Deisler123

I am back. Some more to update: Enjoy.

Part IV: The ownership of clubs in Chinese Super League – II: How rich owners run their clubs

Looking back at the 10-15 years of the development of the super league in China, owners come and go. Most (70%+) owners are not responsible at all, which is a reflect of what businessman are like in general in China. They (in general) are impatient, focus on the short-term interest and benefit, have no boundary of doing things, and only care about their own interests. This was, in general, believed to be due to the fact that the economy was developed so fast that everyone becomes money-oriented.

So let’s talk about how owners run their clubs in China.

Note here when I mention Chinese names, I will always go Last name first.

There are, in general, a few categories. Let me get to them one by one

Type 1) Very self-centred private owner, have some/little background of state support. Super rich. Do whatever they want

Example owner: ZHU Jun, owner of Shanghai Shenhua

Background: owner of the 9^th city, which is a company that operates online games (MMO in most cases). The company became super rich after running some Korean games and World of Warcraft in China.

Examples: He likes to speak in front of fans and media, and makes himself sound huge. He is very cocky, at the same time a crazy football fan. When his club played against a very famous club from Europe (cant remember which one) at a friendly, he played for half of the match. He promised to fans, after Chelsea won the champions league, that he will bring Didier Drogba and Nicolas Anelka to Shanghai. He did that – Drogba played for Shenhua for half season, then left. He didn’t pay his wages, then Drogba raise to FIFA, he got penalty of like 10mil pounds.

He was not very happy about the manager, and decided to sit with the manager in the games. Then he sacked the manager, and made himself as a manager for a few matches.

In 2014, he sold the club to Greenland (a state-owned super-rich real-estate company), under the pressure of Shanghai government.

So to summarise, Zhu knows football, he is a crazy fan. But he interferes how the club is run way too much.

If Dr. Xia is like him, Villa is in SUPER danger. But it is very unlikely that Xia is anything like him, so don’t worry too much.

Type 2) private owner, not very rich, huge passion on football, not very ambitious

Example owner: SONG Weiping – Hangzhou GreenCity

Background: not really too much to say about his company. He is not super wealthy. But I mention him here, because he is really passionate on football. He focused on youth camp, contributed quite a few players to national teams at different levels (ages). He spoke out against football fraud, which made him a hero in fans.

There are a few owners like him, nothing particular to say about them. They are just trying to keep their clubs survived in Super league. Their clubs have no hope to win the titles, and most years they have to fight for staying in the super league.

If Dr Xia is one of these owners, then nothing in particular to worry about. The worse thing is Xia will not have enough money to pump into the club.

Type 3) State owner, MEGA rich, don’t even know how many minutes a football game has, super ambitious (because of political need)

Example owner: National Electricity Network, owner of Shandong Luneng

Every season they will invest in serious money. However because they are a state-owned company, it is extremely inefficient in how they work as a club. A simple example here to help you understand: Say the manager decides to buy a player, he will tell the CEO of the club, the CEO needs to report to the ’leader/owner’ of the club, then reported to the head of the department in the company that deals with the club issue, then reported to his head, then….. Ok then the boss says yes or no, then managers knows that (from a headed letter with signature, which takes time). Then the manager approaches the player. The agent says: I am sorry my player agreed to join another club. Alrighty then, the whole process starts again. The example may be slightly exaggerated, but you get the point.

And the CEO of the club is often ‘assigned’ by the company boss, who often knows nothing about football. Everyone knows if a new leader comes to the house, what will they do first? Guess what, they will change all the policies and introduce new, exciting projects. Will they work? Only god knows. And if the club performed well, they will get promoted, leave the club and join another department of the company and will never touch football management again. If the club performed badly, they will be moved to another department of the company too.

So, if Dr Xia is this type of owner – Good luck, Villa. Pray for 1 in a thousand chance that will get you back to PL. Villa will not do too bad, so staying in Championship is probably what will happen.

