Swiss saints & sino-sinners: China’s soccer shadow play
Premier League's US$20b honey pot is bound to lure all manner of bidders, for the excitement, for the passion... but most of all, for the money
In the ongoing saga of the sale of Southampton Football Club, nicknamed “The Saints”, the contrasting backgrounds of the seller and buyer offer a world of illuminating insights all by themselves.
Katharina Liebherr, 39, inherited Southampton after her father, Markus, died in 2010 – and, seemingly, with a reluctance that was more than the understandable one of her personal grief. Her grandfather, Hans, founded the eponymous industrial and technology conglomerate Liebherr, and the family is famous in their native Switzerland for their success and wealth, and also their love of privacy. A privacy shattered when Markus snapped up the then failing club for an undisclosed but reported sum of about US$20 million in 2009.
The background of Gao Jisheng, 65, is very different. He served in a paramilitary Shanghai police unit after leaving school and then worked in management roles at state run factories. In 1990, after leaving the factories, he founded Lander Real Estate and, of course, made millions from property.
If Gao manages to close the Southampton takeover, it will be the most important Chinese acquisition in English football to date. West Bromwich Albion, Aston Villa, Wolverhampton Wanderers and Birmingham City were all sold to Chinese investors, but this is, in terms of scope and stature, a more significant deal.
It also comes at a time when Chinese investors seem active again. And in most of the current potential deals, the connections between Chinese investors and the Chinese state, do appear to be close.
After the initial explosion of activity that came after Xi’s 2014 “Chinese sporting powerhouse” declaration and his visit to the UK and to Manchester City in 2015 – after which a Chinese consortium, led by private equity groups China Media Capital and state-run Citic Capital, paid US$400 million for a 13% stake in Manchester City Football Group – there was an undeniable pause as Beijing seemed to be trying to separate the patriotic billionaires who are eager to join Xi Jinxing’s crusade from those who are perhaps more focused on rapidly moving their billions past China’s capital controls and into the murky washing machine that is international football.
However, Beijing appears to have released the pause button – at least for the trusted few.
At the end of April, it was reported by English media that London club Crystal Palace are being considered for a potential takeover by Chinese company Desports.
Now a successful and global sports marketing business, Desports was founded by Jiang Lizhang, who, just like Lander’s Gao, combined an early career in China’s security apparatus with good connections – and did so to very good effect.
Just one year after his 2003 graduation from the elite Whampoa Military Academy he had signed a sponsorship deal between global superstar Luis Figo and domestic Chinese menswear brand, Seven. The 37-year-old now manages sponsorship partnerships for the IOC and with football clubs across the globe.
There is Chinese interest at Everton Football Club too. At the end of April, it was reported that an unnamed Chinese consortium was in talks with the club about investment and “naming rights” for a new stadium.
While the Chinese state has not approved of many of the recent purchases of what it has seen as overpriced European football clubs, it has remained bullish over more solid “bricks and mortar” construction investments, just like Everton’s planned US$350m move to a new riverside ground.
Hull City too are said to be about to sign a deal with a Chinese consortium. Said to be worth US$170m, the deal is being driven by Hong Kong-based GreaterChina Professional Services, which has signed a memorandum of understanding with the English east coast club and is currently seeking funding from mainland China.
However, the takeover could yet run into delays as GCPS’ chairman David Yip Chung Wai was arrested last week by Hong Kong’s anti-graft taskforce, the Independent Commission Against Corruption. No reason has yet been given for the arrest and GCPS were quick to issue a statement to the Hong Kong stock exchange saying the GCPS board believed “the arrest of Mr Yip has no material adverse impact to the Group and the business and operations of the Group remain normal.” GCPS has also suspended Yip from its board.
How this will effect the Premier League’s “fit and proper person” rule remains to be seen, but a previous Chinese consortium that tried to buy Hull City failed the very same test.
The Dai family, which founded the Hong Kong-listed Renhe Group, are run by a brother and sister partnership. Dai Yongge and Dai Xiuli made their fortune by using their close Chinese military connections to help them win contracts to turn 30 city center air raid shelters into shopping malls.
In 2014 Forbes magazine claimed Dai Xiuli was one of the wealthiest women in China and worth US$800 million. Not bad going for the wife of an English teacher living in a modest suburban house in South London for 21 years.
The family’s main listed vehicle, Renhe Commercial Holdings, has a record of financial difficulties. Last year, ratings agency Standard & Poor’s described its corporate governance as “weak.” The Dai family failed the English Premier League’s “fit and proper” test because the acquisition involved offshore companies which made it hard to clearly understand the family’s sources of funding or whether they had sufficient income to run a top-flight football club. The Dai family are now in talks to buy Reading, a lower league English club.
While the specter of the Chinese state hangs over all these potential acquisitions – and indeed every Chinese investment in the UK and beyond – what is also central to it all is the fact that the English Premier League remains the world’s richest football proposition.
The league’s current TV rights contract for US$20 billion over three seasons will bring hundreds of millions to any club lucky enough to share the spoils.
It will, of course, attract chancers from all four corners. Be they communist ones, military ones, billionaires living in suburban London or just plain entrepreneurial ones, hitching a ride on a strong political wind. They will come.
For the excitement. And for the passion. But most of all, for the money.