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Chinese football tackles salary reduction

Shen Jiang, senior associate at Jingtian & Gongcheng, and Luca Ferrari, partner and global head of sports at Withers, consider the legal issues around the player wage reductions now agreed by all Chinese Super league clubs

China Super League teams such as Shanghai Shenhua resumed training in small groups this week (Photo by Yifan Ding/Getty Images)

In most of Europe, international and national competitions had to be suspended abruptly and either eventually cancelled altogether or put on hold in the hope that a restart could be planned once the pandemic is ‘under control’. The situation is slightly less complicated in China, where the national championships follow the calendar year and the 2019 football season had already been completed prior to the infection outbreak.

Chinese Super League

The 2020 CSL championship had yet to begin when, on 30 January 2020, the Chinese Football Association officially decided to postpone it for an indefinite period of time. However, while Chinese football governing bodies were spared the slings and arrows that are currently tormenting most European national leagues trying to complete the season, clubs in China are not exempt from severe economic damage due to a shorter, delayed season and the knock-on effect of the economic crisis caused by the pandemic.  So much so, that player wage reduction has for months been the primary topic of discussion.

Shen Jiang

On 8 May 2020, the CFA published an official (‘non-binding’) proposal calling for a salary adjustment for male players and coaches of professional clubs in all three top tiers of the Chinese professional football. According to the official statement, the CFA Guidelines have been laid out in consideration of the demands of the Chinese football clubs while keeping in mind Fifa’s recent guiding principles on the legal consequences of Covid-19.

Salary reductions

The Guidelines recommend a salary cut between 30 per cent and 50 per cent, to apply from the 1st of March 2020 until one week prior to the start of the 2020 season. As of 18 May, we understand that all clubs have agreed to adopt the Guidelines.

While underlining that the Guidelines have no binding effect on the clubs, the CFA’s ultimate aim is to exercise its moral suasion, encouraging salary adjustments for players and coaches “on an equal and fair basis”. Along the same lines, as an alternative to salary reduction, the CFA  “recommends” that, based on the club’s actual cash flow difficulties, clubs and players agree deferring a portion of the salary not exceeding 30% until 90 days from the start of the 2020 season.

Luca Ferrari

The CFA Guidelines do not target all players and coaches. In order to protect lower salaries, the CFA has specified that the reduction scheme should not apply to players and coaches with a monthly income not exceeding 10,000 yuan (about €1,300) net. Moreover, the CFA recommends not to delay payment of monthly salaries that are below 20,000 yuan (€2,600) net.

On the other hand, the CFA suggests that foreign players and coaches, including players on loan, should be included in the plan. The CFA president Chen Xuyuan stated in the

interview with China Central Television that “If any foreign player wants to sue us overseas, I believe FIFA will have our back”.

In theory, the Guidelines are an invitation to agree. However, despite their non-compulsory nature, they provide that, should clubs and players fail to agree the suggested contractual amendments, clubs “unilaterally could make reasonable salary reductions”, provided:

  1. they seriously tried to reach an agreement;
  2. their financial situation is gravely affected by the Covid-related disruptions;
  3. they explain and argue their case to the CFA; and
  4. other conditions mentioned in the Fifa Guidelines are met.

Issues to consider

Subject to the foregoing set of conditions, the CFA Guidelines affirm the Chinese football clubs’ right to unilaterally reduce players’ salaries.

In fact, given the absence of football trade union representatives in most of the Chinese professional football clubs, it is quite difficult to conduct collective negotiations between clubs and players; as a result the decision on whether or not to cut salaries – as well as how to implement the reduction scheme – is going to rest ultimately with each club.

To ensure players are satisfied that the sacrifice they will be asked to accept by their club does not put them in a worse position vis a vis their colleagues at other clubs, it is key that the latter agree a unified stance. This was done recently, according to rumours, in a meeting of the CSL clubs’ managing directors where the clubs decided unanimously that the salary reduction resulting from negotiation or applied unilaterally by each club would not be less than 30% of salaries due during the period between 1st of March and one week prior to the first match of the new season, which is expected to kick off in June.

Within this limit, every club will first negotiate the reduction with their players and coaches, failing which they will proceed unilaterally – which of course raises the fundamental question: are players bound to accept a unilateral pay-cut? The debate in China revolves around two main points:

  • First, on a ‘political’ level, about justification: is this all part of a collective effort to help the country in a moment of crisis, or is it simply an occasion to balance football clubs’ financial books?
  • Second, on a strictly contractual basis: are players entitled to terminate their contractual relationship for just cause in case of unilateral reduction of their salaries?

In 2018, China had the largest pay gap between football players and the general population. According to Sporting Intelligence’s Global Sports Salaries Survey 2018, professional players earn as much as 160 times more than other Chinese citizens do. In a country where football sprang to prominence by handing out high wages to foreign players and coaches, the issue of footballers’ salary cuts may create division not only between players and clubs, but also within the fans and the wider society.

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