Money-Losing Chinese Soccer Clubs Hit With New Spending Limits

  • Foreign signings above $6.6 million will incur national tax
  • CSL teams spent more than $450 million on players in 2016

Five days before the opening of soccer’s biggest trading window, Chinese authorities have moved to rein in the country’s unprofitable clubs by announcing an unprecedented rule that would force teams to pay double for new recruits.

The measure comes amid a spending spree by teams backed by major private and state-owned businesses that have responded to Chinese President Xi Jinping’s call to create a $740 billion sports economy by 2025. Clubs that spend above 45 million yuan ($6.6 million) on foreign players -- way below the price of most such recruits -- or 20 million yuan on domestic signings will have to pay an equivalent amount into a national soccer development fund.

For cheaper transfers, the payments would be made into clubs’ own youth-development programs. The proposed new regulations, sent to teams Wednesday, quantify penalties first disclosed by the China Football Association last month.

China has emerged as the biggest investor in world soccer, buying major and minor overseas teams, sports-media businesses and building enormous training academies across the country. The most eye-catching purchases have involved the recruitment of high-profile Latin American and European players and coaches on salaries beyond what they could earn elsewhere.

Fifth-Biggest Spender

The rules were established “in order to limit the trend of professional football clubs pursuing short-term performances and introducing players at high prices,” the CFA said. The Asian nation was the fifth-biggest spender on players in 2016, trailing only powerhouse leagues in England, Spain, Germany and Italy.

The rule change is likely to affect most, if not all, Chinese Super League clubs, which had a combined revenue of 1.5 billion yuan in 2016, according to state-run news agency Xinhua. Those receipts were dwarfed by the $450 million spent on recruiting foreign talent.

The new regulations also stipulate that sides field at least as many Chinese players under 23 as the number of foreigners, up to a maximum of three overseas imports. The move underlines the focus on youth development in a country that has only once qualified for the World Cup, losing all three games in 2002 without scoring a goal. China conceded an injury-time goal to tie 2-2 with Syria Tuesday, all but extinguishing hopes of reaching the 2018 tournament in Russia.

Mads Davidsen, the technical director of Shanghai SIPG, the league’s second-placed team, said the rules may be a counterproductive way to improve the skills of young domestic players because they may no longer come up against the best possible opponents. “I understand the sentiment, but not the tools,” he told a conference last week.

Shanghai SIPG is among the top spenders. It stunned the sport in January when paying English champions Chelsea $75 million for reserve midfielder Oscar six months after breaking the previous Chinese transfer record by hiring Brazilian striker Hulk.

Even with the changes looming, European media have continued to link several stars with transfers to China. U.K. tabloid The Sun reported Wednesday that Bayern Munich’s Chilean midfielder Arturo Vidal is “desperate” to move there in search of “one last major pay day.”

News of the proposed penalties was earlier reported by China’s Sports Weekly.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE