a country to exert soft power influence around the world … English football is widely perceived as being an industry leader, hence the attraction for China.”

According to Chadwick, this recent flurry of acquisitions has been encouraged and to some degree facilitated, by both British and Chinese governments.

“The British government has been playing a game of football diplomacy with China, using the sport as a means to entice Chinese investors to spend their money in Britain.

“Tony Blair [former Labour prime minister] was a master of the art and George Osborne [former chancellor under Conservative prime minister David Cameron] followed the lineage.

“While there is no specific or explicit confirmation of this, Osborne’s desire to secure funding for HS2 [the high speed rail link to the North of England] and his Northern Powerhouse project seems to have led him to use English football as lubrication in the diplomatic machine.”

Chadwick says China’s state influence started with President Xi Jinping in 2014. “His proclamation then about the development of China’s sport industry and the central role that football should play in it, has prompted and sustained the activity we are now seeing.

“Furthermore, with China launching its football development policy earlier in the year and state investment vehicles acquiring properties in football, the hallmarks are there of a state enabled policy, even if many of the organizations now involved are China’s entrepreneurial lieutenants rather than the state itself.”

If these new football club owners are indeed “lieutenants” they have, to date, taken vastly different approaches with their march to battle.

Fosun, led by chairman Guo Guangchang, who has been described as China’s Warren Buffett, have taken a measured and low-key approach at Wolves.

“Our goal is crystal clear,” Jeff Shi, Fosun director and appointed representative in Wolverhampton, pragmatically told the British media after Fosun bought the club. “We will do our very best to help take Wolves back to the Premier League as soon as possible.”

Wolves then went on to appoint a new manager, former Italian goalkeeper Walter Zenga, and spent £14 million, wisely according to commentators, on new players in what has been seen to date as a so-far-so-good approach.

“The major positive for supporters has been investment in the team” according to Thomas Baugh publisher of “Jeff Shi suggested in his first press conference that five to eight new players were required, but by the end of the transfer window 13 had been signed. After minimal investment from the previous regime this was well received.”

Baugh reckons the new club administration together with the new team manager have provided the “sweeping change that many had long hoped for … Jeff Shi has been particularly active among the fan base, regularly greeting supporters, posing for photographs and even enjoying a pint with them before a recent fixture. He’s already a popular figure.”

Dr Tony Xia’s approach has been altogether different. Even before he completed his £75 million purchase, Aston Villa issued a press release that said Xia was “responsible” for Beijing’s National Bird’s Nest Stadium and that Recon Group controlled five listed companies.

This was quickly retracted after the UK’s Financial Times checked the background to both claims, and Villa then said Xia had in fact only been responsible for the landscaping around the Bird’s Nest Stadium and that Recon ran only one listed company, ‘Lotus Health’, which produces MSG and last year ran at a considerable loss.

There is also confusion about the status of Xia’s Ph.D. and if he did or indeed did not obtain it from Harvard. The mistakes, Aston Villa said, were due to “miscommunication”.

Many Aston Villa fans, talking online through the various supporter networks that all professional clubs now have, were understandably apprehensive about their new owner’s credentials. Yet at Xia’s first British press conference the new 39-year-old owner said his 10-year plan was to make the club one of the greatest in the world and he then followed these big words by bigger actions, spending £55 million on new players in a matter of weeks.

Unsurprisingly, his cash happy actions saw him soon receiving widespread support and this largely remains, helped by his twitter feed that has since provided the supporters, and of course the press, with a popular and almost daily stream of idiosyncratic mutterings.

“I cannot choose the best, the best chooses me,” reads his bombastic headline at the top of his twitter homepage, while another tweet explains how “I completed signing a contract of 4.2B deal yesterday [presumably not football related] but the [Aston Villa] result took away all the joys. Still struggling with the disappointment.”

However, despite the bold bankrolling, the club is not doing well on the pitch. They have won just one league game this season and although many in the media agree that they have at times played well and have been unlucky, at the start of October Xia sacked his manager, Italian Roberto Di Matteo, who Xia himself had hired when he bought Villa.

The replacement is Englishman Steve Bruce, a seasoned managerial stalwart considered a safe pair of hands whose first game will be the one against Wolves on Saturday.

Alan Jones, a lifelong Aston Villa fans who grew up in Hong Kong and played the game to a high amateur level there before moving to live in England for the last 20 years, says the ownership style is very reminiscent of what he used to see in Asia.

