🇨🇳 Why Chinese Owners are Causing the Demise of Several European Football Clubs

I released a video last week which has become my most watched shortform video of all time in just three days of release.

I wasn’t entirely surprised that its popular because I make great videos it’s a truly fascinating topic and one we will explore in greater lengths today

On the 20th of May, Inter Milan got taken over by Oaktree Asset Management. This happened because their current owner Steven Zhang missed a payment to Oaktree to repay one of their many debts.

To understand how such a major club can find itself in such a chaotic mess we have to learn a little about how some of the decisions made in 2016 by President Xi of China are having major ramifications on European football. Lets dive in…

To set the scene, lets rewind a decade. Ten years ago President Xi declared that China would begin a journey to become a global sporting superpower and proclaimed that the sport of “Soccer” would be a major part of the countries’ transformation.

These weren’t just words hwoever, he passed legislation that allowed two things:

1. Chinese football clubs could sign foreign players far easier than before (remember when they were buying everyone?)

2. The wealthy Chinese elite could buy overseas sporting assets much easier than they could previously (tax breaks for the purchase of European football clubs)

As a result, a lot of wealthy Chinese investors saw this as a brilliant way to diversify their portfolio and get their money out of the Chinese state. There were a lot of them too. Here are some of the clubs they invested in:

• West Bromwich Albion

• Aston Villa

• Inter Milan

• AC Milan

• Reading

• Northampton

• Manchester City (China Media Capital bought a minortity stake in the City Football Group)

• Wolverhampton Wanderers

All the above saw their club receive majority or minority investment from Chinese owners at some point between 2014 and 2016.

However, shortly after this massive proclamation from President Xi, the Chinese economy started to show signs of turbulence. Especially in the real estate sector.

The massive Evergrande collapse of 2021 was the result of several years of slow decline, not helped by the Covid pandemic.

Two years after his 2014 declaration, President Xi had a u-turn and proclaimed that the wealthy elites need to focus their investments on the domestic market instead. All of a sudden, the CCP decreed that overseas acquisitions in sports clubs, cinemas and real estate were “restricted” for Chinese investors.

So picture this, your team has just got a shiny new owner, but that owner cannot access any of their wealth back home. They therefore cannot spend their own money to

• Improve the clubs infrastructure

• Buy players

The only way in which they could do either of these things were to:

1. Sell players to realise more club profit

2. Make more money from within the club (win more, garner more commercial deals, sell more shirts)

3. Borrow money from elsewhere to stay afloat

This became a serious problem and saw a series of clubs suffer:

Aston Villa: Tony Xia bought the club in 2016. He sold the club in 2019 days before Aston Villa were set to enter administration. He missed several payments along the way

Reading: Dai Yongge still owns the club but has not spent a penny on the team in three years. Staff and players have been unpaid. Reading have been docked points on 4 separate occasions as a result. Fans in turmoil.

Wrote an entire newsletter on that situation!

AC Milan: Li Yonghong borrowed money from Elliot Capital to stay afloat. Couldn’t pay them back and lost club to Elliot as a result!

Inter Milan: Steven Zhang borrowed money from Oaktree Asset Mgmt to stay afloat. Couldn’t pay them back and lost club to Oaktree as a result. Eerily similar story to above

There was also an interesting situation at Atletico Madrid where the Chinese billionaire Wang Jianlin bought a 20% stake then sold most of it three years later.

There are more issues at Wolves too with very similar stories due to Chinese owners.

Those who haven’t sold yet are stuck facing the dreaded position of not wanting to sell their asset as the value has dropped substantially (Reading). Those who have either got their club taken from them (Inter and AC) or sold at a loss (Aston Villa).

It’s a scary situation as something completely unrelated to football has had rife ramifications on the lives of the players, the staff and the fans of many football clubs.

League intervention from Europe is not possible either. The English Football League for example cannot do much to make President Xi to make it easier for Dai Yongge to access his capital back home.

So what gives?

The answer is unclear as of yet.

Many football fans often think their teams’ sporting success is entirely dependent on their on-pitch performance. The geo-political landscape in China is a stark reminder that foreign ownership is NOT a pre-requisite for success and football is not always the answer.

I’m carefully watching the situation over in Reading. Check this tweet to get a glimpse of where that club is at the moment!

Similarly, to see my very popular video on Inter Milan, click HERE.

See you next week.