The Economic and Cultural Fuel Behind China's Soccer Investment

A rich club wanted to buy Barcelona pillar and long-time right back Dani Alves. Another wanted to poach midfielder Arda Turan, who had only just begun playing for the Catalans. Interest in players from the world's most successful club of the last decade isn't unusual, of course. But the clubs making the offers weren't the newly moneyed Paris Saint-Germain or Manchester City. Neither were they soccer aristocracy like Manchester United or Bayern Munich.

One of them was Beijing Guoan. The other wasn't identified. But they were both from the Chinese Super League, per the Spanish press.

Alves, who is almost 33 and in decline, was reportedly offered 30 million euros over three years. But the more shocking offer was for Turan, at 29 and still in his prime. He sat out the first half of the season while waiting out Barca's transfer ban following his summer move from Atletico Madrid, but was offered a 5-year contract for 100 million euros, according to Chinese outlet Sihu. That would make the Turk one of the best-paid players on the planet, even though he probably isn't among the top-10 midfielders in the world.

These were bold attempts that shook up soccer's winter transfer window. And China's clubs have been emboldened, which in turn reflects how soccer often acts as a very well-calibrated barometer for pressure shifts in the global economy. China's Super League, once best known for corruption and match-fixing, is growing into a powerhouse. On the transfer market, anyway.

According to the authoritative transfer tracking website Transfermarkt, five of the six biggest transfers completed since January have been conducted by Chinese clubs. Midfielder Alex Teixeira moved from Shakhtar Donetsk to Jiangsu Suning for 50 million euros, which blew Liverpool's bid for the 26-year-old out of the water. Striker Jackson Martinez walked away from Spanish power Atletico Madrid for Ghuangzhou Evergrande Taobao for a 42 million euro fee. Ramires left defending Premier League champions Chelsea and Gervinho parted from AS Roma for Jiangsu and China Fortun, respectively. Elkeson, meanwhile, left Ghuangzhou for Shanghai SIPG. The only non-Chinese interloper in the winter's top-6 was Stoke City, flush with the monopoly money raining down on the Premier League from its rich new broadcast deals, landing Giannelli Imbula from FC Porto.

Eight other transfers in this winter's top-50 were Chinese as well, including, remarkably, four acquisitions by Tianjin Quanjian, which plays in China's second division. Jiangsu apparently also bid 75 million euros for Chelsea's Oscar, which would make it one of the 10 most expensive deals ever.

Plenty of big-name coaches work in China now. And other respected pros have recently reached for the cash being thrown around there—Brazilians Robinho, Paulinho, Renato Augusto and Gil; Colombians Fredy Guarin and Fredy Montero; Argentine Ezequiel Lavezzi; former Seattle Sounders striker Obafemi Martins. The list of those approached and tempted is even longer. Many of them use the leverage of a rich offer to improve their terms with current employers.

Now that the dust on the transfer window has settled, the question is less focused on who the next player will be to board a plane to China, but whether this is a fad or a trend.

China's economic growth has begun to flatten out, so it has sought to evolve from manufacturing to service. And professional soccer, as a form of entertainment, is a service. In a country newly rich and besotted by Western luxury goods, the sport has become a paradigm of sorts for embracing and importing foreign commodities. Only in this case, those commodities aren't yachts or Ivy League educations, but rather soccer players.

"The change in taste has been an almost stereotypical obsession with status symbols and conspicuous consumption," explains Michael Pettis, an economics professor at Peking University and the owner of Maybe Mars, which he says is the largest independent music label in China. "The driver is perception: high quality goods are only better to the extent that they are widely recognized as high quality."

But status symbols change, and sometimes quickly. In his excellent book Age of Ambition: Fortune, Truth and Faith in the New China, Evan Osnos writes of the Chinese propensity for fads and rages, locally called a "fever." "In the first years after the country opened to the world," Osnos writes, "people contracted 'Western Business Suit Fever' and 'Jean-Paul Sartre Fever' and 'Private Telephone Fever.' It was difficult to predict when or where a fever would ignite." Likewise, Expensive Foreign Soccer Star Fever swept over the country quickly and seemingly out of nowhere.

These strong currents in Chinese culture might go some way to explaining why an already soccer-mad country suddenly started to import better players with established names into its unironically-named Super League. It's a quick upgrade of the domestic game. Pettis says most Chinese "are horribly depressed at the low quality of Chinese soccer and the corruption scandals in which it is constantly embroiled, and would be deliriously happy if China were ever to become a major player." Things in China are built quickly. Rather than wait for a domestic soccer scene to mature, the Chinese bought a foreign one.

That soccer would mirror a change in global and all-cash marketplace for mercenary players—and to some extent coaches—is hardly surprising. It's been happening for decades.

When the Italian car, food, and media tycoons were at the height of their powers in the 1990s, the world's best players were found in Italy. When Russia began turning out oligarchs, they soon started buying up teams like Chelsea as their private playthings. When other Russians got rich during the gas boom, local clubs began bringing in big names as well. And just as soon as that market deflated and the ruble plummeted, the foreigners were unceremoniously shunted out the back door.

In India, the I-League—which succeeded a soccer outfit actually called the National Football League—briefly made noises about signing major names, but has struggled to fully professionalize and find financial stability just as the entire country has been on a tortuous march to modernity. Even the Brazilian league, ransacked of its best talent for decades, briefly rose and brought back talent ahead of the 2014 World Cup as the local economy soared, before falling away again as the market crashed.

The Chinese buying frenzy, while seemingly much quicker and more concentrated than others, is similarly a symptom of larger economic and cultural forces. Guangzhou was bought up by a building company for just $16 million in 2010 during China's real estate boom, lifting it out of obscurity and towards Asian prominence. Then, in 2014, it flipped half the club on to Alibaba, one of the world's biggest internet companies, for $190 million. Most of the other clubs are also owned by companies still stuck somewhere between government-control and full-blown capitalism, turning soccer into a proxy advertising war in a country that developed an appetite for the sport years ago. Chinese president and party chairman Xi Jinping is a big supporter of all this, and soccer now apparently acts as a bridge between the private and public sectors. Companies endear themselves to Xi—whose government wants to grow the sports industry to $800 billion by 2025—through their investment in soccer.

The more extraordinary thing is that this model may yet prove sustainable. The Chinese Super League's broadcast contract cost only $8 million in 2014 and $13 million in 2015, per Forbes. But its new deal will generate $200 million in 2016 and $1.3 billion over the next five years, according to the Guardian. That's price inflation even the Premier League could only fantasize about.

It's no great mystery why the biggest European clubs have been touring in China for decades. In a market of well over 1.3 billion people—that crept closer to 1.4 billion in a 2015 census, now standing at 1,376,049,000—that retains fierce patriotism in conjunction with its fascination with the West, the revenue generated could bankroll the wealthiest league in the world.

But the Super League is still some way off from developing its own global stars. Grassroots player development in the world's most populous country is colossally ambitious, aiming to open 20,000 soccer schools countrywide by next year, but still in its infancy. "The development side of the game has started and will continue and really isn't linked at all to what's going on at the top end," says Tom Byers, an American coach involved in the improvement scheme initiated by President Xi himself. "There are no shortcuts to development. Grassroots football development is a marathon, not a sprint. So expectations have to be managed."

Nevertheless, any yields from those investments are a long way off. If China is awarded the 2026 World Cup, which it covets, it will struggle to produce a competitive team. The Chinese have qualified for just one previous edition and never won the meek Asian Cup.

As with all other emerging markets, the trick will be to sustain interest and investment over a few decades. And if Fancy Soccer Things proves to be a fad, it could all go away just as soon as they money does.