“As I saw in football clubs in Hong Kong and China, it is so often just about face,” says Jones. “So often Chinese owners invest money, they want return and they want it now.

“But to succeed, football management needs to be long term. Look at Alex Ferguson at Manchester United and Arsene Wenger at Arsenal. Their clubs gave them 20 years. Xia gave De Matteo something like 150 days. It’s not enough to fail or succeed.

“Of course the fans are happy with the cash injection. They look at it with a rose tinted view. They look at Roman Abramovich and what he did to Chelsea. It’s what every football fans wants. But the real worry, the fundamental concern, is how long Xia will be there. Is this just a plaything for him?

“That and his background. I am not the first to say that when Xia first arrived it was very reminiscent of the Birmingham City saga and Carson Yeung. The issues over Xia’s past are a worry.”

“One suspects the issue is that football has very rapidly become beholden to China and the country’s money”

Simon Chadwick feels the whole subject of money, ownership and possible conflicts needs immediate attention. “I think the domestic FAs, continental FAs such as UEFA and the world governing body FIFA have got to revisit their existing governance structures and systems as a matter of urgency.

“Consider Suning, owners of [Chinese club] Jiangsu and Inter Milan [of Italy], while also touted as buyers of the Stellar agency business. Hence, Suning could sell a player, buy the same player and represent him in the deal … all at the same time.

“One suspects the issue though is that football has very rapidly become beholden to China and the country’s money, and football won’t want to rock this particular boat.

“In the meantime, China therefore goes about its business shrewdly, astutely, intelligently, without need to fear excessive forms of intervention or regulation … Yet I think there are some significant governance issues emerging from China’s overseas football investments.

“How players are bought, sold and represented is an important issue — see Fosun at Wolves, who also own part of [football agent] Jorge Mendes’ business. One of this business’ clients is Talisca, the Benfica player, who was touted over the summer as a Wolves signing. This inflated the player’s value, and in the end he went to Turkey,” says Chadwick.

Close to 40,000 are expected at Villa Park on Saturday to see the latest encounter between these two old rivals. These two club’s grounds sit a little more than 10 miles apart, as they have done for more than a century.

The area that sits between them is severely run down in many parts, but in the 19th Century it was one of the most heavily industrialized areas in Britain.

Its multitude of coal mines, iron works and factories, according to Charles Dickens writing in The Old Curiosity Shop “poured out their plague of smoke, obscured the light, and made foul the melancholy air”.

It was these factories and foundries that formed football. It was this background that provided the players, supporters and desire to create the world’s first football league as factories attracted more people from the countryside and made them into workers who were paid in cash.

The Factory Act of 1850 brought in a legal minimum wage and free Saturday afternoons — all work had to end on Saturday at 2 p.m. — and this, combined with the Victorian taste for both recreation and regulation saw the creation of the football club as know it today.

One academic theory about why football spread so quickly across England and then the world was that men had to use their hands all day in factories. Playing football with only their feet felt like a welcome novelty.

Aston Villa was actually founded by the congregation of the Villa Cross Wesleyan Chapel cricket team who formed a team because they were looking for sport to play in the winter months. Cloth merchant William McGregor, a committed liberal, Christian and a strong supporter of the Temperance movement, became the club’s first chairman.

Founding father

McGregor was also a visionary who after witnessing the local cricket leagues and reading about the baseball leagues in the United States. He formed not just Aston Villa but also the Football League in 1888. This brought in a professionalism that sought to end the widespread practise of illicit payments to the better players.

McGregor also wanted to stop the domination of English football by the southern moneyed elites who had learned the game at the fee-paying schools and had the time and leisure to continue playing in adulthood.

McGregor aimed to build a fair and transparent league open to working men. In essence, that league is the same one that Aston Villa and Wolves play in today and there is a statue of McGregor outside the Aston Villa ground.

Dr Xia will probably not walk past the statue on Saturday as he has stopped going to Villa’s games, saying he is busy with other business commitments. Instead he sends video messages to the team and uses his twitter page to communicate with fans.

It’s not clear if Dr Xia knows what inspired William McGregor to form the club he now owns or the league they play in, or if he knows that the first game between Villa and Wolves in 1888 ended as a 1-1 draw.

That inaugural English Football League season ended with Aston Villa finishing second out of 12 teams and Wolves just one point behind in third. Now the fans will be watching for the result of the game on Saturday, what happens for the rest of the season and indeed for the next 129 years.


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