Aston Villa, Slavia Prague and the curse of Chinese cash

Aston Villa, Slavia Prague and the curse of Chinese cash

Ten years ago, on 7 November 2008, Aston Villa wrote themselves a small place in the history of Slavia Prague, one of the Czech Republic’s most successful clubs, with four titles to their name since Czech independence and 13 more beforehand.

A Steve Sidwell shot cannoned off beanpole Norwegian striker John Carew and rolled into the bottom of goalkeeper Martin Vaniak’s net as Villa left Prague with a slightly fortuitous 1-0 victory in Group F of the UEFA Cup. In doing so, they became the first away team to win at Slavia’s new Eden Arena.

To date, that remains the only competitive meeting between these two historic European teams. But, a decade on from that cold November night in Prague, there is a much more significant common thread that binds these two sides together: Chinese ownership.


Aston Villa’s post-relegation meltdown


The rapid unravelling of Aston Villa following their failure in the Championship playoff final against Fulham surprised quite a few people. From the outside, the club seemed to have stabilised after a disastrous few years under Randy Lerner’s tenure. Following Roberto Di Matteo’s difficult start to life in the second tier, Steve Bruce seemed to have steadied the ship, leading the club to a 13th-place finish in his first season and then pushing hard for automatic promotion in his second.

But, after defeat in last season’s playoff final to Fulham, it took no more than a few days for the club to go into meltdown. It was revealed that a £4m tax bill had gone unpaid; chief executive Keith Wyness was suspended, and suddenly the threat of administration and even a winding-up order was hanging over the club.

It was all a far cry from when the club’s new owner strode confidently into Villa Park just over two years earlier. Back in May 2016, despite the club’s recent relegation from the Premier League, Xia Jiantong, better known in the West Midlands as Dr Tony Xia, was full of bravado. “My ambition is to bring Villa to the top six in less than five years and I hope it can be [one of] the top three in the world – even the most well known in the world – in less than 10 years,” he told the Guardian before saying to Villa fans, “Forget the past and think we are going to enter into a new age.” How right he was.

After almost 40 consecutive years in the top flight and winning the European Cup as recently as 1982, Villa now find themselves marooned in a hugely competitive second tier. And after that defeat at Wembley in May, many fans now fear they could be in for a long stay.

But the Villa story is about a lot more than a cautionary tale of inexperienced owners promising the earth and then failing to deliver. It is more a cautionary tale of a club looking overseas for a sugar-daddy to provide a quick fix and bankroll them to the top.


Football’s addiction to overseas billionaires


It all started with Roman Abramovich’s seemingly bottomless pockets at Chelsea as his dubious Russian billions bought a long-standing mid-table club in a posh part of London every trophy around. Billionaire ownership was then taken to a whole new level by Sheikh Mansour, who brought the state-backing of the oil-rich autocratic United Arab Emirates regime to Manchester City.

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Other clubs looked on enviously as these two traditionally average sides were catapulted to the summit of English, and indeed European, football overnight. It is perhaps understandable that many wanted to follow in their footsteps. So, across football, the search for billionaire backers began in earnest. And it was only a matter of time before the focus fell on China.

China is the world’s largest country, with a population of more than 1.3 billion people and an economy that has exploded since the ruling Communist Party forsook its principles and began to allow strictly-controlled capitalist ventures. There are currently more than 300 billionaires in China according to Forbes – which is now owned by one of them – and that number is growing. It is estimated that the country creates two new billionaires every week.

The Chinese Communist Party (CCP) is more than happy for people to get filthy rich, too. But this is not regular capitalism. Every business, without exception, has close ties to the regime. You don’t get rich in China unless the CCP says you can. And if you step out of line, you will quickly find your company taken away and yourself behind bars. But as long as you stay loyal to the party and do what they are told, getting rich is just fine.

