Thursday, July 21, 2016

European football: meet soccer's 'hot money' new club owners from China

China’s goal to create a domestic sports economy worth $850 billion by 2025 means that football is fast becoming a vital component of an emerging industrial sector. Now Chinese businesses are showing an "intense interest" in acquiring European soccer clubs. Simon Chadwick, Professor of Sports Enterprise at Salford University Manchester, examines who they are, and what their motives are when buying a club.

IF RECENT REPORTS ARE to be believed, we are a matter of days away from AC Milan finally revealing who its new owners will be. The club announced some weeks ago that it has been sold to Chinese investors, even though there is still some mystery surrounding the club’s acquisition price.

This mystery is symptomatic of stories that have swirled around the Rossoneri for months. Reports have variously identified search engine Baidu, alcohol brand Maotai, and conglomerate Alibaba as being the prospective buyers of one of Italy’s best-known and most iconic clubs.

At the same time, rumour and counter-rumour have left fans of English clubs West Bromwich Albion (of the Premier League) and Wolverhampton Wanderers (of the Championship, the tier below the Premier League) bewildered by the array of possible new owners reportedly seeking to buy their clubs. 

Over the last week, Liverpool has joined this list, with some reports suggesting that art dealer and entrepreneur Liu Yigian will buy the club, and in doing so make The Reds China’s biggest English purchase yet.

At the time of writing, Albion fans remained enthralled by the prospect that Wang Jianlin, owner of the Wanda Corporation and one of China’s richest men, could be the club’s new owner, while Wolves fans have been on tenterhooks, faced with the possibility that Robin Li of Baidu is their club’s Chinese purchaser.

At the same time, Chinese retailer Suning has recently followed-up its earlier acquisition of Jiangsu of the Chinese Super League, with the purchase of a 70% stake in AC Milan’s cross-city rivals Inter Milan.

I have previously detailed China’s football goals and why it is perhaps no surprise that we have seen several European football clubs being acquired by Chinese investors. However, in the more specific cases noted above, one is still left to ask who these people and organisations are, and what their motives are when buying a club.

A recent report by the BBC highlighted the composition of club owners in the Chinese Super League. 

All 16 CSL clubs are owned by businesses from these sectors (Source: Simon Chadwick)
The predominance of real estate investment in Chinese domestic football is significant, especially as we have seen little evidence of such investments in overseas clubs. Arguably the most significant reason for this is that real estate and property companies are effectively dependent upon the state for planning permission. At the same time, in China there is intense competition for land, particularly in urban areas.

Being seen to publicly support the state’s pursuit of its football goals is therefore one way of navigating through the red tape, thereby easing the route towards successfully securing planning permission. It also provides a competitive advantage when companies are bidding to secure use of land. It is surely no coincidence that Chinese football’s most successful recent club (Guangzhou Evergrande) is owned by a real estate corporation.

Real estate management is much less of an issue for Chinese investors in overseas clubs, which explains why other types of corporations have been in the vanguard of recent European acquisitions. Upon securing a 20% stake in Atletico Madrid, Wanda owner Wang explained how Madrid would become a hub in a global entertainment axis stretching from Beijing through the Spanish capital to Los Angeles.

Wanda now owns AMC, the cinema business, as well as Legendary Studios in Hollywood, while recent rumours suggest the company is also considering a bid for Paramount Studios in Los Angeles. Given Wanda’s additional ownership of Infront Sports and Media, and Ironman Triathlon, it becomes clearer that Wang sees football as an entertainment product, part of a vertically integrated global business empire.

There are some similarities between Wanda, and Baidu and Alibaba, albeit that the latter two have core businesses that operate in digital spaces. Baidu is best known as a search engine, while Alibaba started out as an e-commerce company. Given the voracious appetite of new Chinese consumers for online consumption and social media, it is inevitable that both need content to drive their business models. Football provides this content and is a proven point of engagement for users.

Aside from Alibaba’s ownership stake in China’s Guangzhou Evergrande, it remains to be seen whether either company will acquire a European club. This contrasts with Chinese electrical retailer Suning, which owns both the Chinese Super League’s Jiangsu club and Italian Serie A’s Inter Milan. Stories continue to circulate as well that Suning is bidding to acquire player agency Stellar (which, among others, represents Real Madrid’s Wales star Gareth Bale).

Suning’s ownership of two clubs and, potentially, an agency that could represent players moving between them poses some interesting ethical and governance issues. That aside though, one is left to ask why a high-street store chain seems intent on creating an integrated football supply-chain business?