Type 4) Private owner, ok-ish rich, want to test the water (for possible economic or political gain)

Example owners: 20%-30% of all clubs

They invest average money in the club, if the club doesn’t work out, they retract their investment and sell the club in half season or in 2 seasons, depending on how patient they are.

I have seen clubs simply got disbanded, all players lose their jobs etc. Mostly happened in the 2^nd or 3^rd division. It rarely happened in super league, as the local government will not allow this to happen- this will make them feel ashamed.

So better PRAY Dr. Xia is not this type.

Type 5) Private owner, super rich, determined to make the club success which leads to the success of his business and political development. May know something about the football but really use the club as a tool for his business empire.

Example owner: XU Jiayin, owner of Guangzhou Evergrande

He is a very special character I have to say. He served in the army, then moved to Guangzhou to start his career as a businessman. He operates his business empire like running an army – highly disciplined, he is THE boss, very strong character. He wants to be successful in every single thing he does.

He knew nothing about football. He was a volleyball fan, bought a volleyball club and invested a lot and won tons of trophies. Rumour said he has heard of the president and the head of province are football fans, then he bought his club immediately.

He invested sky-high money in the club – like 200-300 million pounds in the last few years. He wants the best manager and players in the team – Marcelo Lippi came, now Luiz Scolari. The team has 7-9 national squad players. He bought the best world class players, and if the club has no titles, he sacks the manager. Even the club is on the way to the title (2012 topped the group stage), he replaced the manager for Marcelo Lippi (rumour said President likes him, but no one can prove that).

He runs the club like an army (don’t get me wrong, it worked nicely – most Chinese players lacked discipline). A single match win bonus (for Asian Champions league) for the team is 1 million dollars (yes, you read it right, 1M per match). One player broke his bone for a key save in the final match of the group stage, he gave that player 1 million dollars as a reward that night. One player twittered and complained that he did not have 1^st team opportunity – next day he was sent to the reserve and never played again. He does not allow ANYONE to interfere how the manager runs the team – the CEO was chased by the journalists and he had to get in to the players' changing room to escape. That was only 5 mins. The CEO next day lose his 6 months salary and got a warning. He made his ‘6 DO’s and 3 Don’ts’ rules for all players – for example no smoking no alcohol no argument with referee and managers etc. Anyone who violates that rule, will have 1 million RMBs penalty or even kicked out from the club. In an end-season final party, the politicians wanted to cheer with the player (with wine), the player literally turned to the manager and asked for his permission. That was broadcasted live and I watched that – I was very surprised.

So, as I said in another post, if Dr. Xia is 50% as good as Xu (with some adjustment to English football ofc), I will not be surprised at all if Villa win the Premier League in 5 years.

After all this, I would like to give my own opinion on Xia’s take over.

If he bought Villa all by himself (with his own company), without any state support:

Then I think it will be either type 2 or 4. Much more likely to be Type 2 than 4, in my opinion. Villa may get promoted, but cannot do what Xia said about becoming one of the top world clubs. He is not that rich tbh.

If he has state support – in this case his own personal wealth is irrelevant.

I think he will be very likely type 5. The reason that the type 3 club does not work is because those owners do not have to make the club successful to be able to climb up the career ladder. The state support Xia may have is at a completely different level, which has the will of the government that they want to export influence, and football is a perfect platform for that ambition. Xia has to do well and the club has to perform well – otherwise his own business could be in danger (imagine what will happen if your wife asks you to wash the dishes, and you refuse that – same ending).

So, looking at the take-over purely from the 3^rd-party perspective, I actually would hope Xia has the state support. Because if he hasn’t, the best Villa can be is just a club that needs to worry about relegation back to 2^nd division every year.

Considering the current national strategy of China, I think it is very likely that Xia has state support. It is no secret that president likes football, he also wants to use football as a lead to a huge expansion in domestic market for economy growth. China has tons of foreign currency (5 trillion USD in their banks) and they need to be spent. And the strategy seems to be have global influence and soft national force (in terms of influence and economy), rather than hard force (like what US does in terms of military actions). You guys all know that the president of China visited the UK for 2 days – and he spent half day in Man City, right?