China also has a new-found love of football. Party leader Xi Jinping is a big fan of the sport, and when he likes something, everyone else in China is far more inclined to find a sudden passion for it as well. Xi has talked about China becoming a dominant force in the world of football and winning the World Cup by 2050. He has openly spoken about Chinese investors using the game as a soft power tool to boost China’s standing in the world. It should come as no surprise that there was a sudden rush for China’s rich and powerful to invest in football.

The Chinese Super League has become the latest destination for ageing players looking for a big – very big – final payday. The quality is average but the wage packets are high, which is why players of the calibre of Hulk, Oscar and Axel Witsel have been tempted there. And many businessmen have been looking to invest in football abroad, too. For them, while the CCP is pro-football, it seemed like a simple way to get their money offshore and into assets which the CCP could not easily take away.

Countless sides across Europe have found Chinese investment over the past few years. Clubs as diverse as Atlético Madrid, Internazionale, AC Milan, Espanyol, Sochaux, Nice, and Den Haag have been bought up by either individual investors or business consortiums. Another that found itself bought out by Chinese investors from the brink of bankruptcy was Slavia Prague.


The Slavia story


Slavia’s ownership was a little less transparent than Villa’s, but they appear to have been bought out CEFC Europe, a regional offshoot of CEFC China Energy. CEFC have close links to the new Czech president Miloš Zeman, who has been fawning over China in an effort to attract investment into his country.

Unlike Villa, Slavia appeared in the short-term to be reaping the rewards of Chinese investment. They won the Czech First League in 2016/17 and were runners-up last season, making it to the third qualifying round for the Champions League, where they lost to Dynamo Kyiv.

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The problem is that China under the Communist Party simply does not operate like other countries. Billionaire’s from the Middle East and Russia have to play the political game at home, but state controls over their actions are relatively minimal. That is not the case in Communist China, where party policies can change overnight depending on the balance of power within the regime. And when they do, businessmen know that they either comply or face the consequences.

In China, that is likely to mean your business being seized by the state and quickly finding yourself in jail or a labour camp. And this is the fate that has befallen both Villa and Slavia.

In September 2017, the Communist Party suddenly and unexpectedly placed restrictions on the amount of money Chinese investors could pump into overseas sports projects. Overnight, Chinese owners found that they couldn’t move money overseas to either buy new teams or invest in the ones they already owned at anything like the same rate they were before.

For those teams under Chinese ownership, that resulted in big problems. Effectively, it meant that a Communist Party diktat would have profound effects on football teams across Europe. It certainly hit Villa hard.


Aston Villa’s financial mismanagement


According to the Guardian, after initially taking over at Villa Park, Xia was regularly moving around £4m a month into Villa’s coffers to cover the club’s outgoings. But in 2017, the regularity of that money arriving declined until April of this year, when it stopped coming altogether. This was the root cause of Villa’s current financial predicament and the timing of Xia’s funding slow-down fits perfectly with the Communist Party changing the rules on overseas sports investment.

There are other question-marks over his tenure. There has been plenty of debate over how much Xia is actually worth, with his claims of a £1bn personal fortune being questioned by fans and local media alike. But these questions only began to be asked when his funding of the club began to dry up. And by then, it was too late.

The warning signs were already there for Villa. They were supposedly losing £800,000 a week in 2016/17 before a £26.6m profit on player sales was factored in. Last summer, Steve Bruce was given just £2.9m on players. This summer he has managed to sign just two players on permanent deals, John McGinn from Hibs and Orjan Nyland from Ingolstadt, both signed after the new investment was secured.

At the same time, Villa are still having to shoulder the burden of wages for players who are no longer in the first team picture. Micah Richards still has a year to go on his bumper contract. Henri Lansbury still earns a staggering £35,000 a week, and Ross McCormack is on a whopping £2m a year. All of these contracts were signed off by Tony Xia.

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With Villa’s parachute payments going down next year from £33m to just £15m, there was even talk that the club would have to sell its training ground before the new investment was secured. None of this paints the picture of a well-managed club and is about as far from Xia’s rhetoric about being one of the top three in Europe as it is possible to get.

