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Takeover of Aston Villa part of China’s expansion

May 25,2016
Chinese money is extending its reach to European football. In its latest attempt to become the global football titan, a Chinese conglomerate has taken 100 percent control over a
142-year-old club in the “home of football,” England.

Aston Villa announced on May 19 that Chinese Recon Group led by CEO Xia Jiantong bought full ownership of the club from its previous owner Randy Lerner. Aston Villa, which was established in 1874, was sold to American investor Lerner in 2006 at £62.2 million ($90.4 million) before the Recon Group bought the club for a reported £60 million after its relegation this year to the Championship, the second level of English football.

After recording a £27 million operating loss in 2016 alone, Aston Villa finished at the bottom of the English Premier League standings. With the profit from TV rights and tickets plummeting, a rumor went around that as many as 500 Villa employees would be let go after the season. It might just have been a rumor, but there was no doubt that Aston Villa was suffering from substandard management and financial deficit. Lerner had already placed Villa on sale in 2014, valuing it at an estimated £200 million.

Chinese capital saved the day for the struggling English club. “Recon Group is a multinational conglomerate group led by Dr. Xia Jiantong,” according to the official announcement by Aston Villa on its website. “The group holding company owns, directly and indirectly, the shares of several publicly listed companies on the Hong Kong and Chinese stock exchanges and many other private companies employing 35,000 people in 75 countries.”

When the Recon Group stepped in to save Aston Villa from its financial and management plight, the group’s CEO, who is little known outside China, came under the spotlight. Xia Jiantong, a 39-year-old businessman from Quzhou, Zhejiang, earned his degree from Harvard and Massachusetts Institute of Technology in landscape design before returning to China in late 1990’s to expand his career as a businessman in planning. He took over the Recon Group in 2004 and has headed the Chinese holding company since then.

According to Aston Villa’s official statement, Xia played football in college as a striker and “decided to buy an iconic football Club in England as the cornerstone of his sports, leisure and tourism division.” Xia’s immediate goal, according to the statement on Villa’s website, is to “return Aston Villa to the Premier League and then to have the club finish in the top six, bringing European football back to Villa Park … to make Aston Villa the most famous football Club in China with a huge fan base.”

In his interview with the Associated Press, Xia said, “in sport, it’s crucial to consider spirit, psychology, leaders’ attitudes. Especially for Villa now, the biggest priority for us is to fix everyone’s confidence, from the players to the coaches.’’

Xia taking over ownership of one of the oldest football clubs in the world is the latest move by China after the Chinese Football Association published a report on April 11 with an interim plan to become a “football superpower,” a passion of Chinese President Xi Jinping who is known to be an avid football fan.

Since President Xi declared China’s intention to become a global football power, Chinese conglomerates have been expanding their grasp in the sport, including the huge amount of money invested during last winter’s transfer window to recruit world-class footballers. The Chinese Super League, the first tier-division in China, spent about $284 million over the offseason transfer period, eclipsing the spendings of European leagues including the English Premier League which spent about $272 million.

While enlarging the size of its domestic football league, China is extending its reach overseas. In January 2015, Wanda Group, China’s biggest real estate company, bought 20% of ownership of Spain’s Atletico Madrid. In England before Aston Villa, a consortium of China Media Capital Holdings and China CITIC Bank invested $400 million to assume 13% stake in City Football Group (CFG), the Abu Dhabi-based company that owns Manchester City, in December last year.

“We have worked hard to find the right partners and to create the right deal structure to leverage the incredible potential that exists in China, both for CFG and for football at large,” said Khaldoon Al Mubarak, the chairman of City Football Group.

Although China has been involved in buying interest in other offshore football clubs, Aston Villa is the first time a Chinese firm bought out 100% ownership of a European football club.

The infiltration of Chinese capital into European football is only expected to grow. Recent local media reports in Italy suggested that Chinese firms such as Alibaba are in the process of acquiring ownership for Italian football clubs such as AC Milan.

Simon Chadwick, Professor of Sport Business Strategy and Marketing at Coventry University, United Kingdom, concurred, saying that China has only begun its effort to take over the global football market.

BY KIM JI-HAN, CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]


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