chrgavalas
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7 years ago Final
Project visuals/text
Last week China’s cabinet placed its sport clubs on the list of local companies what are not allowed to invest overseas in a move that follows on the footsteps of late last year’s campaign to curb capital outflows.
According to a Bloomberg report, the outflows include what government calls “irrational investments” and the decision aims at protecting the yuan from further depreciation.
But what were the uncontrollable actions that took place in the last few years that ultimately needed to be contained?
Why and in what ways did China decide to heavily invest in soccer in the first place?
Our data analysis investigates the numbers behind one of the running decade’s most prominent financial developments in the world of soccer and takes a closer look at its repercussions both in China and abroad.
Behind the country’s surge in soccer investments is the body that is now trying to hold them back: the government itself and notably its own President, Xi Jinping, who announced a plan in 2015 according to which China would be transformed into a world beater at the sport.
His plan revolved around the cleaning and reorganization of professional soccer in the country with the inclusion of new programs in thousands of schools, aiming at eventually establishing a constant flow of players who’d be able of even winning the World Cup.
That resulted in China’s top teams spending hundreds of millions of dollars to hire foreign stars like Brazilian midfielder Oscar from Chelsea or striker Hulk from Zenit.
That came at the detriment of their expenses: the transfer fees they had to pay were as high as $65.65 million (payable to Chelsea by Shangai SIPG) in the case of Oscar.
But with no exceptions, all interested chinese teams would have to double, triple or even quadrille the salaries of the stars they signed in an attempt to lure them in the otherwise weak Chinese League.
Subsequently what came about was a huge increase in the value of the league itself over the last seven years. According to transfermarkt, from $54.99 million in 2011, the estimated value of the league rose up to an all time record high last year at $628.12 million.
But it’s not just the European players reaping the benefits of such frenetic spending.
Some of the most storied european clubs have been bought by investors from the Far East, a situation that has gotten them off the financial hook.
More specifically, the flood of Chinese money is poured into an estimated 29 foreign soccer clubs in the past four years including powerhouses like AC Milan, a team that has been a shadow of the glamorous squad who won the Champions League in 2007.
It was bought by a Chinese consortium in April for $788 million in a troubled deal that was only finalized eight months after it was initially agreed.
According to the statement issued by ex-owner of AC Milan who’s also ex Italian Prime Minister, Silvio Berlusconi, “the buyers confirmed their commitment to undertake significant capital increases and liquidity injections aimed at strengthening Milan’s financial structure”.
The purchase of one of Italy’s most famed team is the biggest Far East investment in a european soccer club and has totally captured the interest of the city of Milan, only a year after retail giant Sunning Commerce Group bought its rivals, Inter Milan.
Both teams had been doing terribly in recent years —being out of european competition this year due to their poor performance in their local league— which had been placing extra pressure on their longtime owners to sell their shares.
However, the phenomenon has spread in other prestigious league such as the Premier League and the La Liga.
In England, it is indicative that Southampton Football Club was recently bought by tycoon Gao Jisheng becoming the third British team after West Bromwich and Aston Villa that are already under Chinese control.
And in Spain, Dalian Wanda Group owns 20% of Atletico Madrid.
The soccer spending frenzy reflects a broader governmental tendency to invest in the entertainment industry in China that has seen explosive growth in recent years, growing at a much faster pace than the overall economy in an effort to rebalance it away from exports and towards consumer spending and services.
Approximately, in 2010 there had been only $100 million invested in entertainment whereas last year this number went up at the levels of more than $2 trillion!
And by breaking down the numbers in entertainment’s subsection of soccer we see that in the last three years the amount of money Chinese capitalists have invested in the “beautiful sport” to buy european club shares has also been on the rise. What’s enormously indicative is that even half of 2017 is enough to surpass the total of 2016 in that respect.
Eventually, as the spending frenzy kept on going until this summer and the transfer marker window now open in Europe until early September, the government stopped taking a back seat.