The answer is: probably for the same reasons as Wanda, Baidu and Alibaba. is one of China’s largest e-commerce platforms, while its stores sell electrical items such as computers, televisions and so forth. Strategically, Suning’s rapid, decisive moves into football indicate that the business seems intent on creating and managing the content that fans and consumers can access via the equipment they can buy in Suning stores.

Intense interest in Europe

China Media Capital (CMC) is probably best known in football for its £265 (USD $350) million purchase of a 13% stake in English club Manchester City. City’s existing ownership structure (the club was bought by Abu Dhabi’s ruling family in 2008) implies that Chinese investment in the club has a geopolitical and strategic dimension to it. Given Abu Dhabi’s oil reserves, which China presumably wants access to, the tie-up seems logical.

The relationship seems even more logical given that CMC is a state-backed firm, effectively an organisation that represents China’s investment interests abroad. At one level, CMC is therefore something akin to a sports sovereign wealth fund, which has been set up to engage in long-term, revenue-generating investment opportunities. At another level, the firm appears to have been tasked with identifying properties in which to invest that are likely to have a significant impact upon the development of football in China.

Beyond the politics, and China’s corporate juggernauts, other Chinese businesses are taking an increasingly intense interest in European football. Several weeks ago, Tony Xia and the Recon Group acquired Aston Villa, a club recently relegated from the English Premier League. Xia joins the likes of Hui Wang and United Vansen International Sports at Den Haag in the Netherlands, and Li Wing-Sang of Ledus at Sochaux in France, in acquiring a European football club.

The peculiarities of running a business in China means that such companies and their owners are likely to benefit from them contributing to the national football effort. One might call this corporate or state-level guanxi. Investor intentions, though, are not always political or indirectly commercial, as there are likely to be other motives too for their sudden engagement in football.

One reason is that, given China’s goal to create a domestic sports economy worth $850 billion by 2025, football is fast becoming a vital component of an emerging industrial sector. However, at the same time, the financial value of sports properties in China is booming, something that concerns investors. As such, what has been termed by some observers as ‘hot money’ is being invested offshore to mitigate risk in the event of the Chinese sports market over-heating.

Critics might interpret the phrase ‘hot money’ as being a euphemism for something more unsavoury. In this respect, the case of Carson Yeung, who bought English club Birmingham City in 2009, is proving to be unhelpful to the new wave of Chinese investors.

Indeed, with Yeung in mind, the response of Europeans to the likes of Xia has been polarised. While some fans see the promise of Chinese Yuan being a saviour for their clubs, others adopt a rather more literal interpretation of ‘hot money’. 

Suspicions in Europe remain that Chinese investment is the vehicle for something which, at the very least, could be unethical.

Simon Chadwick is ‘Class of 92’ Professor of Sports Enterprise at Salford University, Manchester in the UK, where he is also a member of the Centre for Sports Business. First published in The Asia and the Pacific Policy Society Policy Forum. Read the original article.

See also: China’s push for FIFA World Cup victory (through taking over the world game) (19 June 2016); Chinese football and future power: not simply in the sport to play the game (23 Apr 2016); China's clear signal to the global football game: the centre of power is shifting (10 Feb 2016); Do Chinese fans prefer traditional football clubs? (9 Jan 2007); Report: Still a market for ManU tours to China (29 Sep 2005)

Sunday, July 10, 2016

Jihad v Football: Islamic State's love-hate relationship with the World Game

That Islamic State and other Jihadist groups fundamentally despise soccer was born out again recently with disclosure of IS’s plans to bomb football stadia in multiple countries and their public execution of four players of the Syrian city of Raqqa’s disbanded Al Shabab soccer team -- Osama Abu Kuwait, Ihsan Al Shuwaikh, Nehad Al Hussein and Ahmed Ahawakh. According to Dr James M Dorsey, a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies in Singapore, an analysis of IS’s policies exposes a “convoluted love-hate relationship” with the World Game:

