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Chinese football playing field shifts

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The Chinese Super League has seen an influx of star names for huge transfer fees including the Brazilian Hulk. Reuters

BEIJING (Reuters) –China Sports Media paid a record $1.18 billion in 2015 for a five-year contract to broadcast China’s top-flight football league.

The move by CSM came as the Chinese government was trying to kick-start the sport in China, where the domestic league and national team have long struggled.

CSM’s chief executive, Zhao Jun, now says that new directives by the Chinese government, such as limiting foreign players, is undercutting the growth of the China Super League, and that the company wants to renegotiate its deal.

“What we bought at the time was the future, but the future is not coming on time,” Zhao told reporters in Beijing on Friday. “This isn’t an issue with us, but an issue of policy.”

At the heart of this are new rules that have put a virtual block on splashy player transfers and abrupt changes to a quota system that caps the number of foreign players that domestic teams can field. The new measures make it harder for companies to market the game to paying viewers, according to Zhao and other industry executives.

CSM’s position underscores a growing political risk for global and local players in China’s sports market, where overt support for the game just two years ago has been replaced by tough regulations and scrutiny on investment deemed “irrational” by the government.

Zhao said CSM, which is looking for new investors, was pushing to extend the length of its contract with the Chinese Super League and had agreed with the domestic league to delay a $90 million payment until the two sides resolved the issue.

“Long-term, we think this is a good market, but for us we only have a window of five years, which makes business tough,” Zhao said.

The change in the political winds has been clear.

In 2015, President Xi Jinping appeared in a selfie with then Prime Minister David Cameron of Britain and Sergio Aguero, a star striker with Manchester City, the English football giant. Soon after, the state-backed China Media Capital, the majority shareholder in CSM, led a $400 million deal for a stake in the owner of Manchester City.

This year, however, China tightened rules on the number of overseas players able to appear for domestic clubs and recently said indebted teams would have to pay a 100 percent tax on any signing fee of a foreign player over $6.5 million.

The changes – which followed an influx of star names for huge transfer fees, including the Brazilian stars Oscar and Hulk, as well as Carlos Tevez of Argentina – mean clubs can’t rely on deep pockets to buy the best players, and broadcasters have fewer star names to help lure paying viewers.

The quality of China’s domestic league falls well short of competitions in Europe, while the national team sits between Jamaica and Trinidad and Tobago in the world rankings.

The Chinese Football Association, which oversees the China Super League, said it was in discussions with CSM over the impact from recent policy changes and looking to find an “agreeable solution” for both sides. It declined to comment on the payment delay.

Signs of difficulty commercialising the sport in China point to growing risks for global clubs and franchises looking to tap into the spending power of China’s huge potential fan base.

Zhao said CSM had planned to start a pay-per-view model to broadcast games next year, but was now delaying the project.

“It’s certainly true the league has become less attractive globally and domestically, since the chance of top-class international players signing with CSL teams has been drastically reduced,” said Mark Dreyer, the Beijing-based founder of the China Sports Insider website.

Clubs had paid huge fees to buy foreign stars, driving up global transfer fees. Oscar, the Brazilian, moved to Shanghai SIPG for a reported $69.82 million, while names like Wayne Rooney of Manchester United and Diego Costa of Chelsea had been linked with big moves to Chinese clubs.

There were no major signings in the recently closed transfer window.

The Chinese Football Association has made enforcing discipline and on-field behaviour a priority this year, which has led to often harsh punishments for players. Oscar was handed a rare eight-match ban last month for kicking the ball at two opposing players.

There have been some winners in the drive, including young Chinese players who have benefited from a quota system that requires a set number of local under-23 players in each game.

Xu Junming, a 23-year-old midfielder at Shanghai Shenhua, a top-tier club, played 18 minutes last year, but has been given over 18 times as much game time this season, according to the Beijing-based statistics firm Sodasoccer.

Xu is concerned though. He turns 24 in October, which means he will no longer qualify for young player quotas.

“I will be lying if I say I am not worried. But this is really not for me to decide,” he said.

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