English Premier League clubs could pay for banking on China cash

Mysterious Southampton shirt sponsors LD Sports pull out of three-year agreement after just 12 months citing pandemic struggles
English Premier League in battle with Suning-owned PPTV over Chinese rights payment as coronavirus and politics threaten deals

Jonathan White

Published: 8:50pm, 17 Aug 2020

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On the face of it, the Uefa Champions League quarter-final between Lyon and Manchester City on Saturday night was a high point for Chinese football.

Both clubs feature Chinese investment. City were part bought by China Media Capital in 2015, a 13 per cent stake costing US$400 million and coinciding with Xi Jinping’s visit to the Etihad alongside David Cameron and Sergio Aguero. The French side were given US$112 million for 20 per cent by a Chinese consortium led by IDG Capital Partners in 2016.

The deal, Lyon president Jean Michel Aulas said at the time, “will enable OLG to accelerate its international ambition, and its growth strategy, with a Chinese partner, which also symbolises in Lyon, a major location on the Silk Road, an ambitious and friendly cooperation between China and France.”

Nothing unusual in any of that or the soft soap language it was packed up in. City Football Group is owned by the Abu Dhabi regime, while semi-finalists Paris Saint-Germain are owned by Qatar and RB Leipzig were only founded by sports drink giants Red Bull in 2009. The other team, Bayern Munich, might be fan-owned but they are football royalty and the fourth richest club in the game. They are the world’s 24th richest team in any sport.

Manchester City striker Sergio Aguero poses for a selfie with President Xi Jinping and Prime Minister David Cameron at the Manchester City academy. Photo: Twitter

The talk is of sportswashing but for those outside European football’s blue-blooded, various shirted aristocracy, the money has to come from somewhere. That has seen clubs look further afield for investment, either through ownership, sponsorship or partnership.

The hope is that those three ’ships will end with a championship but silverware seldom follows.

However, the real worry is what happens when the investment is state-sanctioned but not state-backed?

While PSG and City are essentially owned by the respective governments, which is what Newcastle United fans were hoping for from the Saudi-consortium backed by crown prince Mohammed bin Salman, the same is not true of Chinese money.

Now with the White House and Westminster falling foul of Beijing, questions are beginning to be asked of Chinese money in European football.

Two women wearing face masks pass by a giant poster of Atletico Madrid soccer players at the Wanda Metropolitano stadium in Madrid in May. Photo: AP

Dalian Wanda Group’s 20 per cent stake in Spanish La Liga side Atletico Madrid in 2015 kicked off a US$2.5 billion investment from China in clubs across the continent, all of it encouraged by Beijing and China’s number one football fan Xi Jinping.

Then in 2018, Wanda, owned by China’s second-richest man, Wang Jianlin, was told to sell up its overseas investments, and that included the Spanish side. Beijing called the shots there, citing an end to “irrational” overseas spending, but its influence can be less direct.

When AC Milan owner Li Yonghong could not move his money out of China because of capital outflow regulations he defaulted on a loan and the club changed hands. It was a similar story with Tony Xia at Aston Villa. Neither tycoon was told to sell up but they had no option.

We have seen with English Football League side Wigan Athletic being placed into administration that there should be concerns with the EFL’s owners and directors test. These were reinforced over the weekend when it emerged that new owner Au-yeung Wai-kay indicated his desire to put them into administration before he actually took the club over.

Fixing the owners and directors test is one thing but even that cannot take into account geopolitical shifts and the whims of a country.

Take the English Premier League’s ongoing dispute with its China broadcast rights owner Suning. The retail giant’s PPTV arm bought the five-year cycle from 2017-2022 for US$719 million, a record at the time and a huge reason why broadcast money became so big.

Wigan Athletic’s DW Stadium will host EFL League One football next season after the club were relegated from the Championship. Photo: EPA

Now, they are holding out on a US$209 million payment and while the reason is said to be the coronavirus pausing the season, there are whispers that Sino-UK relations are playing a part. The EPL has reportedly retaliated by refusing a three-year extension.

Clubs have obviously come to rely on that money, just as they do their partners and sponsors.

Southampton’s massive shirt deal with LD Sports raised eyebrows last year, with the company consisting of little more than a website, and now the company has reportedly pulled out of its partnership two years early citing coronavirus-related financial concerns. That could cost the Saints nearly US$20 million.

As we have seen with the growing presence of Asia-facing betting sponsors, who often exist only for the term of the contract, nothing lasts forever. This weekend Blackburn Rovers saw their shirt sponsorship deal with 10 Bet, who operate Asia-facing mirror sites including one in simplified Chinese, end early.

Even brands of some repute can disappear overnight. Huawei were hugely involved in football then disappeared, probably kicking themselves for missing out on a “Huawei the lads” tie-up with Newcastle United.

Football is not only the global game, it is the globalised game. The financial impact of the pandemic is sure to affect investors local and overseas alike but there is only one foreign government that could have even more impact. Can even the most ambitious mattress partner bed down on their investment in the face of pressure from Beijing?

China, who Fifa credits with inventing football, is in a position to take the ball home when it comes to European clubs. Perhaps we will see just how big a football fan Xi is in the coming months.

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