So I think it is quite likely he has state support.

If he has the state support, the best Villa can be is HUGE. And the worst? Very unlikely to be worse than worrying about relegation every year IMO.

We can only wait and see –

Doing something and doing something quick in the summer after the take over will be a very good sign. Because that means Xia has the urge to make the changes. In the next few weeks, everything will unfold.

Most Chineses owners like to interfere the managerial role, which never worked out. Xu never did that, so his club becomes very successful, based on enough budget he puts into the club. This is THE KEY to sucess for a chinese owner. If Dr. Xia ever decides to interfere what manager should do, nothing good will happen.

Part IV: The ownership of clubs in Chinese Super League – I: the owners

OK. Here comes the core topics, the ownership of clubs in China.

Now there are 16 clubs in the super league. They are located geographically quite uniform across east half of China (where economy is better developed). The northest club, Changchun Yatai, in the city of Changchun, has the similar latitude to Paris. The southest club, Guangzhou Evergrande, in the city of Guangzhou, has the similar latitude to Senegal. So domestic league in China is like a European Champions league in terms of flight time, which is why FA in China hasn’t increase the number of clubs to 18 or even more, apart from the obvious reason of keeping the high quality of league.

So how many of those 16 clubs are owned directly by government. None. Because government in China does not do business directly

How many of them are owned by state companies? Probably three : Shandong Luneng (by National Electricity Network, the central company that deals with electricity in China), Shanghai SIPG (by SIPG company that deals with harbours in Shanghai), Beijing Guoan (by Guoan, a state company, that deals with information, real estate etc.)

And all others are (theoretically) owned by private companies.

Here it is necessary to say a little about how business works in general in China, which is VERY different from how it works in UK. In theory everything in China is owned by the people, governed by the government. But it simply does not work in this century (Soviet Russia was an example of that). Because of that, government allowed private-owned business since 80s. That said, all large scale business has to have, in some form or another, involvement of government, either decision making or direct investment.

Because most (14 out of 16) clubs’ owners are involved in real estate/urban development business, so I will use that as an example to explain, in a nutshell, why government’s involvement is essential for the success of a mega company. To start with, all land in China is owned by government according to the law. If you want to develop a land, for example, in Beijing, you need to buy from government. The problem now is, how would you compete with more than 100+ mega companies that all work in this business with more than billions dollars? The answer is obvious, you need to convince the seller (government) in one way or another, either your plan is impressive, or you pay more, or …. (you can imagine the rest of the methods, right?). So after a few projects like this, you became a millionaire, having worked with the government for a few times – you need approval from government, you need borrow from the bank (most owned by government), you need to have contractors (some owned by government), and I can go on forever – you see the point here? You cannot do business without government, which is the regulatory body. Is it necessarily a bad thing? Not at all – it has proven to be successful in the last 20 years. Could it be better without the involvement of government? Maybe, but it is impossible to happen or prove. Why spend our brain cells on something that will never happen?

Plus China has a very strict policy on companies that receive funds from overseas, or buying in overseas countries. It is like the UK will never allow China to buy Royce – this may not be a very good example as it is much stricter in almost all sectors in China though. So if you want to invest overseas, what do you do? Yes, I guess you know the answer – you work WITH the government, in a form or another. Note that I am not talking about small business like I-have-a-million-pounds-so-i-want-to-invest-a-house-in-London type of things, which is probably not regulated by the government. Any major projects are normally (almost for certain) have the involvement of government – because those companies have some background of government at the first place!

I hope this helps you understand why business in China has little transparency (of course there are other reasons but we don't need to get into those as we are not students in economy). Because, put it in a simpler way, it is run in a different system! Is the system good, compared to what UK/US has? Who knows? Who even cares? Because there is absolutely NO WAY to test on this hypothesis and to prove it. It is like telling yourself you will become a millionaire, if you have done this, this and that. The statement is false and can never be proved, because it can never happen!

