Shanghai-based digital marketing agency Mailman Sports Senior Client Manager TOM ELSDEN discussed a number of aspects of the ongoing spending spree by Chinese investors. Recent months have seen investors from the country acquire stakes in Aston Villa, West Bromwich Albion, Wolverhampton Wanderers, Inter Milan and AC Milan, among others. Elsden mentioned a few other clubs and investors to keep an eye on in the coming months and described the role that Brexit's impact on the value of the pound has played in this phenomenon, among other observations.
Q: Do you expect the recent flurry of moves by the Chinese to continue?
Elsden: These acquisitions have been slowly happening over the last 12-18 months. We've seen now that there is basically a new club linked or announced every week. We're going to expect to see that continue again over the next 12 months. We've seen West Brom and AC Milan both acquired by Chinese investors for over £150 million ($196M). They're probably two of the largest teams now that have been acquired. We're not surprised by any new name that is linked. I think outside of the top 12 largest European teams, any team can now be linked with a Chinese investor.
Q: Are Chinese investors more likely to acquire teams from one league or country in particular?
Elsden: I think there's going to be a lot of deals, spread across Europe. There's obviously a lot of interest in England at the moment, post-Brexit. So that's a factor, they're now getting a lot more for their money. And we're seeing Hull City, Leeds United and several other English teams now being linked. It's going to be tier-two teams. So West Brom, yes, they are in the Premier League, but they're nowhere near the elite. It's going to be a constant, steady stream of acquisitions of slightly lower teams, but ones that are going to be long-term investments.
Q: What will Brexit -- and the pound's subsequent loss of value -- mean for Chinese investors?
Elsden: There definitely is uncertainty. But I'd say uncertainty is always a time of opportunity. The pound dropping in value by over 10% has created a huge opportunity for Chinese investment. They now get over 10% more for their RMB. So they're now looking at these Premier League and Championship clubs and seeing a lot more value in them. In the short term, we should see continued increase in investment, maybe two to three more over the next 12 months.
Q: Is there one league that investors find most attractive?
Elsden: I would say it depends on the organization that's investing. What we're always going to see is that there is an ulterior motive behind investment. So for example, when Slavia Prague were acquired by the Chinese energy company [CEFC], following this, about two months later there was a deal in place for gas to be sourced out of the Czech Republic. So it's going to see what suits the needs of the acquisition company, that's obviously the priority. Then it also depends on what's available. There's a real growth in interest around English teams at the moment because of the revenue streams of the Premier League.
Q: What are investors hoping to reap from these acquisitions?
Elsden: These acquisitions, at the moment, they're not necessarily looking for an immediate impact. It's not like the last decade, let's say the [Chelsea Owner Roman] Abramovich era, where they were investing hundreds of millions into the teams. At the moment, these are just acquisitions, more of an asset to add to the Chinese portfolio. It's both short- and long-term strategy. Short-term, it is going to be looking at how they can be positively impacted -- how they can be seen positively -- by the [Chinese] government. Any organization or entrepreneur that is publicly supporting state policy -- by state policy we mean President Xi's mandate to grow football in China -- it's a very, very clever move. Long-term, it is an investment, it's an addition to their portfolio.
Q: Is Wanda Group Chair Wang Jianlin likely to invest in a Premier League team?
Elsden: I think it's a very smart move for him to make. ... He's heavily tied in the sports industry in China, so I'd say that we can expect to see him making moves in the Premier League and the rest of Europe in the next few years. ... One model that is very, very attractive at the moment is City Football Group, how they have developed franchises in the U.K., U.S., Japan, Australia and potentially a fifth in China. It's another model that these Chinese investors will be looking at. [Aston Villa Owner] Tony Xia came out saying that he is not looking to stop with Aston Villa, and that he will be looking at the continent, looking at Australia, looking at Asia to grow his own Villa group.
