It wasn’t the best season for Aston Villa. The 142 year-old football club had by far the lowest points total in the English Premier League but now it has been relegated perhaps it has scored its most important goal of the year – by getting a Chinese buyer.
On Thursday, former European champions Aston Villa announced that Chinese tycoon Tony Xia Jiantong has agreed to acquire the football club for £60 million ($88 million), ending a decade of ownership by American businessman Randy Lerner.
The struggling football club has eventually landed in the hands of a Chinese owner as FinanceAsia predicted, albeit someone else than we had in mind.
Despite tumbling out of the world’s most profitable football league, Villa fans have reason to look forward to a brighter future after ridding themselves of the American owner under whose stewardship the club endured nine consecutive years of losses and a litany of overpaid and poorly-performing managers and players.
Their new Chinese owner has pledged to take the Birmingham-based club back to the Premier League, finish in the top six, and bring European football back to Villa Park, their home ground.
Such high hopes are not groundless given the miraculous success of Leicester City, the Thai-backed football team that outplayed England’s cash-rich superclubs to lift the Premier League title this season.
Xia will hope to replicate the story of Leicester City owner Vichai Srivaddhanaprabha instead of that of his fellow countryman Carson Yeung, who bought Villa’s local rival Birmingham City in 2009 and oversaw the team’s relegation from the top-tier in just two seasons.
The Aston Villa acquisition dovetails with Chinese President Xi Jinping’s rallying call for the country to become a top-tier football powerhouse by 2050 and maybe even win the World Cup. To help achieve that goal, Xia could potentially turn Aston Villa into a platform for promising young Chinese players to feature in one of the world’s top football competitions.
In the announcement Xia said he wants to make Aston Villa the biggest club in China.
It remains anyone's guess whether Xia’s acquisition of Aston Villa is driven by personal interest or political factors. Still it does not appear that he is investing for profit, at least not in the short term.
Owning a club in world’s most lucrative football league does not guarantee profitability even after huge investment. Lerner, for example, is estimated to have lost over $400 million during his spell in charge since 2006, according to British media reports.
According to local media, BT Sport and Sky will pay a record £5.1 billion for live Premier League TV rights for the 2016/17 season. Aston Villa’s absence from the Premier League next season means it will lose out on at least £99 million, which is what it would have earned had it finished bottom.
That sum alone exceeds the £98 million received by title winners Chelsea in the 2014/15 season.
What Xia could immediately get from the Aston Villa takeover is probably worldwide attention. The Jiangsu-born businessman was little-known despite being the controlling shareholder of five public-listed companies in China and Hong Kong, according to the announcement.
He is buying the club via his flagship entity Recon Group, a privately owned conglomerate that runs businesses ranging from finance, infrastructure, agriculture, transportation and logistics, new energy, tourism and culture, according to Recon’s website.
So to the growing list of major foreign assets targeted by Chinese buyers this year, which so far ranges from retail stores, online retailers, hotels and cinemas to mines and agrochemical manufacturers, Xia is now adding a football club.
It's not the first time Chinese capital has made a beeline for European football, though, and probably won't be the last. Chinese property-to-entertainment conglomerate Dalian Wanda Group bought a 20% stake last year in Spanish Champion League finalists Atlético Madrid while China Media Capital took a 13% stake in England's petrodollar-backed soccer club Manchester City. In addition, a Chinese consortium is currently trying to buy Italian heavyweight AC Milan.
As such, sport is increasingly becoming part of the story as China flexes its financial muscles by snapping up assets around the world.
China total outbound M&A volume reached $117 billion year-to-date, according to Dealogic, and has already exceeded the full-year figure of $109 billion in the record-breaking year of 2015.