IF THE ISLAMIC STATE (IS) was serious about attacking Euro 2016, its plans clearly never materialized. Leaked transcripts of the interrogation of one of the attackers of Brussels Airport in March leave little doubt however that soccer figures prominently on the group’s target list. So does this month’s beheading in Raqqa of four Syrian players. Yet, what emerges from analysis of IS’s policies is a convoluted love-hate relationship with the world’s most widespread expression of popular culture.
Mohammed Abrini, a Belgian of Moroccan, descent, gained notoriety as the man with a white hat, after he was seen walking away in an apparent snap decision not to commit suicide alongside his two mates in the 22 March suicide attack at Brussels airport in which 34 people were killed.
Targeting stadiums
In testimony, following his arrest at the end of a two-week manhunt, Mr. Abrini admitted, according to a just leaked transcript of his interrogation, that he had taken pictures on a visit to Britain of Manchester United FC’s Old Trafford stadium.
Earlier reports said that authorities had also found pictures of Aston Villa FC’s stadium in Birmingham alongside images of the city’s Bullring shopping centre and the recently revamped Birmingham New Street train station on Mr. Abrini’s cell phone.
Despite being part of an IS cell believed to be responsible for targeting Paris’ Stade de France in November 2015 in a wave of attacks that left at least 130 people dead, Mr. Abrini insisted in his interrogation that his pictures did not constitute part of a reconnaissance mission.
Mr. Abrini reportedly also told Belgian police that his cell had originally planned to attack this month’s Euro 2016 tournament in France but had opted for Brussels airport because it feared that authorities were closing in on it in the wake of the Paris attacks.
Often fervent fans
With little is publicly known about Mr. Abrini’s life, it is unclear to what degree he was passionate about soccer. However, Mr. Abrini’s apparent interest in soccer mirrors a pattern among militant Islamist and jihadist leaders, including self-declared IS caliph Ibrahim Bin Awad Alqarshi aka Abu Bakr al-Baghdadi, and foot folk.
They are and even former players who nonetheless do not shirk from targeting local games in a geography stretching from Iraq to Nigeria as well as big ticket European and World Cup matches whose live broadcasts hold out the promise of a worldwide audience.
An online review conducted in 2014 by Vocativ of jihadist and militant Islamist Facebook pages showed that their owners often were soccer fans.
In fact, nowhere is the jihadists’ convoluted love-hate relationship with soccer more evident than in the contradictory policies of IS. IS is notorious for its targeting of soccer fans, including the execution early last year of 13 teenagers because they had watch an Asian Cup match between Iraq and Jordan on television.
Crowds in IS’ Syrian capital of Raqqa were forced earlier this week to attend the public execution of four players of the city’s disbanded Al Shabab SC soccer team -- Osama Abu Kuwait, Ihsan Al Shuwaikh, Nehad Al Hussein and Ahmed Ahawakh -- on charges that they had been spies for the People's Protection Units (YPG), the Syrian Kurdish militia that is in the frontline of confronting IS on the ground in Syria.
In both the cases of the teenagers and the players it remains unclear whether soccer was the sole or primary reason for their executions. What is clear however is that while IS ideologically condemns the sport as an infidel invention designed to distract the faithful from their religious obligations, it has yet to announce a unified policy towards soccer or apply existing rules uniformly across all territories in Iraq and Syria that it still controls.
Islamic State opportunism
IS moreover has not shied away from using soccer and former players in its recruitment videos.
Multiple stadiums in cities and towns in Iraqi territory north of Baghdad have been targeted by IS in recent years. Various soccer matches in Europe in the immediate wake of last November’s Paris attacks were cancelled because of perceived threats by IS.
IS has never formalized its banning of soccer but the group propagates it on the streets of towns and cities it controls and in mosques as well as public Internet access points where only IS-sanctioned content can be accessed. In fact, Soccer was initially tolerated in IS early days in Raqqa.
IS subsequently introduced an informal ban. The ban’s enforcement is however inconsistent and contradictory. The group has frequently requisitioned soccer fields for a variety of purposes, including as shelters and car parks. Al Shabab’s Raqqa stadium is believed to house the group’s police force.
New book: The Turbulent World of Middle East Soccer
Children have been seemingly exempted from the ban and IS video clips show fighters in town square kicking a ball with kids. Yet, the age limit appears to vary. In Manbij, a town near Aleppo, children older than 12 are forbidden to play the game. In Raqqa and Deir-ez-Zor in eastern Syria the age limit is believed to be 15.
Foreign fighters have similarly been allowed to own decoders for sports channels and watch matches in the privacy of their homes
IS, moreover, seemingly randomly, at times allows the public to watch international matches and at others cracks down on those following a match on television. IS raids cafes that broadcast games without permission, frequently beating their patrons.
The group authorized the showing of the FC Barcelona and Real Madrid derby a week after the Paris attacks, but at kick-off rescinded the permission and closed down cafes and venues broadcasting the match because of a minute’s silence at the beginning of the game in the Madrid stadium in honour of the victims of the attacks in the French capital.
“IS policy towards soccer is driven by opportunism and impulse. The group fundamentally despises the game, yet can’t deny that it is popular in its ranks and in territory it governs,” said a former Raqqa resident.

Dr James M Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of W├╝rzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog and a just published book with the same title.