China’s most successful club on the brink of death? An in-depth background

Dalian Shide FC, China’s most decorated club with eight championships to its name, is clinging on for dear life despite emotional scenes at the end of last season as players and fans believed the club had played its last ever game. Just days later, local sports media reported that city rivals Dalian Aerbin had purchased Shide and planned to merge the two clubs. But confusion descended upon the affair when the CSL blocked the merger a week before Christmas.  It was assumed that the dongbei outfit would either dissolve completely, or find someway to merge with Aerbin.

However, Shide surprised everyone by submitting the required documentation before the January 15 deadline to play in this years CSL, which kicks off in less than two month’s time – the club felt it had no choice but submit its application “in order to avoid death” according to a club spokesman.  The shock departure of CFA head Wei Di during the middle of negotiations to keep alive the history of China’s most successful club suggested the affair was even more complex than previously thought. The situation remains deadlocked with the CSL today sending a delegation to Dalian to try to find a solution to the matter amid fears Shide may not have the finances in place to finish the season.

The following is a translation by Oxford University undergraduate Johan van de Ven of an article which appeared in Southern Weekend daily shortly before the merger between Aerbin and Shide was blocked. It provides priceless insight into the three main tycoons involved in Dalian football and how Dalian Shide find themselves in their priceless predicament. The heavyweight trio are: Wang Jianlin, chairman of Wanda group, Shide Group, chaired by Xu Ming who bought the club from Wanda, and Zhao Mingyang, owner of Aerbin group which founded Dalian Aerbin in 2009.

Dalian Wanda → Dalian Shide → Dalian Aerbin: A financial tour of one football club

An official of the Dalian municipal government said of Zhao Mingyang: “Using an arm not too thick and broad, lift up Dalian football.” Zhao actually almost bought Shide from Xu Ming as early as 2009.

Despite each of them having their own personality and objectives, what links Dalian football owners  Wang Jianlin, Xu Ming and Zhao Mingyang together from beginning to end is their managerial skills, financial capital, and the “knotty and twisted difficulties” of commercial interests. Shide may have played its last match, but the story lives on.

On December 3, 2012, the Dalian football association won approval from its superiors at the Dalian Department of Sport, allowing Dalian Aerbin to purchase an overall stake in Dalian Shide. The move has already been accepted by the Chinese Football Association.

One month previously, on November 2, anonymous player confirmed for the first time that his  employers, Dalian Shide, would cease to exist. That was the final battle, the curtain call of Dalian Shide’s Chinese Super League season, as well as being one day prior to the final match for these eight-time winners of Chinese football. Along with his team-mates, he  had been told before the game to gather at the Dalian Shide training base for a meeting.

After they had arrived, they realized that the training ground car park was busy than usual, markedly different from the cold and cheerless atmosphere that had prevailed over the complex for the previous half-a-year. Everyone was waiting for a mysterious character to emerge.

Not long thereafter, an eye-catching Maybach slowly drew into the training ground. A middle-aged man sporting a black business suit and a sharp crew-cut climbed out of the car, smiled and said, “From this day forward, every blade of grass and every speck of dirt here belongs to Aerbin.

Aerbin Group is one of the largest privately owned construction companies in the Northeast. This boss is the 43 years-old Zhao Mingyang. He is also the owner of the dazzling new team of the Chinese Super League, Dalian Aerbin.

The rise and fall of a football team in any other place may not mean much, but in Dalian, dubbed “football city,” it can cause a great commotion.

Why does Zhao Mingyang persist with this endeavour that is more likely to cause him headaches than win him profits? “Do you still not understand how it works in China?” Zhao Mingyang replied when questioned by journalists from the Southern Weekend.

The Earliest Master: Wang Jianlin

Original Dalian football benefactor, Wang Jianlin, owner of Wanda group

The earliest master of this football team, established almost 20 years ago, was Wang Jianlin, Chairman of the Dalian Wanda group. Following the first match after he took up his position, Wang put two million RMB on the outcome of the team’s campaign. The temptation of this reward led the brave to come to the fore. Wanda knocked aside all competition in winning the Jia-A championship.

In his first year of being involved in football, Wang originally only wanted to spend 40 million RMB, but by the end of the season, he had seriously overspent, digging out some 60 million RMB from his pockets. For the Wanda group, whose operations

had only just commenced, “this was as good as writing their own death sentence.” One source within the Dalian Football Association recalled to Southern Weekend journalists that Wang Jianlin kept on saying, “Next year, this cannot be done.” He claimed that otherwise, he would have to leave the football world.

But afterwards, Wang Jianlin led a group of senior executives to Singapore to pay a visit upon a financial group. However, this group refused to have any dealings with Wang. Only after he entrusted an acquaintance of his to inform his counterpart, “This company owns the champions of the Chinese Jia-A Football League,” was this financial group willing to work with Wanda, holding them to high standards all the same.

After returning from Singapore, Wang Jianlin seemed to have “opened his governor and convection vessels (a term from Traditional Chinese Medicine, 大同任督二脉), deciding to clench his teeth and continue to invest in football.

