Has the Chinese transfer market bubble burst?
21 March 2019
Big changes in Chinese football on the transfer scene, but football keeps growing in popularity.
English clubs are different to most European clubs - therefore the changes in China will affect differently.
In January 2016 Liverpool were desperate to sign a striker as German coach Jürgen Klopp were looking to make his first major signing. With £32,5 million summer signing Christian Benteke far from his best, and with Danny Ings, Divock Origi and Daniel Sturridge all out injured, Liverpool who had scored only 25 goals in 22 Premier League matches looked well out of firepower up front.
Liverpool consequently focused in on the in-form Brazilian international Alex Teixeira from Shakhtar Donestsk to sort out their problems. It seemed only a matter of time before the transfer would go through.
However, in the nick of time Chinese Super League Jiangsu Suning swooped in to steal the deal and break the Chinese transfer record with a sensational £38 million transfer fee.
Bold statement from China
The deal was a bold statement that Chinese Super League clubs were ready to challenge Premier League sides for the best players in the world.
“I remember my English colleagues were shocked that a club in China were able to snub Liverpool in the transfer race for a player of that quality”, says Mads Davidsen who was technical director at Shanghai SIPG at that time.
Stop spending money on Carlos Tevez and Oscar. And start spending money on Chinese talents
Arsenal coach Arsene Wenger also in 2017 expressed his concern that Chinese offers would become the benchmark for Europe and at the same time the leading sports marketer Andrew Georgieu said “the CSL will overtake the Premier League at some point. The only thing is I don´t know is how long it will take.”
Statistics were backing up such remarkable statements. After sports-loving president Xi Xinping four years ago had expressed his ambition for China to become one of the world´s leading football nations and win the World Cup by 2050, it sparked off a virtual transfer frenzy among Chinese Super League clubs as companies and business tycoons went to extra lengths to prove their dedication for the project.
In 2015, clubs in the Chinese Super League paid out £116 million on players, a jump of 65 per cent superseding the Premier League's rise of eight per cent. Chinese clubs also paid the highest average transfer fee with £3,3 million per player compared to the overall average of £1,57 million. However, these numbers were absolutely dwarfed by the net spend fees by CSL clubs in 2016 and 2017 as they shelled out £295 and £332 million, respectively.
But the Chinese government became concerned with large amounts of foreign currency flying overseas. Money was being spent going into the pockets of overseas agents and players without any conjugal benefit for Chinese football.
A series of measurements was then implemented during 2016 that in essence were focused on China First.
“The message from the government was: “Stop spending money on Carlos Tevez and Oscar. And start spending money on Chinese talents”, says Professor of Sports Enterprise Simon Chadwick.
A state tax was introduced on transfers of foreign players for clubs that weren´t making profits. And at the same time, a huge numbers of football schools were created using state funding while children playing football was introduced into Chinese school curriculums.
Chinese retirement home?
It did not take long to see the financial results as in 2018 the net spend of the CSL clubs had gone down to merely £36 million, a decrease of no less than 89 per cent.
And the questions now remains: where have these restrictions left Chinese football, and have they taken Chinese football forwards or backwards?
Given the level of investment in domestic football Simon Chadwick argues that the level of football in China is on the rise. However, he also says:
“China earlier built a reputation of being a retirement home for aging European professional footballers. But because of what happened in 2015 and 2016 and Carlos Tevez and Oscar moving there, some of the Chinese reputation changed and the country was seen as a new frontier for football players. But with the change in regulations I think China has reverted back to being a retirement home for aging European professionals," says Simon Chadwick.
According to Mads Davidsen, the bubble hasn´t burst, it has merely changed.
“When I arrived at Shanghai there was a clear notion that whoever bought the best foreigners would win, but then the strategy of the CSL clubs changed to whoever has the best Chinese players ultimately wins”, says Mads Davidsen.
“Chinese clubs have generally smartened up. Like we did in Shanghai, they have invested heavily in their own academies to develop their own domestic players. There is a much more professional environment around Chinese football today. If you compare to for instance Benfica, then Shanghai train in the same way, they have the same medical facilities, the same performance dept., etc. But it is still too early to say if Chinese football in general has improved.”
Spectator attendances on the rise
Both Simon Chadwick and Mads Davidsen recognise that the fact that significantly fewer world football stars are pouring over the Chinese boarder have had no effect on the popularity of the game in China.
“Spectator attendances have been on the rise for a long time. The number of television viewers is also steadily increasing and so TV-deals are getting more lucrative by the year. It has become normal to attend football matches and watch it at home in front of the TV and that is part of creating a football culture”, says Mads Davidsen.
While Mousa Dembele´s and Marek Hamsik´s recent much-debated moves to China might have illustrated that the Chinese transfer market bubble hasn´t burst but merely hit the pause-button
For Premier League - and Championship sides - the fact that it may prove harder to offload some of their players for huge transfer fees for the Chinese market is merely marginal, underlines Simon Chadwick.
“English and European football clubs are incredibly opportunistic. And so, when one opportunity closes, they move on to the next one”, says Simon Chadwick.
And his opinion is backed by Mads Davidsen:
“English clubs are so spoiled in terms of TV-revenue that they don´t have to worry about if a Chinese club will buy one of their players. Most clubs in Europe (except clubs like PSG, Bayern München and Juventus) are dependent on selling players, but standard English clubs like Brighton and Burnley are not included among those clubs”, says Mads Davidsen.
While Mousa Dembele´s and Marek Hamsik´s recent much-debated moves to China might have illustrated that the Chinese transfer market bubble hasn´t burst but merely hit the pause-button. Everything suggest that the rapidly developed governance system now encircling Chinese football has ended the possible ambitions of CSL clubs to pose a transfer-threat to Premier League clubs.
The question is now if the notion of “China First” with the emphasis of developing Chinese talent and limiting foreign transfers to a bare minimum won´t end up putting China last.