For a few weeks this summer, Villa’s situation looked pretty bleak before they eventually managed to secure investment from an Egyptian company called NSWE. NSWE appears to be backed by Egyptian billionaire Nassef Sawiris and American billionaire and owner of the Milwaukee Bucks NBA franchise, Wes Edens. Xia remains as chairman for now, but the extent of his financial involvement now appears pretty minimal.


Slavia perils


In Prague, it was a different political upheaval in Beijing which has caused the club’s current crisis. Their issues set in when owners CEFC China Energy found themselves falling foul of the Communist regime.

Ye Jianming, the man who fronted the CEFC buyout of Slavia, is now missing presumed under arrest in Beijing. Meanwhile, the Communist Party is beginning to dismantle CEFC China Energy in its entirety. Activity at the CEFC Europe office in Prague has stopped, funding to all 22 of their Czech asses, including Slavia, appears to be frozen, and there is even talk that the Eden Arena, where Carew scored that fortunate winner a decade ago, may have to be sold little more than a year after CEFC bought it back.

CEFC propped Slavia up to the tune of £11m in 2017, but that money will not be forthcoming in 2018, despite reports that the Chinese state-run Citac conglomerate has bought 49 percent of CEFC Europe’s holdings. Without it, Slavia could struggle to complete the season.

It is a story being repeated across Europe. Milan’s former owner Li Yonghong failed to pay large debts and was forced to sell the club to US investors after they were initially barred from European competition for two years. The Wanda Group which has bankrolled Atlético Madrid in recent years has now sold off most of its shares too.

In England, the record of Chinese investors is almost exclusively woeful and is worth looking at in a little more detail. West Bromwich Albion had, until last season, been stable in the Premier League since 2010. Then, in August 2016, the club was sold to Chinese businessman Guochuan Lai, who has an estimated wealth of £2.8bn. Their spiral towards last season’s humiliating relegation took less than two years. More telling than the failures on the pitch were those off it.

In February, the club reappointed Mark Jenkins as CEO. He was damning in his assessment of what he found: “I’ll be honest, I’ve come back and I’m shocked at what I have found in some of the decisions that have been made,” he told the club’s website, adding that the club had “unravelled” in the 12 months since he left. The finger of blame was pointed firmly at former chairman John Williams and CEO Martin Goodman, both of whom were appointed by Lai when he bought the club.

Then there is Southampton. Since their return to the top flight in 2012, they have been seen as a model for all smaller clubs to follow. Their ability to spot and sign talent and then sell them on for huge profits while successfully replacing them brought regular top-10 finishes under the ownership of Katharina Liebherr.

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The club was actually bought by her father, Markus, but they managed to retain stability even after his sudden death in 2010. Then at the start of last season, 80 percent of the club was sold to Chinese businessman Gao Jisheng.

Cue a desperate last-gasp escape from relegation after a season of turmoil. The club failed to sell their one want-away star player, Virgin van Dijk, until January, causing disruption and squad disharmony. Their recruitment policy went out of the window with big money being splurged on poor, underperforming players in Guido Carrillo and Sofiane Boufal, who have both now been shipped out on loan at considerable expense.

Meanwhile, after a decade of shrewd managerial appointments, the board chose to dispense with Claude Puel, the manager took them to eighth place and the League Cup Final in 2016/17 before, replace him with Mauricio Pellegrino. Under Pellegrino, the quality of football deteriorated, and the results were even worse. He was sacked in March and his replacement, the pragmatic Mark Hughes, kept them up by the skin of their teeth. He now has a three-year contract, but few fans will hold out much hope of him retaining the Southampton style next year.

With the exception of Man City, who are 13 percent owned by China Media Capital, which invested long after the United Arab Emirates had bought the clubs recent success, you then have to look lower down the pyramid for other examples of Chinese ownership. But the pattern is consistently repeated.


Lower league woes


Reading were bought at the end of last season by Xiu Li Dai and Yongge Dai through their Renhe Sports Management Ltd. In a year since they took over, they’ve gone from losing playoff finalists to avoiding relegation to League One on the final game of the season.

