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Chinese Government Doubts CSL Model, Fears League Could Become Dumping Ground

The Chinese government has decided to "crack down" on what it calls "irrational investment" in overseas players, according to Bland, Hancock & Wildau of the FINANCIAL TIMES. It fears Chinese Super League club owners, "many of whom are heavily indebted property developers," are paying "far too much" for foreign players and that China could become "a dumping ground for overpriced players who cannot make it at the top level in Europe." Chinese officials worry that these purchases do "little to boost the development of the local game or improve the prospects of the poorly performing national team." Despite the "huge" sums spent on foreign players, revenues generated by the local league are "paltry, raising questions about the sustainability of the current boom." Under the new rules, Chinese teams can only field three foreign players in a match, clubs must reserve 15% of their expenditure for youth training and will face penalty fees if they are deemed to have spent too much on individual transfers. The Chinese FA also wants clubs to undergo third-party audits, "with insolvent teams expelled from the league." Gavekal Dragonomics economist Chen Long said, "There is definitely concern about Chinese football clubs spending ridiculous amounts of money buying foreign players." Stephen Ting, a TV commentator in Guangzhou, said "alarm bells started ringing" after Shanghai SIPG last month paid a reported $64M to buy Brazilian midfielder Oscar from Chelsea. Ting: "Oscar wasn't even playing regularly at Chelsea so that transfer fee is crazy. The authorities had to react quickly." While spending has "surged," revenues remain meager. Most clubs lose money on transfer fees. Match tickets sell for as little as 50 yuan ($7.27) and there are "scant hospitality facilities." Hawkers sell fake club merchandise around many stadiums and "few fans buy official kit." Tom Elsden of Mailman, a sports marketing group in Shanghai, said, "The revenue model is light years behind the English Premier League and the other European leagues." The crackdown on football spending is also motivated by "broader economic concerns," as the government tries to restrict money leaving the country "in order to stop downward pressure on the currency" (FT, 1/20).

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