The Bubble Revolution in Chinese Football: Lives at the Bottom of the League

In November 2019, Guangzhou Evergrande Taobao regained the Chinese Super Football League (hereinafter: CSL) and won the title 8 times in 9 years. It is estimated that each player in the team would receive a bonus of approximately RMB 1.5 million to 2 million. However, at the other end of the professional football hierarchy, players from Hunan Billows F.C., who are playing in the third and lowest tier professional football league, China League Two (hereinafter: League Two), were forced to take to the streets to defend their labour rights as they had not been paid for more than one year. Despite being professional footballer, the disparity in the treatment of players in different Chinese leagues is staggering.

Xi Jingping’s “Football Dream” becomes national policy

In recent years, economic transformation in China continue to accelerate and many emerging industries are expanding rapidly. In addition to the industries related to innovative technology, renewable energy and online economy, the sports industry is also growing at a geometric rate. In the "Thirteenth Five-Year Plan" announced in 2015, the Chinese Communist Party has set the value-added in sports industry is to make up no less than 1% of the national GDP as an economic objective, and determined to catch up with the US’s 3% and Japan’s 2.5%. In 2018, the total scale of the national sports industry was RMB 2.4 trillion, which has increased for more than 2.5 times when compared to 2012, and it has become one of the fastest growing industries in China.

As Xi Jinping is a renowned football fan, his “Football Dream” has become an integral part of his “Chinese Dream”. Between 2015 and 2016, the Chinese government has published two official guidelines and plans for the development of football, outlining a blueprint to establish China as a top football powerhouse by 2050. A working group on football reform led by former Deputy Prime Minister Liu Yandong, was set up as a result, which promoted football reform to the level of national policy. In line with the nation’s ambitions in football, professional football competitions have naturally become a popular industry for investors. All of a sudden, hot money pours into China's top football league: China Super League. The total revenue of CSL has surged from RMB 60 million in 2006 to RMB 1.59 billion in 2018, an increase of 26.5 times in 12 years. Many world-famous stars and coaches have caught up with the CSL's gold rush. Currently, one player and two coaches out of the top ten earners in professional football worldwide are plying their trade in CSL. The economic strength of CSL has surpassed most of the top European leagues and has become synonymous with the "nouveau riche" in the football world.

CSL players paid top salary while League Two players fight for survival

At present, the average annual salary of CSL players is ranking 6th in the world, second only to the five major European leagues (English, Spanish, Italian, German, French), at USD 1 million per annum. However at the other end of the spectrum, many players in lower leagues have fell victims to large scale wage arrears and clubs disbandment. Before the start of the 2019 season, seven League Two teams were forced to quit or disqualified from the league due to financial problems. Since the season began, wage arrears incidents broke out in another seven League Two teams Hunan Billows F.C., Ningxia Fire Phoenix, Jilin Baijia, Fujian Tianxin, Nanjing Hehai Shaye, Baoding Rongda, Dalian Gigabit, forcing many professional players to defend their rights collectively. One player even reported that he only had RMB 31 left on him, leaving him with no option but to stay at home at all times. While the super stars of the CSL are making mutli-million RMB a year, players in the lower leagues are subjected to the risks of being owed in wages or dismissals, and some may even have to pay for their medical expenses due to injuries in trainings and games out of their own pockets.

Clubs rely solely on owners’ financial backing

The extreme disparity reveals the many structural problems within Chinese professional football. Since professional football was commercialized in 1990s, running football clubs has never been a profitable business. Financially, football clubs at all levels rely entirely on title sponsorship from investors and sponsors. Apart from gaining national or international exposure, it cannot be ruled out that various investors attempt to establish a good relationship with local governments byinvesting in football, hoping to benefit from local policies. Therefore, it is not difficult to construe that most of the investors and sponsors of CSL are local real estate conglomerates with close ties to local governments. On the other hand, some investors can also profit from trading football clubs. According to reports, the current valuation of a League Two team is about RMB 30-70 million, 10 times more than that of four years ago.

