March 6, 2021 10:46:14 am
In 2015, Chinese retail giant Suning went on a buying spree.
First, they purchased a football club in China. Then, they splurged on star players and superstar managers. And they were just getting started. In 2016, they bought majority stakes in Italian football giants Inter Milan for a reported sum of £230 million. After that, they paid a whopping £523 million to the English Premier League to show their matches in China from 2019 to 2022.
Six years later, they’ve gone bust. The Premier League terminated the TV deal. A ‘for sale’ board has been placed at Inter Milan. Their Chinese club closed down operations last week. And several players who helped them win their first Chinese Super League title four months ago are now without a club.
If Suning’s rise as a global player was seen as the epitome of China’s dream to become a world football power, their fall has put the country’s ambitions under the microscope.
The Jiangsu Suning story
Suning, one of China’s biggest bricks-and-mortar retailers, forayed into football following the country’s government-backed push to become the sport’s superpower. They started by taking over Jiangsu Guoxin-Sainty, a Nanjing-based club that played in the Chinese Super League. Upon takeover, the name was changed to Jiangsu Suning.
After that, in a way that became typical to Chinese clubs, Jiangsu spent millions to get some of the best players in the world. They lured Brazilian forward Ramires from Chelsea and made such an attractive offer to his compatriot Alex Teixeira that he picked them over Liverpool. To manage these stars, Jiangsu Suning got a superstar manager: Italy’s Fabio Capello.
This was followed by the company investing in Inter Milan and acquiring the Premier League broadcast deal. And it was all coming together nicely for them, at least in terms of results. In November 2020, Jiangsu Suning won their maiden Chinese Super League title while Inter Milan are currently on course to claim their first Italian Serie A crown since 2009-10.
However, their success on-field coincided with a troubled period off it for Suning.
According to Nikkei, Suning’s overseas retail acquisitions backfired in recent years and their woes were exasperated by the pandemic. The report added the company ‘net loss for 2020 at 3.9 billion yuan, a stark turnaround from a 9.8 billion yuan profit the year before.’
That forced Suning to cut back on its non-retail ventures, including Jiangsu, which had accumulated debts of roughly £67 million due to its spending on players’ salaries. However, despite an asking price of just one cent, Suning found no buyers for the football club and eventually pulled the plug last week.
Suning’s story isn’t a one-off.
Suning wasn’t the first Chinese corporate to venture into football, and neither were they the biggest spenders. But their exit has raised questions over the Chinese football model, which was basically to sign big names for big money with the hope it would make them a strong football nation – a strategy that for long was termed as unsustainable.
Last month, Shandong Luneng were thrown out of the Asian Champions League for unpaid salaries whereas Tianjin Tigers, one of China’s oldest clubs are on the cusp of shutting shop due to new Chinese league policy, which bars corporates from lending their names to football teams.
That rule change was enforced by the Chinese Football Association (CFA) in an attempt to remove the clubs’ reliance on corporates for cash injections to buy big players.
A lot of times, that money did not produce desired results. For instance, Shanghai Shenhua reportedly paid Argentine striker Carlos Tevez £41.5 million for a season, during which he played just 20 matches and scored only four goals. Tevez, in an interview with TyC Sports, called his seven-month stint in China a ‘holiday’.
To curb such instances, the CFA introduced a ‘transfer tax’ in 2017 – a 100 per cent tax on foreign signings. This also came at a time when the Chinese government was concerned about ‘capital leaving country’, according to the Guardian. Next month onwards, foreign players will get paid a maximum of £2.7 million per season as per the new rules set by the CFA.
It wasn’t just the foreign players’ salaries that irked the government. As per an iris-france.org report, in 2017, the Chinese government stepped in to curb overseas club acquisitions, calling it ‘irrational investments’.
Till then, multiple Chinese corporates had bought stakes in football clubs abroad, including Atletico Madrid (Wanda Corporation), Wolverhampton Wanderers (Fosun), Slavia Prague (CEFC Energy) and Inter Milan (Suning). Now, all of those investments have either been scaled down or stakes are sold.
Despite all the troubles, it’s still too early to say if the Chinese football bubble will burst. But the days of Chinese clubs spending big in order to become a preferred destination outside Europe for top players in their prime might be a thing of the past.
Instead, as state-owned news agency Xinhua reported, after a ‘high-speed, wild growth’ it is time to ‘respect the laws of football, respect the laws of the market, adhere to youth training and work for the long term.’
Chinese companies are still some of the biggest sponsors of the FIFA World Cup, a tournament the country aims to host in 2030. The target now seems to have realigned to develop young players now so that a formidable team can be fielded nine years later if their plans materialise.
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