Chinese Consortium invests $400m in CFG

Just been reading up about Li Ruigang, the new director of CFG. He's the Chinese equivalent of Murdoch, with a finger in all sorts of media, entertainment and internet pies. He counts Rupert Murdoch as a friend and role model (but we won't hold that against him). In fact Murdoch spent years trying and failing to break into the Chinese media market. He finally gave up trying and handed his business over to Li, who bought a controlling stake. He has set up a joint venture with Jeffrey Katzenberg of Dreamworks.

I used to complain about the quality and composition of the City board in days gone by. John Wardle - nice but probably too nice to be effectual, Bryan Bodek - a local solicitor, Mark Boler - owned Mere Golf Club but didn't really trust Mackintosh, and Dennis Tueart - who was David Makin's man. Then there was our single executive, Mackintosh, a jumped up accountant who spent more time cultivating his own image and eliminating anyone who might be a threat. Anyone who used to attend the AGM will no doubt remember Paul Stanley's annual question "What do each of these directors actually do for us?" to which he never got anything approaching a coherent answer. When I look at the quality of the board now, with its international movers, shakers and industrialists, the difference is staggering.

The other thing I don't quite get is that the Chinese group paid for a part of CFG. But if CFG were looking to get opportunities in China, wouldn't you expect them to be the ones paying the money? The party investing is the one that normally expects to get a return but in all the press releases, it infers that CFG is looking to be the beneficiary. So I reckon that this more about China getting access to the UAE and/or the services of City's expertise and that this was the price of that.

You're probably right PB. Even so, it shocks me how low the % stake that has been bought in CFG. It's only just big enough to block Sheikh Mansour buying it back at any time of his choosing (<= 10%). Chinese parrtners have to generally own 35%+ of any joint venture as a minimum. That's not to say that any football club set up in China won't have a higher % of local ownership. But the fact that the Chinese bought into the group would indicate that will not happen.
 
Just been reading up about Li Ruigang, the new director of CFG. He's the Chinese equivalent of Murdoch, with a finger in all sorts of media, entertainment and internet pies. He counts Rupert Murdoch as a friend and role model (but we won't hold that against him). In fact Murdoch spent years trying and failing to break into the Chinese media market. He finally gave up trying and handed his business over to Li, who bought a controlling stake. He has set up a joint venture with Jeffrey Katzenberg of Dreamworks.

I used to complain about the quality and composition of the City board in days gone by. John Wardle - nice but probably too nice to be effectual, Bryan Bodek - a local solicitor, Mark Boler - owned Mere Golf Club but didn't really trust Mackintosh, and Dennis Tueart - who was David Makin's man. Then there was our single executive, Mackintosh, a jumped up accountant who spent more time cultivating his own image and eliminating anyone who might be a threat. Anyone who used to attend the AGM will no doubt remember Paul Stanley's annual question "What do each of these directors actually do for us?" to which he never got anything approaching a coherent answer. When I look at the quality of the board now, with its international movers, shakers and industrialists, the difference is staggering.

The other thing I don't quite get is that the Chinese group paid for a part of CFG. But if CFG were looking to get opportunities in China, wouldn't you expect them to be the ones paying the money? The party investing is the one that normally expects to get a return but in all the press releases, it infers that CFG is looking to be the beneficiary. So I reckon that this more about China getting access to the UAE and/or the services of City's expertise and that this was the price of that.
In the same way that Thaksin became known as Frank, Li Ruigang will be know as Franny to me from now on.

Your last paragraph doesn't make much sense. A transaction like this is an exchange. Franny has given cash and has received a stake in a business in return, which he will be hoping yields him more cash. Mansour's family have exchanged a stake ( which is an enormous thing of course) for cash and opportunity.
 
My maths may be out here but to put it into perspective: If there's 1.4billion people in China, and we manage to convince just 0.5% of the population to spend the equivalent of a pound a month on subscription based TV content we'd earn £84m per year? Wow

Yes, but City always maintained that their content is designed to be free and universally available. If they wanted to go down the subscription TV route they'd have done it a long time ago but it goes against their ethos. Also, most of that money would go back to the TV distributors, not us.

The other thing I don't quite get is that the Chinese group paid for a part of CFG. But if CFG were looking to get opportunities in China, wouldn't you expect them to be the ones paying the money? The party investing is the one that normally expects to get a return but in all the press releases, it infers that CFG is looking to be the beneficiary. So I reckon that this more about China getting access to the UAE and/or the services of City's expertise and that this was the price of that.

I've put the pertinent bit in bold. The Chinese have a number of reasons to want in on this, but it's mostly about what we can do for them that they can't do themselves. As numerous journos have commented, under President Xi football has become a major focus of the Chinese government, at least as far as its sports ministry goes, and they desperately want to drag their country up to a level competitive with the rest of the world. In a staggeringly short amount of time they need to do a lot of things - engage the kids, raise coaching and playing standards dramatically, build infrastructure, make China an attractive market to players for more than just money reasons, expand the scope of their broadcasting and the reach of the league, get the rest of the world interested in Chinese football. The list goes on. On top of this, the current Chinese government has the stated aiming of hosting and winning a World Cup in the foreseeable future. Obviously they can't do it all at once but the Chinese are nothing if not incredibly ambitious and they honestly believe they should be at the summit of the world at just about everything, much like the Americans but for different reasons.

