NICOLAS PAPA WRITES — The European footballing landscape, or soccer, as we Americans call it, is undoubtedly the pinnacle of competition for the world’s most popular sport. The greatest players from around the world congregate in Western Europe to play against the best of the best, while some of the world’s wealthiest people bring huge investments in an attempt to get a slice of this incredibly profitable pie.
Since Russian billionaire Roman Abramovich’s 2003 purchase of the controlling financial interest in the London -based club Chelsea, European soccer has become a hotbed of foreign investment, particularly from Asia.
The current trend of Chinese investment patterns into foreign markets is perfectly represented in the microcosm that is European football. Between 2015 and 2017, investors from China funneled almost $US2.5 billion into ownership of European football clubs. Italy’s Inter and AC Milan, England’s Manchester City, Southampton, West Bromwich Albion, Aston Villa, Birmingham City and Wolverhampton Wanderers, Spain’s Atletico Madrid, Espanyol, and Granada CF all had equity stakes purchased by Chinese investors.
Why is this happening? Professors Alan Smith and James Skinner of the Institute for Sports Business at Loughborough University, London, believe that Chinese investment in European football is the result of corporate interest rather than a love of the “beautiful game.” Buying a controlling interest in the club gives investors direct access not only to a growing revenue stream but to control over some of the most internationally recognizable brands. Chinese investors can use their position within clubs to aggressively market their corporate products.
For example, Suning Holdings Group, one of the largest non-government retailers in China, purchased controlling interest in Inter Milan (one of the most historic clubs in all of Europe). In doing so, it assumed severe club debts, all for the stated goal of bringing Suning further into European and international markets by using the club as a medium for promotion. The Wanda Group’s Wang Jianlin, one of China’s richest men and an owner of 15% of Atletico Madrid states, “The Wanda Group is not solely about making purchases in the sports industry” but is designed to “enlarge and strengthen its business in related industries like tourism through involvement in the sports industry… the longer you build your brand, the better you’ll benefit. That’s the merit of the sports industry.” Put simply: Owning a football club allows these Chinese billionaires and corporations to funnel domestic customers into their newly bought footballing brands while simultaneously promoting their corporate products to Europeans and other international viewers.
This trend of Chinese investment as a means of brand promotion is not simply a fad. It is a direct result of Chinese governmental policy. Dr. Jonathan Sullivan, from the University of Nottingham’s Asia Research Unit and a co-founder of the China Soccer Observatory, maintains that these investments were directed by Chinese General Secretary Xi Jinping. A self-confessed lover of football, Xi Jinping sees the sport as a tool to be used by the Chinese government. Sullivan maintains that the Chinese government and its General Secretary’s primary interest in such investing helps raise the country’s international profile as a global economic player and buys the nation some good will within the international market.
Sullivan also contends, though, that Chinese investment into European soccer has stalled recently. This is a result of the worsening relationship between China and western nations, European concern over Chinese governmental oversight of these investing corporations, Chinese fears of excessive capital leaving the nation and a general concern over the short-term profitability of these clubs as a result of the coronavirus pandemic. Still, these concerns in no way mean the trend will fade completely. As there is an increase of American investment in clubs like Liverpool F.C., Parma, and Fiorentina, we can expect the Chinese to eventually rebound.
Expect, then, European Football to act as a battle ground for Chinese corporations, and by proxy the Chinese government, fighting for control of the international economic market for many years to come.