Suning’s loss to Inter Milan underlines China’s inability to dominate football

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About ten years ago, Xi Jinping, the Chinese president, said had a dream: to turn the country into a global football superpower. That ambition was quickly supported by action and money. Chinese conglomerates poured money into the country’s domestic league, even attractive football stars based in Europe. Some companies spent money buying stakes in European clubs to raise the standards of Chinese football.

But China’s ambitions never got off the ground – and could be on the verge of disintegrating completely.

On Wednesday, US-based asset manager Oaktree Capital said took overr Italian football club Inter Milan after its Chinese owner, Suning Holding Group, failed to repay a 395 million euro ($429 million) debt on time. Suning had offered his stake in Inter Milan as collateral.

Suning’s loss to Inter Milan is part of a wider exodus of Chinese companies leaving European football. No fewer than twenty European clubs were owned by major Chinese investors in 2017; that had dropped to just 10 by 2021.

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Claudio Villa – FC Internazionale/Getty Images

Suning’s forced exit from Europe’s football pods is a decade-long experiment into whether flashy billion-dollar deals focused on elite sport could trickle down to build a real football giant.

“Looking back, there haven’t been many good examples of success,” says John Duerden, a longtime Asia football reporter. Chinese ownership of these European clubs did not result in huge investments or significant victories on the pitch. Several Chinese owners sold their shares in professional European clubs within a few years of purchasing them.

These large foreign investments in top professional football also did not translate into profits at home. The Chinese national team has not participated in the FIFA World Cup for more than twenty years.

China’s entry level is “broken,” said Tom Byer, a soccer youth development consultant based in Tokyo, Japan, with experience in China’s soccer system. “The biggest driving force in football is culture, and that doesn’t exist in China. Most Chinese families view football as a distraction from education, and they don’t want their children to play.”

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A “world football superpower”

China’s football achievements are a big miss compared to the ambitious plans unveiled in the mid-2010s.

In 2016, Suning bought a 70% stake in Inter Milan in what was one of the most high-profile forays into European football by a Chinese company. That same year, organizations such as the Chinese Football Association arrived put forward plans to make China a ‘world football superpower’.

Other Chinese companies, flush with cash from the country’s booming economy, bought stakes in European clubs. The Dalian Wanda Group bought one 20% stake in Spanish club Atletico Madrid in 2015, and subsequently signed a five-year contract naming rights deal when Atletico moved to its new stadium in 2017. Fosun International purchased the English club Wolverhampton Wanderers in 2016.

Football fans at the time were not concerned about the new Chinese owner of a club. “Nationality is secondary. As long as the results are good, fans tend to put those concerns aside,” Duerden said.

Conglomerates also poured money into the Chinese Super League, the country’s top domestic football league. In 2010, China Evergrande Group – then one of the country’s largest real estate developers, years before the collapse that caused the current real estate crisis – bought Guangzhou FC. From 2016 onwards, Evergrande financed expensive transfers of players from Europe to China. Other Chinese football club owners, including Suning, also financed their own transfers from Europe.

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Brazilian footballer Ramires arrives at Nanjing Lukou International Airport in China on February 9, 2016, after signing a four-year contract with Jiangsu Suning. Ramires was part of a wave of European players who moved to the Chinese Super League.

VCG via Getty Images

At one point the CSL competed Europe’s biggest leagues for money spent on transfers. According to data from Transfermarkt, a football website that collects data on player transfers, the country spent 418 million euros ($453 million) in 2016 and 543 million euros ($589 million) in 2017.

But just as business was taking off, authorities called time on these ambitions.

The Chinese Football Association ordered clubs to curb “irrational spending” on foreign players in 2017, and to limit their presence in top teams to support local talent. Three years later, in 2020, the CSL sponsors ordered to remove their brand names from local clubs.

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Then money got tight. Beijing’s push to rein in excessive lending in the real estate sector plunged Evergrande into a liquidity crisis. Government authorities taken over the company’s football stadium in late 2021. (Evergrande had defaulted on its foreign debt payments by the end of the year).

Former Inter Milan owner Suning also had a cash crunch. The conglomerate’s interests in a subsidiary of Evergrande decreased in value when the parent company crashed. E-commerce competitors such as JD.com also put pressure on Suning’s core business, limiting its ability to finance operations at its domestic club, Jiangsu Suning FC. The club forward dissolved of the 2021 season, just after winning its first-ever CSL title.

Suning’s loss to Inter Milan last week wiped out founder Zhang Jindong’s net worth. According to Bloomberg, the former billionaire was worth around $6 billion when his company bought Inter Milan in 2016. calculations. It’s almost zero now.

Suning made a name for itself in retail, selling electronic devices in thousands of brick-and-mortar stores. With a turnover of $35.5 billion for the 2020 financial year, the Chinese company ranks 328th in the rankings. Fortune’s Global 500 list 2021.

That was the last time Suning made the list, as its revenue fell to $10 billion in 2022.

Who owns the European clubs now?

Oaktree said in a statement shortly after it took control of Inter Milan: it said The initial focus will be on ensuring ‘operational and financial stability’. The company plans to involve more Italian and European members in the club’s management. (At the time of the Oaktree takeover, people of Chinese descent made up more than half of Inter Milan’s board, including the president.)

The US now has a greater presence in world football. Half of the teams in the English top flight now have that a certain level of American owned. And Inter Milan is now that the seventh club in the Italian top tier to be owned by an American company.

Gulf states are also starting to buy clubs from Europe’s top leagues. Paris Saint-Germain, owned by Qatar Sports Investments, dominates the French league, while British club Manchester City, owned by a company controlled by the United Arab Emirates’ royal Sheikh Mansour, is winning both domestically and in Europe is.

But some ownership interests are controversial. Human rights activists and some politicians to have criticized the takeover of Newcastle by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund, as “sportswashing” or the use of football to obscure the country’s human rights record.

Will China ever get good at football?

Chinese male footballers perform poorly on the world stage. The country’s men’s national team ranks 88th out of 210 teams, low for a country of its population size. The team has only qualified for the FIFA World Cup once, in 2002.

Byer, who previously held positions in Chinese football at the national youth level and at the Beijing Guoan Football Club, says that “most people have no idea about youth development.”

While China focused on the elite level, neighboring Japan focused instead on younger players. That “automatically increases the pool of elite players because the gap between the best and least developed players becomes smaller,” Byer explains.

Japan first qualified for the FIFA World Cup in 1998, but has qualified for every competition since. More Japanese players are playing in Europe’s top competitions, the pinnacle of professional football. (There are currently no Chinese footballers in Europe’s top leagues after Wu Lei left the Spanish club Espanyol in August 2022.)

China is currently participating in the qualifiers for the upcoming 2026 FIFA World Cup, which will be held in Canada, Mexico and the US.

Even Chinese President Xi jokes about his team’s performance. In November, after the Chinese team defeated Thailand’s in a World Cup qualifying match, the Chinese president said said the Thai Prime Minister Sretta Thavisin said “there was a lot of luck involved,” according to a post on the Thai government’s official social media accounts.

“I’m not so sure about their level,” Xi said. “There are ups and downs.”

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