Impending Evergrande bankruptcy: China’s soccer record champions are involved

The Evergrande crisis is also causing problems in professional sports. China’s record champions FC Guangzhou are mostly owned by the over-indebted real estate company. The worries about how things will continue are correspondingly great.

On the construction site of the new soccer stadium in the southern Chinese city of Guangzhou, operations are ongoing. Several huge cranes are in motion, the foundation of the new stadium can already be seen on drone images. The Reuters news agency published the recordings a few days ago.

Showcase project of the economic metropolis

The new stadium for the Chinese record champions is the urban model project in the economic metropolis of Guangzhou. With up to 100,000 seats, it will be one of the largest football stadiums in the world. Despite the de facto insolvency of Evergrande, the majority owner of FC Guangzhou, the stadium is to be completed.

“This is something of a big construction site here – the whole world is looking at it,” a local resident told a Reuters reporter. “It would be unthinkable that the largest football stadium in the world would not be completed. The government would never allow that!”

Is the state stepping into the breach in stadium construction?

In fact, it looks like China’s leadership will save FC Guangzhou and thus also take over the 1.6 billion euro bill for the stadium – directly or indirectly. According to a report by the Bloomberg news agency, the government of the Chinese part of Guangdong is considering investing ten to 15 percent in Guangzhou FC. The rest of the association will probably be taken over by a state company, it is said.

With Evergrande came the sporting success

The Evergrande group, now facing bankruptcy, bought FC Guangzhou in 2010 and made it China’s largest and most successful football club. Guangzhou has won the championship eight times since then, most recently in 2019. Until recently, the club even had the owner’s company name in its name: Guangzhou Evergande. However, new rules that came into force at the beginning of the year put an end to club name sponsorship in Chinese football. The state and party leadership wants to set an example for more real fan culture and, above all, for less commerce in China’s soccer league.

The People’s Republic’s 16 first division clubs have spent billions in the past boom years: for players and coaches from abroad, for oversized stadium projects or, as in the case of FC Guangzhou, also for young football academies. In terms of quality, however, the billions have made little progress in Chinese football.

Just the beginning of the end?

“The annual budget of a soccer club like Guangzhou Evergrande was sometimes more than 150 million euros. This is not sustainable in the market economy, and this model cannot go on like this,” says Shen Lei, the sports director of the Shanghai newspaper “Wenhuibao”. “The question is when will the Chinese football funding system collapse completely,” the journalist speculates. “What happened to Guangzhou is probably just the beginning. There will be other clubs that could perish in a similar way because they have already run into similar problems.”

FC Guangzhou, plagued by financial problems, was unable to hold onto its coach, Italian Fabio Cannavaro. In the middle of the week the club announced that the contract between Guangzhou and Cannavaro had been terminated after – quote – “friendly negotiations”. The Chinese record champions are unlikely to have paid the Italian world champions from 2006 much money for a severance payment.