How Soccer Investment Has Become Key to Sino-British Relations
wechat_bg

2016-11-04 06:17:27

The crowds calling for the resignation of Cai Zhenhua after the Chinese national soccer team lost to Syria in early October were nothing new. The Chinese Football Association president was only the latest target of fans’ ire, after the team’s capitulation all but confirmed that the country will continue to wait for its first World Cup appearance since 2002. 

A few weeks later, hope is in the air once more: Following the dismissal of the national team head coach, Gao Hongbo, after a six-match tenure that included four defeats, Marcello Lippi has taken the reins. The Italian boasts a World Cup-winning pedigree as well as a salary of around 150 million yuan ($22.2 million) per year. Soccer’s megabucks have finally permeated the national team setup, with the suspicion being that Lippi’s appointment was financed by outside investors.

Until now, Chinese businessmen have looked to European soccer as the preferred destination for their investments, with the English game their most favored recipient. The appeal of English soccer lies in its strong track record of overseas investment: 16 of the 20 clubs in the Premier League are either fully or partly owned by investors from countries including the United States, Russia, and the United Arab Emirates.

With the exception of the tumultuous relationship between Manchester United and the U.S.-based Glazer family, the Premier League has proven to be a safe place for investors to park their capital. Ever-increasing TV revenues buttress the stock values of clubs throughout the English leagues. 

Meanwhile, the steady regulatory and political climate is reassuring to industrial magnates from regions prone to economic and political uncertainty. The environment that lured in Roman Abramovich, the current owner of Chelsea, back in 2003 is still an attractive proposition to the likes of Lai Guochuan, Tony Xia, Fosun International, and China Media Capital, who have, respectively, acquired ownership interests in West Bromwich Albion, Aston Villa, Wolverhampton Wanderers, and Manchester City.

The deep pockets of Chinese investors, combined with their experience in juggling government directives with financial considerations, make them easy bedfellows for Westminster courtiers.

While there is a clear financial motivation for Chinese investors to bet on the English game, reports of President Xi Jinping’s personal fandom are thought to have encouraged both state-owned and private enterprises to sink large amounts of money into soccer. In 2011, Xi announced his “soccer dream” of China qualifying for, hosting, and ultimately winning the FIFA World Cup. The Chinese president’s passion for the game is said to date back to 1983, when he found himself overcome by a “moment of rage” when the national team slumped to an ignominious 5-1 defeat at the hands of a visiting Watford side.

Whatever the motivation, President Xi has the backing of the bureaucracy, with the National Reform and Development Commission unveiling a national soccer reform plan in April 2016. Setting out short-, medium-, and long-term goals, the plan outlines the establishment of 20,000 soccer schools and 70,000 pitches by 2020, which will draw as many as 30 million primary and secondary school students into the game. In the medium term, the plan also calls on Chinese Super League clubs to dominate the Asian Champions League within four years. The ultimate goal is the realization of Xi’s soccer dream in all its glory.

But if the national soccer reform plan centers on domestic development priorities, why have investors targeted the overseas game? At its root, it is because soccer has laid the foundation for the warmth and cooperation that has characterized bilateral political relations between China and the U.K. in recent years. Indeed, a bizarre selfie featuring Xi, former British Prime Minister David Cameron, and Manchester City striker Sergio Aguero was one of the more memorable moments of the Chinese president’s state visit to the U.K. in 2015.

Furthermore, Premier League coaches have visited China as part of the British Council’s Premier Skills program, while former England captain David Beckham served as an ambassador to the Chinese Super League in 2015. Beneath the symbolic gestures are indications that the British government is leveraging the country’s reputation as the home of soccer to secure investment. 

A BBC interview held with Salford University’s Simon Chadwick in September 2016 shed light on the valuable role soccer investment plays in British domestic policy. “One of the key enablers for this was [George] Osborne’s HS2 rail project,” he said, referring to the former British chancellor’s support for a high-speed railway to connect London with cities in central and northern England, including Birmingham, Manchester, Liverpool, and Leeds. To Chadwick, it comes as no surprise that the three clubs acquired by Chinese investors – Aston Villa, West Bromwich Albion, and Wolverhampton Wanderers – lie along the proposed HS2 rail route, nor that rumors of further acquisitions also coincide with planning for future high-speed lines.

For the British government, a steady stream of foreign investment is welcome in light of the recent result of the EU referendum — especially when the money is financing big-name policy initiatives. To date, HS2’s progress has been rather sluggish, while the ambitious Northern Powerhouse project —a vast economic rebalancing act that seeks to reinvigorate northern England’s former industrial areas — may also benefit. The deep pockets of Chinese investors, combined with their experience in juggling government directives with traditional financial considerations, make them easy bedfellows for Westminster courtiers.

But within the evolving context of Chinese soccer, investors who focus too exclusively on the overseas game risk being accused of not doing their part for the national cause. Prominent business figures, such as Alibaba founder Jack Ma and the chairman of Evergrande Group, Xu Jiayin, have preferred to focus on domestic soccer, establishing an academy staffed by visiting coaches from Real Madrid, with a capacity for 2,600 students. Xu has occasionally singled out Wang Jianlin, the chairman of Dalian Wanda Group who partly owns Spanish outfit Atletico Madrid, claiming that he has not done enough for the domestic game, unlike Xu and Ma’s own team, Guangzhou Evergrande Taobao F.C.

Despite Xu’s vexations, state soccer planners do not foresee a clear bifurcation between domestic and overseas soccer: Though the reform plan calls for 20,000 soccer schools, it also aims for China to host the World Cup by 2030. Wanda’s 2015 acquisition of Infront, a Swiss sports marketing agency closely linked to former FIFA president Sepp Blatter, is seen by industry insiders as a purchase primarily based on financial considerations, with the added benefit of strengthening China’s relationship with soccer’s aristocracy, which may bolster Beijing’s efforts to get the World Cup onto Chinese soil.

Indeed, the government’s support for soccer investment meshes well with orthodox  Chinese economic thinking, which highlights the importance of technology transfer. In the soccer sphere, the idea is that Infront will advise on best practices in sports marketing. Likewise, West Bromwich Albion, a club well-known for its strong youth academy program, will provide essential know-how to help Chinese clubs kick-start their own programs. Investment in the domestic game is important, but for China to become a member of soccer’s elite, it needs to take an integrated approach from the grassroots level upward.

Early signs show that British businesses are eager to assist Chinese policymakers as well. Former Liverpool stars Michael Owen and Mark Wright recently launched Red Sports, a venture that aims to help develop school soccer programs in China. Sue Wright, their business development manager, even directly addressed Xi’s soccer dream in the company’s promotional video.

While Chinese investors in the British game face unpredictable returns due to the uncertainties surrounding Britain’s future withdrawal from the EU, well-reasoned investments in both the domestic and overseas sports suggest that China sees direct investment in English soccer as a source of both short-term financial gain and long-term development of domestic soccer. Long-suffering fans hope that these initiatives, combined with Lippi’s appointment, will accelerate the national team’s stuttering climb toward the global elite.

(Header image: Recon Group CEO Tony Xia kicks a ball during a news conference announcing the company's acquisition of soccer club Aston Villa in Beijing, July 18, 2016. Jason Lee/Reuters/VCG)