The new imposed restrictions will probably come as a blow for many Chinese clubs that will now likely make sales, according to the chairman of UK -based soccer deal adviser, Blackbridge Cross Borders. Alexander Jarvis spoke to Bloomberg saying he thinks many deals will be derailed while some other teams will find ways to get around the rules.
Details
Headline: China’s soccer invasion of Europe in a shambles?
Published website version: https://chrgavalas.github.io/data-projects/China-Soccer/
Code repository: https://github.com/chrgavalas/data-projects/tree/master/code/project8 Final data set(s): https://www.transfermarkt.com/ http://www.aei.org/china-global-investment-tracker/ https://github.com/chrgavalas/data-projects/blob/master/code/project8/China-Investments.xlsx https://github.com/chrgavalas/data-projects/blob/master/code/project8/League-Value.csv
What did you find to be the most difficult part of this project?
The story was developed literally in the last few days and this development inevitably ended up in my headline because I thought that editorially this was the right thing to do, even though this is not a data supported argument. It's more like a breaking news evolution that could only be included as a possible follow up. Other than this, the Chinese government isn't really so friendly when it comes to disclose data about investments so I based my story on a third party dataset which I could luckily find without having to scrape. Also, it was very hard to find the earnings of the players in Europe because these numbers aren't easily disclosed and I based my analysis in various news reports.
Are you satisfied with what you produced? Is there anything you would like to change or improve?
Overall I am satisfied but there are things I could have done differently. I would like to show that the value of the players in the soccer market either goes down after they make the move to China (which is more reasonable) or it doesn't get changed. Either ways it would be very interesting from a sports story point of view. But I didn't find any relative and usable data for that.
Checklist
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- [x] I have posted my project to my project website
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- [x] I have uploaded/updated any Jupyter Notebooks or other datasets into my code repository
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Pitch
In 2017, Chinese soccer teams continued to spend uncontrollably and disproportionately in star players mainly from Europe in an effort to make their league shine further. What's interesting here is that the trend that has captured global soccer attention over the last few years has its roots in the country’s presidency: Xi Jinping has clearly stated he wants to turn China into a soccer powerhouse within decades, with an eye on the 2050 World Cup. But is in the government's interest to also see Chinese investors massively buying european clubs' shares in the future --as it's currently the case-- or not?
Summary
For the purpose of this last project, we will be measuring the amounts of money that teams from China have invested over the last six years in transfer signings and we are going to isolate the top transfers, showing the difference between the salary offered to these players in China as opposed to what they had been getting in Europe. We are also going to use a dataset from the Global China Investment Tracker that gives credence to the fact that Chinese investments in entertainment (of which soccer is a subcategory) are on the rise in 2017, compared to both 2015 and 2016 and even though 2017 has yet to end. In this context, investments are considered the buyout of shares of football clubs from Chinese companies which is another way to demonstrate the ‘yellow soccer invasion’ in european affairs.
Details
However, the State Council, China’s cabinet, just last Friday formally put sport clubs on its list of industries that local companies are restricted from investing in overseas, Bloomberg reported. As much as China favors expansion of soccer establishments in the country, it has also started a campaign late last year to curb capital outflows, including scrutiny of what the government called "irrational investments". The main purpose of the measure is yuan's protection from further depreciation.
Possible headline(s): Chinese soccer’s spending spree piles up; Is there an end in sight?
Data set(s): http://www.aei.org/china-global-investment-tracker/ https://www.transfermarkt.co.uk/
Code repository: https://github.com/chrgavalas/data-projects/tree/master/code/project8
Possible problems/fears/questions: It's a story I had been following for quite some time and once I thought I would also be able to tell it also with data I was thrilled. It doesn't look though as if I have found a new trend in the stats, like something that the general public doesn't really know, or will be surprised to learn. I guess my task will be to structure the storytelling in a way which is as intriguing as possible for the reader.
Work so far
Opened my csv files in pandas, cleaned the data frames and make initial graphs. Searched a lot through the transfermarkt database to find out the correct numbers about the correlations I want to show and then created my own tables in LibreOffice which I then also opened in pandas.
Checklist
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