Relevance to Villa takeover: I dont know if Xia and Recon has state really backing them up. It is likely IMO. But even it has, directly or indirectly, the government in China will not say that (they will not deny either). Why, if you ask? It is simple logic - If China is thought to be monstorous, evil, corrupted with awful human rights record (I strongly disagree with that, although it often is claimed by some journalists working for CNN/BCC and people who make judgement based on a few youtube video clips but never been to China), every overseas investment by them being called as 'invading the world', and most often any chinese can be linked to such imagenary picture by some un-educated people (I got bad experience on this, trust me), is Chinese government so stupid and say: hey, England, I am coming to buy your clubs! And this is the start of our ambition!  They certainly aren't thick! 

Wants to write something about how Villa (and any foreign clubs) can benefit from having a few youth players from China. It is like what the advert you may have seen on internet which keeps telling you that you can earn 1000 quid at home for doing nothing. This is very much like that.

Why Chinese football players are so expensive?

You are probably right to say Chinese super league is nowhere near the premier league in terms of the quality of players, matches etc. True.

But you think those players are cheap, like what they are worth on the transfermarkt.com? Think again.

Just to give you an example: Currently, the most expensive Chinese player, Wu Lei, worth 1M euro shown on the transfermarkt.com. If his club, Shanghai SIPG, wants to sell him, the transfer fee will be about 10mil-20mil pounds. So 10-20 times more inflation. 

Why?

Simple, because in Chinese super league, you can register maximum 5 foreign players, and you can have maximum 3 foreign players and 1 Asian player playing on the pitch at the same time. And you cannot have non-chinese goalkeeper. And we all know the owners are super rich so they can buy Ramiras, Texeira etc, but you got to have good players in all 11 positions, right?

So what do you do? Simple, you pay much more, because we don't have a lot of excellent players in China. Alternatively, you buy a lot of good players and sell them at a higer price on day 2.

An example I have shared in another thread: Guangzhou Evergrande bought a chinese player, Xin Xu, from Athletico Madrid B team, for 5M euros. His value shown on the transfer markt.com? 50k euros at that time. 100 times inflation!

And junior players are so precious (because of 2000-2010 when football in China was completely dead) that they are even more popular even if they are not good at all. 

So a lot of european clubs started to do this- they sign good young players and train them - if they can make to the first team, great! that means sponsorships from China. if they cannot, even greater, they sell them back to China.

The problem for English Clubs is, chinese players cannot play here because it is impossible to get work permit, unless the football genius clause is claimed (which costs a lot of money, 10M pounds at least if I am not mistaken). But it is definitely worth researching for Villa if the owner is also keen on this. There are some way through, for example like what Chelsea is doing: buy and then loan out to other european leagues.

Who would say no to easy money?

hmm time for some Friday night's Majhong with my wife - will be back in 1 hour and finish the history story. The light at the end of the tunnel is coming

Ok, back from the game (like a poker game) - won 60 virtual coins from my wife and mother in law (worth nothing lol).

Update coming soon.

Here we go:

A short history about football in China – II – Light at the end of the tunnel

The story had to start with a club in Guangzhou, not far away from Hongkong, where people speak Cantonese. The club history can be traced back to year 1954, where it was structured like a traditional government-owned sport team (not interested in getting into details of this because most of these type of structures do not exist anymore). Used to be a good team and had quite a lot of legend players. Before 2009 there were a few time trades between owners and a lot of highs and lows. In 2010, the club was relegated into the second division by the FA (with Chengdu Sheffield United, who had link with Sheff Utd at that time as the name suggested) in China because they were caught to ‘match-fixing’ (not sure if the word is accurate, but they were involved in match control, betting etc.) Soon following that, Evergrande group bought the ownership of the club with 10M pounds. Then the ‘Kaiserslauten miracle’ started.

