Will Leeds United interest Chinese investors?

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Supporters of Leeds United will be hoping their club remains attractive enough to overseas investors as business experts predict a flow of Chinese money into the UK game. Phil Hay reports.

Where Leeds United are concerned, yesterday’s deal between Manchester City and Chinese investors was a demoralising example of wealth attracting wealth. The trade of a 13 per cent stake for £265m valued City as a club at £2bn.

Massimo Cellino at Elland Road. Picture by Tony Johnson

Massimo Cellino at Elland Road. Picture by Tony Johnson

The comparisons with Leeds are stark. The sum invested in City is more than 10 times United’s annual turnover in the 2013-14 financial year.

It is nine times the amount that Leeds Fans Utd estimated as the rough cost of a takeover when it began its recent short-lived attempt to buy out Massimo Cellino.

But if Leeds are for sale, or likely to be sold by Cellino in the near future, the latest injection of cash at Eastlands suggests the appetite for throwing money at English football has not dried up.

Business analysts believe yesterday’s announcement will be the start of a flow of Chinese money into the UK game.

CMC (China Media Capital) Holdings, the firm which fronted the purchase of shares in City, represented “a consortium of high-profile Chinese institutional investors”, according to a statement issued by the Premier League club early yesterday morning.

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Three years ago, a group from China were reported to have taken control of a 15 per cent stake in Inter Milan.

In the past 12 months, Chinese cash has been directed towards Atletico Madrid and Malaga in Spain, Sochaux in France, De Haag in Holland and Slavia Prague in the Czech Republic.

In the Far East, they say that the trend has been driven by the country’s President, Xi Jinping, who is intent on establishing China as a serious footballing power.

By 2025 the country wants to create a global sports industry worth close to £500bn. In future, it hopes to host the World Cup.

Chris Brady, a professor at the University of Salford’s Centre for Sports Business, said further Chinese investment in England was highly likely after yesterday’s announcement.

“The Chinese president is a football fanatic and he wants China to be a world power in 10 to 15 years,” Brady told the YEP.

“There’s already been Chinese investment in Europe and the idea that China will carry on investing in European football – in clubs with investment potential – is right. I’d be absolutely confident about that.

“An Everton, an Aston Villa, maybe a Leeds United – what we’re talking about are clubs with potential, clubs that are clearly under-achieving but have underlying support in big numbers. It’s all about growth potential.”

Cellino’s intentions at present are typically unclear. United’s majority shareholder, who retains control of around 75 per cent of Leeds through Eleonora Sport Ltd, appeared to have resigned himself to selling the club in October but backtracked a fortnight ago.

Cellino said he had received no serious offers and would not depart until the club were safe from relegation from the Championship.

The eccentric Italian – owner at Elland Road since April, 2014 – made a brief offer to sell his shares “without profit” to Leeds Fans United (LFU) on October 20 before withdrawing that offer in a matter of days.

LFU, a supporters’ group, believed his stake to be worth a minimum of £30m.

Talks between Cellino and local businessman Steve Parkin, a lifelong fan who has tried and failed to acquire control of United at least three times, also reached a dead end quickly.

In the meantime, Cellino is waiting for the Football League to confirm the date of his appeal against his latest ownership ban.

Leeds are seen by many as English football’s last big investment opportunity; the one major club who have never tapped into the financial boom of the past decade.

But they are not a club without issues.

Their stadium and their training ground remain under private ownership, as they have since 2004.

Cellino is said to have drastically improved the financial mess he inherited from Gulf Finance House but United are faced with a myriad of legal cases.

Their squad are 17th in the Championship after losing at QPR on Saturday.

Brady said: “What Manchester City offer is global investment potential. It’s very appealing. The City Football Group (CFG) have got Melbourne City and New York City, on top of Manchester City. It wouldn’t surprise me at all if we see a Shanghai City before long.

“You could easily invest in a whole load of academies in China and make the most of the young boys over there, of which there are millions.

“If you commit and do it properly, you can’t go far wrong – and China know they’ll benefit from the players who come through.”

CMC chairman Ruigang Li, whose organisation spent six months negotiating with City, said he expected the tie-up “to benefit China’s football industry on multiple levels.”

“City Football Group represents a differentiated, systematic approach to building a global platform for football know-how, player development, academy programmes and commercial partnerships,” Li said.

“We and our consortium partner CITIC Capital also see this investment as a prime opportunity for furthering the contribution of China to the global football family.”

Khaldoon Al Mubarak, chairman of CFG, said: “Football is the most loved, played and watched sport in the world and in China, the exponential growth pathway for the game is both unique and hugely exciting.

“We have, therefore, worked hard to find the right partners and to create the right deal structure to leverage the incredible potential that exists in China, both for CFG and for football at large.”

Brady claimed that City were “probably overvalued” at £2bn. “It shows how important this sort of deal is to Chinese football,” he said.

There is widespread agreement that Manchester City’s owner, Sheikh Mansour, needs money from China far less than China needs its association with the Premier League leaders.

Leeds have not been a top-flight club for 11-and-a-half years but their profile lingers.

They have the highest away attendance in the Championship again this season.

Their incessant appearances on Sky Sports are down to the fact that the satellite company can always bank on large audience figures whenever United are televised.

Simon Chadwick, a professor at Coventry University and an expert in sports business and marketing, said: “There are different types of Chinese investors – state-owned enterprises and private equity groups.

“The private equity groups aren’t necessarily looking for a high-profile club like Manchester City.

“They might buy a club because they’ve been told to by the Chinese government or because it will earn them government favour and potentially access to lucrative contracts.

“It’s all part of the plan to create a global sports industry in China.

“I’ve been predicting (investment in an English club) for a while now. In the last 12 months, the Chinese have been investing in clubs all over Europe.

“They don’t really have a track record of running football clubs yet so it would be premature to say if Chinese ownership was good or bad but I don’t think they’ll run clubs as vanity products.

“They’ll run them in a rational way, with the business acumen that’s seen the huge economic growth in China over the past 20 years.

“They’d want to try and build up a positive image here but there are plenty of poor Chinese investors out there. There’s an old saying about being careful what you wish for.”

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