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Insight to Villa’s take over by Tony Xia - How football as a business is run in China

Deisler123

By Deisler123
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Deisler123 Newbie

Deisler123

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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.

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Deisler123 Newbie

Deisler123

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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?

      B)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.

Edited by Deisler123
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Deisler123 Newbie

Deisler123

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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 2nd 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 2nd 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 2nd 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. :D

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.

Edited by Deisler123
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Mark Albrighton Grand Master

Mark Albrighton

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Think my brain is overloading with all this takeover talk. At the start of the writing a number on a bit of paper anecdote I was convinced that the story would end up being whoever writes the highest number wins. :wacko:

Great stuff though Deisler, much appreciated. :thumb:

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Pilchard Newbie

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Thanks Deisler - I'm sure some questions will crop up!

One that comes to mind is what kind of structure do Chinese clubs work with? Traditional CEO - Manager - Sporting Director? Is it likely we will see 'moneyball' tactics when looking at players? 

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Deisler123 Newbie

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Thanks guys for taking time to read! this makes me feel at least I want to finish the story.

6 minutes ago, Pilchard said:

Thanks Deisler - I'm sure some questions will crop up!

One that comes to mind is what kind of structure do Chinese clubs work with? Traditional CEO - Manager - Sporting Director? Is it likely we will see 'moneyball' tactics when looking at players? 

You will be disappointed, Pilchard.

Back to write more :)

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Ginko Collaborator

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Like the others said, Deisler, an interesting story and thanks for taking the time to give us an insight into Chinese football.

We're glad to have you on the forum and welcome.

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