I think it is necessary to introduce a little about the owner of Evergrande Group, Jiayin Xu, who I think set a role model (a quite different one from Jianlin Wang who also invested in football) for all the upcoming investors in Chinese football market. (If Dr. Xia can be 50% as good as Xu, Villa will win Premier league in 3 years I am no kidding.) Xu served in the army for some years when he was young (which made him a very strict boss – we will come back to it later – and Most Chinese bosses are like this) then went down to Guangzhou to do business. He married his wife who is a daughter of a very rich family and started to step in real estate business. Before he took control of the club, his company is like 2-3 billion pounds worth. Worth mentioning he did not know anything about football – before buying the club, he invested in volleyball which is his favorite sport. The rumour said he bought the football as soon as he knew that the president and the head of province (at that time) are football fans, and soon after that, he stopped investing in his volleyball club.

The chairman of Evergrande Group, Xu, started to pump serious cash in the club. In the first season when the club was in the 2^nd division, he bought using sky-high numbers to buy 5-6 national squad players (including Zheng Zhi who used to play in Celtics and Charlton Ath.). He also bought Brazilian Muriqui for 3.5 mil USD (a record high) and then 10mil USD for Dario Conca (MVP of Brazilian League that year). Then they won the 2^nd division like a breeze. The following year they bought even more national squad players and won the super league with 20 points difference. Then a lot of expensive players came (Lucas Barrios, Alessandro Diamanti, Paulinho from Spurs and 45mil euros record Jackson Martinez from Athletico Madrid, and Alan (top scorer in Europa league), to name a few) in the last 4 years.

In the first year of Asian Championship league, the Korean coach led the team win the group stage. That night, Xu replaced the coach with Marcelo Lippi (with salary of 10mil pounds a year) with no mercy (although fans were pleased and later proven to be a right/harsh decision). Then Lippi took the club to the semi-final and lost there against Etihad. Same year, they won the super league again. Third year, in 2013, they won the super league and the Asian champions league. The 2^nd leg of the finals, there were 350million people watching that game live on TV (imagine if 350million people from China watching UEFA Champions league final between Villa and Barca ). They then won the super league in 2014 under Lippi, and 2015 under Luiz Scolari as well as Asian Champions league in 2015.

Worth mentioning that he invested 1 billion pounds three years, in partnership with Real Madrid, to build a football school (from year 0 to year 18) with 50,000 students (and counting...) as his youth camp. His ambition is to win the world cup, 'in line with' the football dream of the president's.

Now, Xu’s company Evergrande is now almost topping the real estate business league table, with 10 billion pounds annual income. He then stepped into a lot of new markets, and made profit there.

Interestingly, he is now elected as a non-party member of the national peoples’ council (not very accurate translation but it is like a member of the house in Westminster), with very influential power. I don't think I have to tell you what this means to a businessman in China. 

With the influence of success of his club (this is quite controversial as rival clubs’ fans hate this statement and think he destroyed football), fans started to come back to watch football, which lead to huge TV contract (1 billion pounds for 3 years, sold to an online TV company, LeTV), huge interest of rich businessman investing in the clubs (Ramires, Texeira, Gervinho, Lavizzi etc.), and increasing interests in youth teams (I will write a chapter on this as this will be of financial interest to Villa - Chapter done and updated).

And now basically there are 6-8 clubs now in super league that have  100mil pounds budget every year. They are rich and they want to win every title they can. Because of how business is run in China, most companies have state background. So the competition in super league is somewhat a competition between big heads in the state-owned companies. For example, Shandong Luneng club, owned by National Electricity Network (worth probably 50 billion USD if you really count everything in).

and btw last year Alibaba (at least 50-60% goods sold on ebay-UK are from them) bought half of the club (invited by Xu, so he shares 50/50 with Jack Ma, not 51/49.; this tells you how special Xu is as a businessman.), and now this club is on the stock market (not main stock market though).  

What is most relevant to the take over of Villa is, most of the owners in China see running a club as an opportunity to get political advantages (nothing wrong with that imo), and they will do their best to win titles. They DO NOT care how much money they pump into the club, because this is NOTHING compared to what they will gain, directly or indirectly, in their real business.

Part I: A short history about football in China (Dark history)

(Modern) football has been quite popular in China. But historically it was not the most popular one due to several reasons : 1) Chairman Mao likes table tennis; 2) Football requires big open land, which is a problem in big cities; 3) Chinese people in tradition do not like strong physical sports, especially those with direct physical contact. That is why table tennis, Badminton, volleyball are very good and popular in China.

