Christopher Langner is a markets columnist for Bloomberg Gadfly. He previously covered corporate finance for Bloomberg News, and has written for Reuters/IFR, Forbes, the Wall Street Journal and Mergermarket.

Matthew Brooker is an editor with Bloomberg Gadfly. He previously was an Opening Line columnist, an editor and a bureau chief for Bloomberg News. Before joining Bloomberg, he worked for the South China Morning Post. He is a CFA charterholder.

It's a simple question of arithmetic: Where is Shanghai SIPG going to get the money to pay for Brazil's Oscar?

The Chinese Super League soccer club has agreed on a fee of 60 million pounds ($74 million) to take the 25-year-old midfielder from English Premier League leader Chelsea, according to multiple newspaper reports in the U.K.

The transfer may be something of a watershed moment for Europe's top leagues. There have been signs already of the flood of cash washing around Chinese soccer (clubs from the Chinese league were the biggest spenders in the last European winter transfer season, as Gadfly wrote in March). This deal takes the perceived threat to Europe's financial supremacy to a new level.

Until now, most top footballers arriving in China to ply their trade were approaching the end of their careers, content to while away their declining years in a league where standards are significantly less demanding than in Europe. Chelsea's Didier Drogba and Nicholas Anelka, for example, had stints at Shanghai SIPG's cross-town rival Shanghai Shenhua when in their 30s (both left early after reports of unpaid wages). 

Oscar dos Santos Emboaba Jr. is a different case entirely. The player, better known by just his first name, is in his prime: A Brazilian international who scored in the 2014 World Cup semi-final , albeit one who has been stuck on the substitutes' bench at Chelsea recently.

Even more striking than the transfer fee is Oscar's salary: At a reported 400,000 pounds a week, he will become the world's highest-paid player, outpacing multiple World Player of the Year winners Cristiano Ronaldo of Real Madrid and Lionel Messi of Barcelona.

So how can a club that's barely two years old afford it? Gate receipts hardly appear to justify the outlay. An average of 29,310 fans watched Shanghai SIPG play at home this year, according to worldfootball.net. That's the fifth-highest of the 16 teams in the Chinese Super League and barely half the 56,000 capacity of the Shanghai Stadium, where the club plays its home matches.

Empty Seats
Shanghai SIPG has the fifth-highest home attendance among Chinese Super League clubs this year
Source: worldfootball.net

A season ticket for the coming program is 1,000 yuan ($144, or 116 pounds), Shanghai SIPG's website shows. The cheapest adult season ticket at Chelsea, the club Oscar is leaving, is 595 pounds, five times as much. The most expensive is 1,250 pounds. Chelsea's average attendance this season is 41,522.

What about broadcasting revenue, the source of 40 percent of the total for clubs in Europe, according to Deloitte's annual football money league report? In July, the Premier League sold worldwide broadcasting rights for the coming three years for a record 10.4 billion pounds. The amount will be split between the league's 20 teams. The China rights alone went for 560 million pounds.

Ready for the Big League?
China's most valuable club trails far behind Europe's leading teams by revenue
Sources: Deloitte, Forbes
Note: Forbes estimate for Guangzhou's 2015 revenue was converted from dollars to euros at the average exchange rate for the year.

By contrast, rights to air the Chinese Super League online over the next two years were sold in February for a record 2.7 billion yuan, or about 3 percent of the value of the English deal. The buyer was LeTV Sports, an arm of embattled LeShi Internet Information & Technology Corp.

What Shanghai SIPG does have in common with some of Europe's high rollers is a rich owner. The club dates its founding to 2014, when Shanghai International Port Group Co. took over the former Shanghai East Asia Football Club. It finished third last season.

SIPG is a Shanghai-traded company with a market capitalization of more than $17 billion and more than $2 billion of cash on its balance sheet: easily enough to fund a Messi or two. Unlike the Middle Eastern and Russian tycoons who've bankrolled big spending at Premier League clubs, though, SIPG has to answer to public shareholders.

The board had better hope its investors like football, because they're unlikely to see a financial return from deals like the Oscar purchase. Clearly, Chinese soccer has huge potential, but that will take time to realize. The more that is lavished on foreign players, the less there is for youth coaching and upgrading "cabbage patch" pitches, as Bloomberg News's Tariq Panja reported last week.

Whichever way you slice it, these numbers don't add up.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. A match that Brazil lost 7-1, to Germany.

To contact the authors of this story:
Christopher Langner in Singapore at clangner@bloomberg.net
Matthew Brooker in Hong Kong at mbrooker1@bloomberg.net

To contact the editor responsible for this story:
Paul Sillitoe at psillitoe@bloomberg.net