The skepticism flows like a river bisecting the Yangtze these days. Whatever China is doing with its soccer money, it certainly doesn’t seem sustainable. But it also isn’t slowing down. It’s accelerating like a rocket-propelled ship in a vacuum.
We’ve been dealing with salary shocks from China for the entirety of 2016: from Demba Ba ($11.5m/year) to Ramires ($14.5m/year) to Ezequiel Lavezzi ($16.8m/year). In 10 days in January 2016, China’s transfer record was broken three times. Hebei China Fortune even paid a $6.1 million transfer fee to PSG for Lavezzi, whose contract was set to expire in six months. So when the Oscar news broke – Shanghai SIPG was plopping down a frankly ridiculous $25.5 million salary per annum – the surprise was muffled by the pillow the league had already deployed over our collective windpipes.
And then the Carlos Tevez news – $41 million per year, $760,000 per week and more money than the nation of Tuvalu. Whether or not Cristiano Ronaldo follows with his $150 million (just typing that caused me facial cramps), Tevez – the 32-year-old Tevez – is now the highest paid soccer player on the planet.
Tevez’s new team, Shanghai Shenhua, is an interesting conglomeration of faded glory and homegrowns (and coached by former Sunderland idealist Gus Poyet, if you’d wondered upon which shore he’d washed up). In August, Forbes estimated Shenhua’s 2015 revenue was $29 million, which as you’ll note, fellow math whizzes, is a little bit underneath $41 million. Sustainability, thy name is not China. Fortunately for clubs like Shenhua, it doesn’t really matter, in the end.
Shanghai Shenhua added ‘Greenland’ into its name when Greenland Holdings bought out former owner Zhu Jun in January 2014 (its technical name is the ever romantic Shanghai Greenland Shenhua FC, no doubt to reflect the club’s nascent ties to a giant sheet of ice). In 2014, the company styled itself as the largest real estate developer in the world in owned floor space with assets approaching $60 billion. They own major residential high-risde construction contracts in downtown Los Angeles, Brooklyn, London.
Like any multi-national mega-corp, Greenland Holdings has a rolodex of shareholders. One of them is the Shanghai People’s Municipal Government. It’s important to understand here that while the U.S. was formed from the seeds of decentralization and the rights of individual states, China has been a single vertically integrated pipeline as long as it’s been a modern, unified country. So while direct government interests commingling with those of private business seems nefarious to a practiced Western eye, it is hardly a misunderstood practice in China.
So when you ask how Shenhua can afford Tevez’s salary, the answer hits at points all along that vertical pipeline. It has money to burn, but it also has the backing of the government.
We of course know China’s government has made outrageously long strides in the last few years to win a World Cup by 2050. In the U.S., this might mean opening the system. In China, it’s meant the reverse: consolidation. The government is subsidizing thousands of soccer schools and installing soccer rubric in existing ones. What’s more, Chinese president Xi Jinping issued a soft mandate for billionaire-fronted teams to chase escalating transfers fees.
Whether or not that means government tax breaks or subsidies to help cover the cost, it’s clear the government gave a Sopranos-style wink to those clubs who would fall in line.
“When the Chinese government says they are setting their mind to something, it means ‘This is how you’re going to get on our good side,” said David Hornby to the Daily Mail, a sports business director of the Mailman brand management group in Shanghai.
MLS, of course, doesn’t particularly care about any of this, and I’d argue it’s helping the league molt into more colorful plumage. MLS was never in the discussion for players like Lavezzi and Oscar, and if the Chinese league plans on hedging in on the Pirlos of the world as well, it’ll force MLS clubs to hone in even more on places like Costa Rica, which has already provided MLS six impact players this offseason alone. That’s a net positive for the considerably more frugal MLS, which needs to improve itself from the bottom up, not necessarily the top down.
In the meantime, the world carefully monitors the China bubble to see how big it’ll grow before it pops under its own weight.