There was no professional football till 1994, when the top division (called Jia A, literally means Top A) became professional. Then in 2003, it was changed to super league. In 9 years between 1994-2003, Dalian Wanda (owned by Wang Jianlin, the wealthiest man in China) won 7 titles, Shanghai Shenhua (the club have Guarin and DemBa Ba now) won 1 but later was removed due to fraud. Shandong Luneng won 1.

At the beginning of the Top A league, it was very successful. All stadium is full on match day, everyone is crazy about football. Huge market. Then bad things happened.

1)       A lot of players were caught to placing lots of money in match betting. Referees were bribed to control the match. A lot of Juventus-phone-call types of things. People were sent to jail. Fans started to reject to watch the league. Then business moved away from football because fans will simply not buy their products if the business is known to be linked to football.

2)       National team was a shame. It really was. Apart from playing in the 2002 word cup. The national team never had any good performance. Fans became so disappointed, then never care about football.

3)       Because of many reasons, including most of children being the only child in the family, too much pressure in studying, no football pitch to play on in cities, the registered number of football players in China was about 1,000 in total. Yes, you read it right- it was 1,000 total registered players in 1.4 billion people.

4)       The FA in China was run directly by government, which is not very efficient in managing football. They never made right decisions: a few examples here: a) all players need to pass a 12-mins running test – whoever cannot run 3km in 12 mins cannot play in the league, even if you are Messi. Ridiculous isn’t it?

      to prepare for Olympic games, the FA decided to form a virtual club for all selected U23 players, and make the club to play in the top league.

c) the funniest one – I am sure you guys will enjoy most and laugh for the whole day. One year two clubs need to do a draw (picking numbers) to decide who to get to the next stage of promotion matches. The FA gave them two white papers and ask them to write a number (0-9) on it, without knowing what another club writes. Then FA get the sum of two numbers. If the sum turns out to be odd, club A wins, if it is an even number club B wins. Sounds like a very smart and fair draw, right?

Nope, it is not. The key is the number 9 can be read as 9 or 6. LOL.

So both clubs wrote 6 (or 9) on the paper.

Then this is the best part – the head of FA asked privately, with two representatives in front of him, one of the club what the number they chose. They said it was 9. Then the other club said- we also wrote 9. Then they win (they were allocated the even number by FA at the beginning.) The whole process has no official monitoring and broadcasting. Then the club who lost the draw decided to make a formal complaint, but the head of FA insisted on the decision. The club then withdraw their club and quit the league.

So the football in China was literally dead since then. No fans in the stadium watching games, no sponsorships, no money invested in football or youth training. Nothing.

To be honest, I am not a fan of Villa club, at least not yet. I became interested in the villa’s take over by Tony Xia, not only because I am a Chinese who lives in the UK for many years and a football fan myself, but more importantly I am a long time supporter of Chinese football in general (20 plus years) and wish my home country can win world cup sometime in my life (quite ambitious I know lol). So I joined this forum and wanted to see how people react to the take over. I found, not surprisingly, most people don’t seem to have a clue of how business is run in China (why would you? J), or more relevant-ly, how Xia may run Villa in the future.

I therefore decided to write something about Chinese football. I have followed the Chinese top 2 division leagues in the last 15 years. Here I will try to tell you about how football as a business is run in China, based on that I will leave you to do your own prediction of Villa’s future.

When talking anything about China, my own experience is most Western people won’t understand the way we do things – and I found it is mostly due to the huge difference culture we have. So I will also try to include some explanation of the difference in way how people do things, which hopefully can make your reading much easier.

Happy to take any questions you may have – I always enjoyed to talk about football with my colleagues and friends from different countries and background.

10 minutes ago, Lerner's Driver said:

Seconded

OK. Will work on it - will be a long article so perhaps will be in a separate post for me to build story up. will foscus on how clubs are run in China - and try to avoid my own analysis because I may be biased in some way.