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The real reason the CFA is letting the CSL fly free: money, of course

Chinese policy towards state ownership of sports leagues has performed a massive U-turn, with oversight of the Chinese Super League being passed to a private entity. SportBusiness looks at why, and what will happen next.

Ultra supporters and fans of the Beijing Guoan FC chant slogans during a match against Chongcing Lifan FC in Chinese Super League play on June 28, 2015 in Beijing, China (Kevin Frayer/Getty Images)

One of the key failings of the Chinese sports strategy in recent years is how the country’s national teams still lag badly in the two sports that are most popular globally and locally – soccer and basketball. It’s also no coincidence that until recently, both sports’ professional domestic leagues were owned and managed by the government, which has led to two fundamental problems: poor athlete development, and corruption.

In 2017, the Chinese Basketball Association finally saw the light and made former National Basketball Association star Yao Ming its chairman, with a mandate to remodel it after the NBA. He has since moved league ownership from government to team owners and instituted a professionalised amateur draft. The need for reform was underlined by a disappointing performance at the recent 2019 Fiba World Cup, with the team managing only two wins despite home advantage and strong backing from fans.

Now football gets its turn. During the 11th membership congress of the Chinese Football Association in August, Chen Xuyuan, formerly chairman at the Shanghai International Port Group, which owns Chinese Super League club Shanghai SIPG, was elected as the body’s new chairman. Chen left no doubt what was first on his agenda to overhaul Chinese football, saying: “The Chinese Super League and lower leagues have been rapidly developing in recent years, but our professional leagues are still facing a huge crisis.

“The healthy development of professional leagues is the cornerstone of Chinese football. Clubs need to be financially independent. We are far from that. The owners have invested a lot but earn little back, and some lower league clubs are on the edge of bankruptcy.

“I think in the future, the CSL and the CFA will be partners. As long as we make the rules clear, there won’t be much conflict between the two and our professional leagues will be able to develop themselves better.”

Chen has made good on his words quickly, and last week the CFA announced control of the Chinese Super League will be being handed over to the competition’s clubs.

Beijing Guoan celebrate after the goal scored during the Chinese Super League match against Shanghai Shenhua at Workers Stadium on March 16, 2012 in Beijing, China (Lintao Zhang/Getty Images)

Liu Wei, the secretary-general of the CFA, said: “A committee to manage the Chinese Super League is being formed, and moving forward the CFA will not manage the league, and will relinquish its shareholding of the CSL holding company. The CFA will only maintain governance over major issues and hold a single vote on the committee.”

Currently, the CSL is run by an operating company in which the CFA holds a controlling 36-per-cent stake and the clubs hold four per cent each. This means, in effect, that the CFA directly manages the league.

Insider excitement

The response among the Chinese Super League football fraternity has been favorable, with one league manager telling SportBusiness: “They should have done this ages ago. The CFA is a trade association with the highest shareholdings, without any real investment – do you think that makes sense? Why would investors pump cash into the league then?

“Essentially all decisions have been made by the CFA, given their shareholding power, and the clubs have no say at all in the strategy for the CSL. This has made investors in clubs very disappointed.”

Huang Shenghua, the vice-chairman of CSL club Guangzhou R&F, said the league clubs are working quickly to reach agreement on the composition of a management committee, and will incorporate a holding company once that is done.

A member of the preparatory group for this management committee tells SportBusiness that while the CFA may only have “one veto vote” reserved, this ultimately wasn’t a total decoupling between the CFA and the CSL, with the association wielding a big influence on certain matters. “But still, this change is made in a belief that market forces and economics will be the best influence for how the CSL moves forward,” he adds.

“The biggest change will be the change in leadership for the CSL. In the past, it was the CFA, but now the league will run itself. For some in the CFA, this will be quite a difficult pill to swallow, due to a loss in position and authority. They will need to navigate their new roles carefully.”

Another CSL manager reveals: “Despite the influx of investment in the league, it’s annual losses were huge, and one of the reasons for the CFA’s withdrawal from running the CSL was a lack of desire by the government to take the financial burden any longer.

“These new reforms are a result of several club investors and owners lobbying for change, as well as a decision from higher levels of the Chinese government.”

According to a survey published by Sporting Intelligence, CSL clubs  spent a combined $400m on wages in the 2017-18 season, making it the 11th highest-spending league in the world, ahead of Major League Soccer, Japan’s J.League, or Australia’s A-League.

According to a report by the Asian Football Confederation, the combined losses of the 16 CSL clubs were $600m in 2016 and $700m in 2017.

This led to the introduction of a salary cap in the 2018-2019 season, as well as a transfer tax, to force clubs to spend within their means.

Xiaodong Zhu, founder and chairman of Beijing sport marketing consultancy Oceans Sports’, tells SportBusiness: “In China, investing in the CSL is known to be a loss-leader. Buying a football club is about prestige, peddling influence with the government, but it is not to make money as an investment.”

But the new CSL is expected to give these investors who have lost money for years a new voice.

A supporter of Beijing Guoan FC walks passed police officers following the team’s Chinese Super League match against Tianjin FC (Kevin Frayer/Getty Images).

Areas of focus

While the CFA and CSL negotiate the new balance of power, one area they can agree to focus on is the damage piracy is doing to the league. In 2017, the CFA was so desperate to curb the problem that it barred fans from carrying high-end cameras and certain recording devices into Super League matches. Such measures, and the inability of lawsuits to curb pirate streams, have exposed a lack of clear legal protection for sports broadcasters and the league.

Gao Si, a deputy director at the National Copyright Administration of China, said to China Daily: “The copyright law system in China doesn’t recognise sports broadcasting as subject to its protection because of the relatively low originality of the content.”

Gao added that high originality is a decisive criterion that covers audiovisual works such as movies, that are protected by Chinese copyright law, while telecasts and livestreaming of sports competitions do not fall under that umbrella.

While opinions are varied in legal and academic circles, the fact is the CSL is hurting in the here and now. A representative of China Sports Media, the primary rights holder for Chinese and Asian soccer, tells us: “It will be a priority of all 16 CSL clubs to expand efforts to combat piracy. We will be taking the English Premier League as an example to learn on how to deal with this issue moving forwards.”

Growing sponsorship is also a key target for the newly unshackled CSL. “One clear change moving forwards is clubs can find their own sponsors, without needing approval from the government,” says one CSL manager. “Previously with the involvement of the CFA, it was very difficult and tedious to get approval for sponsorship deals. But with this new changes, all 16 clubs can now market themselves independently, and pick deals that are best for themselves in the short and long run, without government intervention.

“Ultimately, though, we will have to see how these changes take effect as we go along. Chinese football has been talking about learning from the English Premier League and the NBA for many years, but so far that really hasn’t happened. Let’s hope that this time won’t be another anti-climax.”

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