Chinese Football and Common Prosperity – How Evergrande’s Financial Excesses Went Unchecked
27 septembre 2021
In 2013, Chinese club Guangzhou Evergrande won Asian football’s Champions League, beating FC Seoul of South Korea over two matches. In the deciding game, almost 56,000 fans were present at club’s Tianhe Stadium to watch their team lift the trophy
Two years later, in 2015, the club did it again this time beating Al-Ahli of Dubai, prompting some to speculate that the Guangdong province outfit might become Asia’s first global super club.
It was perhaps no surprise that Guangzhou found itself in this position; after all, Italy’s 2006 World Cup winning manager Marcello Lippi was in charge at the Tianhe in 2013. Lippi was succeeded by Brazil’s Luis Felipe Scolari, another World Cup winning coach, when the club won the title again in 2015.
Brazilian players also played their part in the victories; in 2013, Guangzhou’s star turn was Dario Conca, at the time one of the world’s highest paid players. Meanwhile, Elkeson played in both matches and has now naturalised so that he can play for the Chinese national team.
Guangzhou Evergrande has failed since then to win the Asian Champions League trophy again. Nevertheless, its domestic domination has continued with the club routinely finishing either first or second in the Chinese Super League table, sustained by player signings such as Brazilian Paulinho, formerly of Spain’s FC Barcelona and England’s Tottenham Hotspur.
Indeed, the club’s status as a member of Chinese football’s aristocracy appeared to have been confirmed in March 2020, when it was announced that it would be moving to a new home in the city. With much heraldry, ground was broken marking the start of construction for what will become the world’s largest purpose-built football stadium.
Once completed, it is envisaged that the venue (which is costing in the region of $1.69 billion to construct) will become a global icon and serve as the basis for China to bid for the right to stage the men’s FIFA World Cup tournament. It is also a quintessentially 21st century Chinese real estate; not just a stadium, but also a residential, leisure and entertainment development, part of a property bubble that has been inflating for some time.
The common denominator in this Chinese Super League team’s ascent and prominence is the Evergrande Real Estate Corporation. Founded in 1996 and based in Guangdong Province, by 2018 Evergrande had become the world’s largest real estate company. Its founder, Xu Jiayin, is one of China’s richest people, reportedly worth $30.4 billion. With some of his wealth, Xu has lavished resources on the Guangzhou club.
The club’s hires have often been amongst the highest paid in the world, coaches typically being paid upwards of $10 million a year. Its academy, which has often served as a beacon for China’s headlong rush into football over the last decade, cost around $400 million to create. Whilst the construction of the Lotus Flower stadium is currently forecast to cost $1.7 billion.
These are big numbers, though they are dwarfed by what faces the Evergrande Real Estate corporation, now the world’s most indebted real estate corporation. Faced with liabilities of $300 billion, of which $200 billion are cash payments made by homebuyers for houses that have yet to be built, the business is set to default on interest payments leading some to speculate that it is on the cusp of collapse. This would have ramifications way beyond Chinese football, indeed football in general.
For fans of Chinese football who are bemused on a regular basis by state diktats and interventions regarding everything from player tattoos to the numbers of overseas players who can be on the pitch during a game, there will be dismay at how little state control there’s seems to have been over Evergrande’s activities.
Ironically, some have referred to Xu Jiayin as China’s Donald Trump, but what is significant is that his political stock within China has been very high. He is close to the Chinese Communist Party, is a member of the Chinese People’s Political Consultative Conference, and has been bestowed with the title of ‘National Model Worker, one of China’s highest civilian honours.
Xu has also been a government advisor on the alleviation of poverty in China, something for which he has hailed president Xi Jinping as being a leading force in addressing. Such words are likely to have resonated in Beijing’s government offices, especially given Xi’s recent drive towards ‘Common Prosperity’ amid concerns about growing social disparities in China.
Yet Xu hasn’t simply been playing than the role of political sycophant, he has also positioned himself and his company well in terms of China’s wider ambitions. His investment into Guangzhou Evergrande wasn’t the vanity project of a passionate fan, it was made at a time when the private sector was beginning to stir its interest in football, something later given sustenance by Xi’s ascent to the presidency and central government’s declaration that it wanted China to become a leading FIFA nation by 2050.
His spending on the club also seemed to demonstrate some joined-up thinking – creating an academy to develop a sustainable talent pipeline whilst at the same time building global profile and prestige by spending to help make Guangzhou one of the world’s highest profile football clubs. And there was cooperation with the authorities too, with both Lippi and Fabio Cannavaro both moving on to coach the Chinese national team.
Otherwise, it is perhaps a mark of Xu’s standing in Beijing that he remains in charge at the Guangdong club. Other football club owners have come, gone and, in some cases, disappeared from view completely. Wang Jianlin acquired a stake in Spain’s Atletico Madrid, which he was forced to sell and return home. Retailer Suning bought into Italy’s Inter Milan and the CSL’s Jiangsu. Last year, the company was forced by the government to sell-up and focus on core business. Slavia Prague’s Chinese owner was imprisoned and is unlikely to get out for another twenty-five years.
By contrast, Xu stayed close to home choosing instead to invest his money domestically and support government policy from within. This is why there’s a distinct possibility that Evergrande will prevail, that its Guangzhou club will continue and the Lotus Flower stadium will be completed. The real estate corporation is deemed by some to be too big to fail. But so too are China’s football ambitions, which Evergrande has always supported.