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Cheng: How the mighty have fallen

Jiangsu Suning

Jiangsu Suning, the 2020 CSL champions, having struggled financially for a while, announced that they were ceasing football operations last week, sending shock waves across the country. The issue shouldn’t come at such a great shock & it’s time the Chinese FA does something about it.

This isn’t the first time we’ve seen teams disbanded; indeed, it has become a regular preseason activity over the last few years in League 1 & 2. Last year’s disbanding of Tianjin Tianhai was a cautionary tale of a team flying too close to the sun, but it could be glossed over due to the ownership’s illegal activity. This season outside of Jiangsu, another Tianjin side, this time around Teda, looks like it will go under as well.

While there’s a lot of throwing up of hands over the Jiangsu situation, to call it the worst thing that’s happened to Chinese football is either short-sighted or misconceived, potentially it might not be the worst thing to happen this year (arguably that would be if China fails to advance to the next stage of World Cup qualifying). Sure, the disappearance of last year’s league champions will be a story overseas media will pick up & will cause Chinese football to lose a bit of “face” but it’s far less serious to the powers that be and the fans (outside of Jiangsu at least).

So why did it happen? Suning was struggling financially in 2019 and things got even worse in the times of COVID. While I took the side of PPTV, the streaming service owned by Suning, over the English Premiership when they butted heads in early 2020, in retrospect it was one of the first public signs of their financial troubles. Since then, PPTV has lost a number of broadcasting rights, most recently Serie A & the CSL. In September, there were widespread rumors that Jiangsu players were refusing to practice in protest of unpaid wages, something the club quickly denied. Those rumors continued to intensify in October as the club was on the verge of winning the league playoff.

Coincidentally, it was around the time that Suning was advancing to a final against Guangzhou Evergrande that Suning the company agreed to waive repayment of a $3 billion loan in a struggling Evergrande Corporation. While Suning’s other sports investment, Inter Milan are in pole position to win Serie A for the first time in a decade. It should be happy days in Nanjing, but Suning’s financial issues & China’s currency controls mean that the company is also looking for suitors for the pearl in its quickly crumbling crown.

Unfortunately for Jiangsu fans, Suning’s hubris meant that a number of suitors were rejected in late 2020 because they didn’t meet Suning’s valuation of the club. In the final weeks before announcing the disbanding, Suning was willing to sell for free to anyone willing to take up the debt, which amounted to around $90 million. By that time, there were nobody was willing to pick up the slack.

Financially, Chinese football is a giant toilet which club owners just flush money down.  While the books have never been open to the public, its widely accepted that no top flight team has ever been run at a profit. There is a reason why most clubs are owned by state owned enterprises or companies with a very strong chairman, a board or shareholders would run screaming from the idea of investing in Chinese football. Ownership also comes with a degree of political cache & can help curry favor with local or national leaders as well as bring them in for local government support/subsidies but when losses keep piling up as the saying goes, “a billion here, a billion there, and pretty soon you’re talking real money.”

The squeeze caused by a downturn in business made worse by COVID, meant their sports investments were untenable & money needed to be focused on key businesses.

Chinese football is obsessed with having clubs with lasting identities (despite the new naming rules ignoring older traditions). Those in power often point to teams in Europe as what they are looking for, but their focus is all wrong. Chinese professional football is not even 30 years old, the 100+ year old clubs they focus on in Europe went through many struggles, mergers and changes in their early years to get where they are today. A Manchester United or Bayern Munich didn’t just start at the point those clubs are at now.

When Guangzhou Evergrande started a decade ago, their spending created a bubble that has only exacerbated as other teams chase them. We’ve seen salaries going up in the CSL faster than ever and before measures were taken in 2019, the speed at which it was happening was unbelievable.

How to fix the situation? The CFA’s push for a salary cap is a good idea that will likely not produce the desired results, a fairly common issue with CFA policies. The top teams are so used to spending that it won’t lead to them reigning in their expenditures, instead they will just find ways around them (bonuses, gifts, apartments, employing family members on paper etc).

So how do we get everyone to play by the rules? Blow it up. It may sound radical, but that’s what was intended to happen in the early 2000s when Jia A became the Chinese Super League. Unfortunately, that was just a minor rebranding, for CSL 2.0 it needs to be far more drastic.

CSL salaries are 10+ times what Korean league salaries are and close to four times those in Japan. This needs to change for teams to have a shot at being profitable. To completely renegotiate all players salaries is likely a way to lead to the problems mentioned above so I propose starting from scratch, with clubs having to bring in new foreign players & a draft of all domestic talent to decide teams (as an American I dislike bringing in US elements to non-American sports, but this will be a one time thing). Players from a club’s youth academy still with that side could remain, as well as players who’ve spent 10 years or more with a team to maintain elements of a club’s identity.

Profit sharing of the television rights deal & sponsorship should remain with one exception, the leaguewide kit deal should end. While in theory the leaguewide deal with Nike promotes fairness for all sides, Nike has only focused on the teams in major cities & wholly ignored large swaths of the league, including sides with decent sized fan bases. Allowing these clubs to sign with other producers could mean they earn more in their deal as smaller brands want to be associated with a CSL side & could also mean more products in stores for fans.

The strict cap & new rules may lead to some sponsors wanting to pay less as you won’t have as many big name foreigners in the league, but it shouldn’t lead to a major reduction in the on-field product. Chinese clubs who make the effort have been rewarded by finding young gems in South America, there’s no reason why that will end. The contest will ideally be less about up front money & more like the old days, about the quality of a team’s scouting &, most importantly, its ability to develop young talent.

As teams slowly work their way towards profitability, assisted by the spree of new stadiums set to open before the 2024 Asian Cup and beyond, the cap can be raised and potentially a designated player rule can be added like the MLS has, allowing clubs to recruit a higher profile foreigner.

Admittedly this proposal isn’t without flaws, but continuing to do the same thing over again will just keep leading to the same results. Losing three top flight sides in two years is just too much. While it is possible to explain what happened in a lot of these cases, until CSL sides can move into the black (or even come close to breaking even), it will continue happening as there’s a finite number of companies who have the level of investment required to own a CSL club and are willing to lose gobs of money each year. One potential positive of the new neutral naming rules is that consortium ownership could become more common and losses will be spread out more palatably, but the key is finally popping the bubble & finding a new approach. I fear the CFA’s salary cap does not go far enough in bringing things back to reality.

Brandon Chemers aka B. Cheng aka A Modern Lei Feng – is a name which may be familiar to many in the Chinese blogosphere. He currently serves as Editor-in-Chief for Wild East Football and is one of the lonely souls writing about Chinese football in English for the last 10 years. Chemers' credentials are second to none – his former blog focused not only on the fortunes of his beloved Beijing Guoan FC, but a multitude of other aspects of Beijing life. He’s deservedly built a reputation in the Chinese blogosphere as an insightful observer of not only Chinese football, but also the wider picture of life in modern China and its many layers. For WEF, beyond writing about Guoan, he often focuses on fan culture and the business of Chinese football.

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