AC Milan is Worth Less than This Chinese Soccer Team

Putting it on par with some of the best teams in the West, including seven-time European champion AC Milan, a recent investment in Chinese soccer team Beijing Guoan pegs the value of the club at more than $800 million.

According to a statement issued yesterday, taking over from previous owner Chinese conglomerate Citic Ltd., Beijing-based property developer Sinbo Land co. agreed to buy a 64 percent stake in the club at such valuations.

After a separate group of Chinese investors bid for the team last year, the valuation is higher than the 740 million-euro ($795 million) fetched by AC Milan. Last season’s European Champions League runner-up Atletico Madrid, whose enterprise value was estimated at 565 million to 618 million euros by KPMG, was valued less than gthat of Beijing Guoan.

How valuations for soccer teams in the country are soaring is illustrated by the deal for Beijing Guoan, which has one of the biggest fan bases in the China Super League. Based on the stock’s last trading price on the country’s over-the-counter market, Evergrande Taobao, the league champion for six years in a row, is valued at $2.9 billion and therefore Beijing Guoan isn’t even the most expensive club there.

“It’s an inflated price,” said Simon Chadwick, a sports business professor and consultant to Chinese soccer. “It’s clearly based on the interest of the state to have highly valuable football clubs that can be compared to the biggest in the world and get people talking.”

The recent spate of excessive spending on soccer has been criticized by the Chinese government and this deal has come on the heels of such criticism. By importing expensive foreign talent to domestic teams, buying stakes in European professional clubs, and seeking to commercialize the Super League by making expensive bids in sponsorships and broadcasting rights, the country’s richest have been pouring money into the sport ever since President Xi Jinping announced his plan to make China a soccer powerhouse.

According to a white paper jointly published by the league and Deloitte LLP earlier this week, averaging 24,200 spectators per match, the Chinese league has trumped Italy in popularity. According to the report, broadcasting revenue surged more than 11-fold to 1 billion yuan last year.

Despite being the among the best-supported teams in the Super League, Guoan has a modest international profile and hasn’t won a league championship since 2009. It is touted that after the transaction is over, the club’s name would be changed to Beijing Sinobo Guoan. Its home field, Beijing Workers’ Stadium saw an average of close to 40,000 spectators per match during the last season.

(Adapted from Bloomberg)

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