Just one place and two points above them in the table were Birmingham City. They are still partly owned by Carsen Yeung, the Hong Kong businessman currently in jail for money-laundering. In October 2016, he sold most of his holding to fellow Hong Kong investor Paul Suen Cho Hung, largely through his British Virgin Island-based Trillion Trophy Asia investment vehicle.

At the time, Birmingham were flying high in the playoffs places under the highly-regarded Gary Rowett. He was inexplicably sacked and replaced by Gianfranco Zolawho did a remarkable job of turning round the team’s fortunes and aiming them towards relegation.

After he was sacked, Harry Redknapp just kept them up, but then embarked on a bizarre summer spending spree before being sacked himself just at the start of last season. He was replaced by Steve Cotterill, who was sacked in March, with Garry Monk just keeping the club up for a second season.

One Chinese-owned club that didn’t manage to scrape out of relegation trouble was Barnsley. Eyebrows were raised in December 2017 when they were sold to a consortium headed by Chinese billionaire Chien Lee of NewCity Capital and Pacific Media Group, which is led by Paul Conway and Grace Hung.

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After their highly-rated manager Paul Heckinbottom jumped ship to Leeds in February, they hired José Morais as his replacement, seemingly for the simple reason that he once worked under José Mourinho. Morais won three of his 15 games in charge and took Barnsley down to League One.

Barnsley might sound like the oddest choice for Chinese investors, but there is an even more offbeat example. Northampton Town were sold to the Guangzhou-based 5USport investment vehicle in June 2017. However, in March 2018, just as the Chinese Communist Party rules on sports investment came into force, they sold their shares back to chairman Kelvin Thomas and director David Bower.

Despite promises of a rosy future, the club admitted after the sale that “the UK investment required by the club have been more problematic and the necessary funding has proved challenging.” The reason given for this was “overseas investment restrictions”, presumably those emanating from Communist China rather than Northamptonshire. For the record, Northampton Town were relegated from League One last season, too.

So, in the 2017/18, the record of Chinese investors in English football stands at three relegations – WBA, Barnsley, Northampton – and three relegation battles – Southampton, Reading, Birmingham. The other team, Aston Villa, would be acknowledged by most as having underachieved in not being promoted. Each club has been dogged with financial mismanagement and broken promises.

There is, of course, one notable exception to this pattern, and that is Wolverhampton Wanderers. Wolves have been owned by Chinese conglomerate group Fosun International since July 2016, and last season sailed to the Championship title under the management of Portuguese head coach Nuno Espírito Santo.

Santo has a plenty of top-level experience having managed Porto and Valencia. However, their success was rather soured by their controversial relationship with Jorge Mendes. His links enabled them to sign players that would normally never have considered a move to Wolves. The club is also expected to be in breach of Financial Fair Play (FFP) regulations this year, too, something which their Chinese chairman, Jeff Shi, has been fairly derisory about. How long-term their bankrolling of Wolves will last is frankly anybody’s guess.




The message from these sorry sagas is pretty clear. And it is one which should reverberate around the world of businesses and politics as well as football. Taking investment from China is a high-stakes gamble. The rules of the game are set by the Chinese Communist Party and they can, and will, change them at any time.

Chinese investors are all at the behest of the world’s largest authoritarian regime. And like all authoritarian regimes, the Chinese Communist Party’s sole priority is its own survival. That need will always trump everything else, from human rights to online freedoms, and even the normal practices of overseas investment. Certainly, the wellbeing of a European football team, no matter how historic, will not be given any real consideration.

This season, Slavia Prague are still competing in European football, but even the most optimistic of fans will question when they will be back there again. And as for Tony Xia’s Aston Villa, even with the new investment it will be an awfully long time before they are celebrating lucky deflected winners by cult Norwegian strikers in Europe again.

That, it seems, is the price most clubs are having to pay for chasing Chinese cash. And supporters and boards of directors should beware the risks of entrusting their club financial and footballing prosperity to those beholden to the ruthless and self-serving Chinese Communist Party.

By David Spencer @dspencer47

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