Now, obviously CFG can only do so much, but we offer them an expertise which they simply can't get from either training Chinese nationals or trying to hire foreign intelligentsia. We have the knowledge of how the Premier League operates its commercial powerhouse, the knowledge of how to run networks of academies, the knowledge of how to attract in sponsorships and how to build and run major teams. You could learn any one of these things by clever recruiting but realistically the best way of bringing up standards in your country is usually to get another group who already know what they are doing to come in wholesale and do it all for you.

That's not to say that they are basically asking CFG to run Chinese football. That would be silly. But I think that the implication that CFG will now invest in the Chinese Super League goes without saying, and they are counting on us bringing in players the likes of which NYCFC hired to glamourise the club, and by implication the league as a result. Other clubs will then find it far easier to attract rival players, not to mention they will be forced to spend in order to compete. This is something CFG has always directly intended with its spending - take for example Australia, where CFG is actively campaigning for the league to release itself from the control of the FFA and to remove its salary cap rules. They aren't trying to promote an arena where they can buy constant success, they are trying to challenge/dare other teams to have to spend more to compete, thus raising the standard of the league as a whole.

Additionally it probably goes without saying that CFG involvement would mean an adoption of European coaching standards at academy level. This has two immediate effects - again, it provides both a model and a competition for the rest of the Chinese to match, and it also serves to provide the Chinese national team with a stream of top-quality players. If some of those players then go to play for City in England, more's the better for them, although I suspect that in the long run they have dreams of English kids wanting to come to play in China.

This is the stuff that CFG can directly affect. Then there's the stuff they get as after-effects. We open the doors for them to foreign sponsorships and interest. They (presumably) will soon have a foreign investor in the Super League, meaning that for the first time they have an external body which has a vested interest in encouraging TV channels in England and the Middle East to buy into the Super League. They are surely also counting on CFG actively promoting Insert Chinese Place Name City F.C. around the world, again then by consequence promoting the rest of the league and encouraging other foreign groups to back other clubs either financially or more likely just by partnerships. Again, there's myriad effects to CFG promoting a revolution in Chinese football. That is, assuming it is able to happen. In both MLS and the A-League, the other clubs and the leagues themselves have both come out fighting against a group who want to put money in heavily in the short term in order to bring up the quality of the rest - in fairness, CFG's game plan in investing usually is fairly anti-competitive in the short term because they are relying on rivals responding positively in the medium and long term, which is not something that can be taken for granted and sometimes is just outright not going to happen. Who knows what would happen in China, but I can't imagine the other clubs would be very happy. CITIC and China Media Capital are counting on it, though.

It's worth pointing out, as I saw another journo pointing out yesterday, that the reason they seem to be putting their eggs in CFG's basket like this is because no-one else offers the global portfolio we do. If Chinese companies bought into any other team, they would be buying into control of the actual club and would suddenly have responsibility for transfer policies, ground investments, ticket pricing etc. The club they invested in, for its part, would then be focused on selling the English club's brand in China with merchandise, TV deals, friendlies etc. China doesn't really want either side of that - their national league doesn't benefit from the scum, dippers, chavski etc just selling themselves in Beijing and the Chinese don't really benefit from getting a hand in negotiating the sale of Shrek or Hazard. CFG is pretty much the only group interested in investing more in the Chinese league than in the English club's presence in China. Until or unless any other club is willing to offer the same thing, it's hard to see them jumping all over the deal like they have done this one.
 
When the Chinese premier and David Cameron came for a visit, you could sense that something major was about to happen and that is what this deal is - major; not just for City and the City Group but for football in general. An astute and pioneering business move by our owners who have constantly shown that they are always one step ahead.

The premier league is changing, with the unprecedented transformative amount of money coming in from TV deals and other deals very soon, it will become even more competitive in the future. We are seeing the small stones this season but it will be transformed competitively in the next few years and I even envision teams winning the league with sub 70 total points, like 65, 66, 67 points or something like that.

This means that if your eyes are not open and you are not pushing to advance and distinguish yourselves then you can get caught up by the chasing pack and this is why this deal is encouraging as it shows that Sheik Monsour and his group are preparing themselves for what is to come and at least ensuring that Manchester City stays ahead of everybody else. We are ready for the future.

As for the actual benefits of this deal, well they are many and I am sure it had already been mentioned. But the obvious will be the expansion and growth of the brand of the club and City Group under the strong foundation a business alliance with China and Chinese investors provides. Among many others.
 
Meanwhile, over at Steptoe`s Yard Louis Van Gaal dusts down a worn out, moth-eaten Rooney. At a table James Wilson
looks up from reading Martin Samuel`s article and says, " You kept me back all this time, I could`ve played for a top club
and now look where I`ve ended up, you dirty old man!". Louis turns around pulling a gurning look and replies,"Garn, you wouldn`t
make it anywhere. This is where you belong, here amongst all the junk. I know what`s best for you."
 