Since football fanatic Xi Jingping became the President of China, the professional football bubble in China has further intensified. Today, the fund required to run a championship winning team in the CSL is astronomical. For instance, CSL champion, Guangzhou Evergrande Taobao, reported a loss of RMB 712 million in the first half of 2019 alone. Thus, without the financial backings from enterprises with deep pockets such as Evergrande and Alibaba, the financial status of the club is neither sound nor sustainable. The professional football bubble has led to excessive pay for top players. Although the CSL rules stipulate that the salary of domestic players is capped at RMB 10 million per annum, players income can be several times more if bonuses and other benefits are included. In other words, the income of top domestic players in China is on par or even surpassed many players from the English Premier League. But have Chinese players achieved English Premier League quality? The FIFA ranking of the Chinese national team (76) provides an honest answer. Excessive pay not only makes domestic players reluctant to ply their trade at more demanding and higher standard foreign leagues to hone their skills; the cost of operating clubs at all levels has risen at the same time, which is having a negative effects on lower-league clubs, putting football clubs with poor support base and low public attention in a more financially vulnerable position. With little public exposure and profitability, the livelihood and employment security of lower league footballers rest solely upon the incentives of investors. When investors no longer have the incentive to invest in teams, whereas in many cases due to non-footballing reasons, the livelihood of the footballers will be put on the line. For instance, in the second year after its relegation from CSL, Yanbian Fude Football Club, formerly the Jilin Provincial Football Team with a 64-year history, declared bankruptcy in 2019 due to excessive debts and lack of new investors.

Club owners only see football as an investment tool

In many cases, club owners in China regard football as a short-term investment tool, and do not necessarily have long-term plans and goals for the development of football and clubs, leading to less well-known clubs detached from the community network and football development hierarchy. Take Hunan Billows F.C. as an example, which had arrears of wages as mentioned, although the club claimed itself as the only professional football team in the province, its support base is notoriously poor. The average attendance of Xiangtao in the 2018 season was only 398, suggesting that the club did not form part of the community network or culture at all. When public attention is low, the bordering benefits brought by title sponsorships greatly diminish. Especially in the lower leagues where media exposure is low, club owners may have other hidden agenda other than promoting corporate awareness through title sponsorship. Henceforth, when the owner's other objectives have been achieved or cannot be achieved, the changing hands, names, or even relocations of football clubs become common experiences in Chinese football. For instance, the ownership of 2018 China League One champion, Sichuan Longfa Football Club, have changed hands 5 times and competed under the names of Sichuan Longfa, Sichuan Xindahai, Sichuan Annapurina, Sichuan FC, and Sichuan Jianzhuang from 2015 to 2019. During that period, the player's salary in arrears was reported, and the qualification of the club was almost revoked. The lack of long-term planning in clubs’ finances and development has led to great instability and unsustainability of clubs and even the employment of players.

In advanced footballing nations, football clubs are important members of their respective local communities, whilst team games constitute part of the social life in the community. At the same time, clubs also run footballing schools to unearth and nurture young talents in the area, provide leisure activities and game experiences for youngsters, which become the foundation of the national football development hierarchy. Therefore, in addition to investments from sponsors and owners, income are also generated from ticket revenues, merchandize sales, footballing schools, and player transactions, ensuring the financial sustainability of football clubs. In England, the average game attendance of English League One (the third tier professional league) is three times that of the China League Two’s. Take Crewe Alexandra FC as an example, a football club located in northwest England competing in English League Two, although it has never played in the top league in its 142-year history, its average home game attendance can still maintain at about 4,000, which is quite impressive for a town with a population of only 70,000. In addition, the club has unearthed many outstanding players over the years (such as England internationals Danny Murphy and Dean Ashton), which not only provides football talents for the nation, but also obtains considerable profits from the player transfer market.

In contrast, lower league clubs in China not only fail to connect with the community and establish a support base; the short sightedness of club owners cannot care less with youth training that improves the quality of players and the level of ball games. Consequently forming a vicious cycle that plagues the development of football in China: games not appealing—> fans not interested—> owners not investing—> players’ jobs not secure. Despite the investment from conglomerates in the CSL has reached a level of fanaticism in recent years, such a "football revolution" from top to bottom has not only failed to lift the nation’s football standard as a whole, it also disrupted the order of the entire football industry ecology, making clubs in the lower leagues even more difficult to survive. As this "Great Leap Forward" in football reform demands immediate results, it has not brought grass-roots players, especially young players with more favorable training conditions, more match experiences, and better promotion opportunities. With the slowdown of Chinese economy breathing down their necks, it is doubtful that club owners will be earnest to continue dig deep into their pockets for Xi’s “Football Dream”. When the football bubble bursts one day, the entire Chinese football will have to pay for today’s frenzy.