Yes, but City always maintained that their content is designed to be free and universally available. If they wanted to go down the subscription TV route they'd have done it a long time ago but it goes against their ethos. Also, most of that money would go back to the TV distributors, not us.



I've put the pertinent bit in bold. The Chinese have a number of reasons to want in on this, but it's mostly about what we can do for them that they can't do themselves. As numerous journos have commented, under President Xi football has become a major focus of the Chinese government, at least as far as its sports ministry goes, and they desperately want to drag their country up to a level competitive with the rest of the world. In a staggeringly short amount of time they need to do a lot of things - engage the kids, raise coaching and playing standards dramatically, build infrastructure, make China an attractive market to players for more than just money reasons, expand the scope of their broadcasting and the reach of the league, get the rest of the world interested in Chinese football. The list goes on. On top of this, the current Chinese government has the stated aiming of hosting and winning a World Cup in the foreseeable future. Obviously they can't do it all at once but the Chinese are nothing if not incredibly ambitious and they honestly believe they should be at the summit of the world at just about everything, much like the Americans but for different reasons.

Now, obviously CFG can only do so much, but we offer them an expertise which they simply can't get from either training Chinese nationals or trying to hire foreign intelligentsia. We have the knowledge of how the Premier League operates its commercial powerhouse, the knowledge of how to run networks of academies, the knowledge of how to attract in sponsorships and how to build and run major teams. You could learn any one of these things by clever recruiting but realistically the best way of bringing up standards in your country is usually to get another group who already know what they are doing to come in wholesale and do it all for you.

That's not to say that they are basically asking CFG to run Chinese football. That would be silly. But I think that the implication that CFG will now invest in the Chinese Super League goes without saying, and they are counting on us bringing in players the likes of which NYCFC hired to glamourise the club, and by implication the league as a result. Other clubs will then find it far easier to attract rival players, not to mention they will be forced to spend in order to compete. This is something CFG has always directly intended with its spending - take for example Australia, where CFG is actively campaigning for the league to release itself from the control of the FFA and to remove its salary cap rules. They aren't trying to promote an arena where they can buy constant success, they are trying to challenge/dare other teams to have to spend more to compete, thus raising the standard of the league as a whole.

Additionally it probably goes without saying that CFG involvement would mean an adoption of European coaching standards at academy level. This has two immediate effects - again, it provides both a model and a competition for the rest of the Chinese to match, and it also serves to provide the Chinese national team with a stream of top-quality players. If some of those players then go to play for City in England, more's the better for them, although I suspect that in the long run they have dreams of English kids wanting to come to play in China.

This is the stuff that CFG can directly affect. Then there's the stuff they get as after-effects. We open the doors for them to foreign sponsorships and interest. They (presumably) will soon have a foreign investor in the Super League, meaning that for the first time they have an external body which has a vested interest in encouraging TV channels in England and the Middle East to buy into the Super League. They are surely also counting on CFG actively promoting Insert Chinese Place Name City F.C. around the world, again then by consequence promoting the rest of the league and encouraging other foreign groups to back other clubs either financially or more likely just by partnerships. Again, there's myriad effects to CFG promoting a revolution in Chinese football. That is, assuming it is able to happen. In both MLS and the A-League, the other clubs and the leagues themselves have both come out fighting against a group who want to put money in heavily in the short term in order to bring up the quality of the rest - in fairness, CFG's game plan in investing usually is fairly anti-competitive in the short term because they are relying on rivals responding positively in the medium and long term, which is not something that can be taken for granted and sometimes is just outright not going to happen. Who knows what would happen in China, but I can't imagine the other clubs would be very happy. CITIC and China Media Capital are counting on it, though.

It's worth pointing out, as I saw another journo pointing out yesterday, that the reason they seem to be putting their eggs in CFG's basket like this is because no-one else offers the global portfolio we do. If Chinese companies bought into any other team, they would be buying into control of the actual club and would suddenly have responsibility for transfer policies, ground investments, ticket pricing etc. The club they invested in, for its part, would then be focused on selling the English club's brand in China with merchandise, TV deals, friendlies etc. China doesn't really want either side of that - their national league doesn't benefit from the scum, dippers, chavski etc just selling themselves in Beijing and the Chinese don't really benefit from getting a hand in negotiating the sale of Shrek or Hazard. CFG is pretty much the only group interested in investing more in the Chinese league than in the English club's presence in China. Until or unless any other club is willing to offer the same thing, it's hard to see them jumping all over the deal like they have done this one.

Great post. I also think this is a genius move politically. All of the top European clubs want to break in to China. Imagine if Gill and Rumeniger try pulling another stunt like FFP to stifle us how that's going to go down with the media company that own the rights to European football in China. Just so happens the own 13% of our club, they're kind of obliged to protect our interests.
 
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Does this mean cheap flights to china for City fans flying Etihad?
:)
 

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