However,  Wang Jianlin’s actual authority within the business of the football team was quite small – at this time, the mayor of Dalian, Bo Xilai, had become known as the “mayor of football town.” At the start of the 1998 season, Wang Jianlin wanted to appoint Chu Genbei as  head coach. Everything was in place for the deal to go through, so he called a news conference. The aforementioned source stated, “At this point, Bo Xilai called Wang over to his office, and told him that the standing coach,

Chi Shangbin, had been honoured by the city, so how could he fired just because of Wang’s say-so?”

After being scolded by Bo, Wang Jianlin could only announce that Chi Shangbin was to be restored to his original position as head coach.

The above example demonstrates the unyielding interference of city leaders, but below we must also confront the problem of corruption in the football world. At the peak of his footballing popularity, Wang Jianlin decided to withdraw. On December 24^th 1999, Wang Jianlin sold off his football club, its training base and other top-notch assets to the Director of the Board of the Shide Group, Xu Ming – all at a knock-down price.

The transfer of contracts shows that the Shide Group only had to fork out 500 million RMB up front. The remaining 700 million RMB would come out from outstanding loans held by the Wanda group with the Dalian branch of the ICBC bank.

Even though he had stepped away from football circles, the brand effect that Wanda football club had built up had for a long time made Wang Jianlin’s opening of new commercial projects seem as though it had benefited from some kind of heavenly support.

The former general manager of Wanda football club, Shi Xueqing, previously recounted to Southern Weekend journalists that although Nanping district had been chosen as the site for the project, they had never been able to find a suitable piece of land. When plans for Nanping were soon to be abandoned, Shi Xueqing and an accompanying official from the local government had dinner together, and as it happened, the chief of Nanping district was at the table next door, and after he heard that Shi Xueqing was the general manager of Wanda football club, he insisted on meeting with Shi. In the end, Shi Xueqing got the land that he was looking for, building a Wanda plaza in Nanping district.

 Xu Ming’s “Interests bound too closely.”

Whereabouts uncertain – Shide group president Xu Ming

If he was not totally committed to asking for the love of the “mayor of football town,” Bo Xilai, Xu Ming perhaps would never have been able to show his face in the terraces.

When interviewed on their opinion of Xu Ming, many people within the industry think that when he entered into the football world, there was an intention to use the Dalian football “brand” to galvanise his profits. “Not only does Xu Ming not understand football, he also doesn’t watch it,” one of Xu’s friends said. “He only uses football as a chess piece in his business operations.”

In the three years after assuming control of the football club, Dalian Shide were champions in almost all premier domestic competitions. But afterwards, in the wake of a reshuffling of top-level leaders in Dalian, as well as the failure  of the G7 reform (a football reform that focussed on the separation of politics of business and the break-up of state enterprises), the local government gradually reduced its support for football, and eventually, everything changed.

“Previously the Deputy Secretary and Deputy Mayor would often inspect the team before significant games, so Xu Ming did his utmost to prioritize results. But after the failure of G7, the leadership didn’t place too much importance on football. Even the local Secretary for Sport did not watch football. Xu Ming’s enthusiasm for and investment in football both abruptly abated,” claimed a middle-ranking employee of Shide football club in an interview with Southern Weekend journalists.

In 2005, Dalian Shide won the inaugural Chinese Super League title. This was to be the final glory of the most successful team in Chinese professional football. At the start of 2006, Dalian Shide finished in last place in the A3 group of the Asian Champions League, suffering a crushing defeat and from this point descending into decline.

One source who previously served in senior management with Shide football club revealed to Southern Weekend journalists that one day, when he was delivering a report in Xu Ming’s office. Xu received a telephone call. This senior manager heard the deputy district chief of a certain district of Dalian. The phone call went on for half an hour, and he heard that this deputy district chief wanted to make use of his relationship with Xu Ming, Bo Xilai and Bo Gu Kailai to rise up the ladder and search for an opportunity for promotion. Xu unreservedly promised his support.

Not long after, this senior manager resigned, and he stated to Southern Weekend journalists that he had premonitions that Xu would meet with a mishap, as his interests were too tightly bound with those of certain leaders.

Next generation bigwig – Aerbin group chairman Zhao Mingyang

The new “football fan boss” Zhao Mingyang

What sets Zhao Mingyang apart from Wang Jianlin and Xu Ming is that he is a fanatical fan of Dalian football.

Full of bombast, the impression that Zhao Mingyang gives to the outside world is that he is the hedonistic son of rich parents, infatuated with race cars and yachts. But looking at him through the eyes of a stranger, he is of average build and height, often wearing a smile upon his face and a crew cut atop his head. He does not dress extravagantly. He seems like the kind of man you would ordinarily bump into on the street.

He was born in October 1969 in Aerbin village, Dengshahe town, in the Jinzhou district of Dalian. As its industrial and commercial resources indicate, the predecessor of the Aerbin group was the Aerbin Construction and Engineering company, controlled by his village collective. In 2002, this was restructured, becoming the Dalian Aerbin Construction company. He and his father, Zhao Wenyu, who had founded the company, held 32.1% and 35.6% of the company’s stocks respectively. Through a series of capital increases, expanding stock levels and stock right transfers, Zhao Mingyang seized control from his father, and currently his holding in the company is as high as 93.26%.

Why was Zhao’s father able to rise above all the other construction and labour teams of so many other villages and towns, and expand and strengthen his position?

According to Shi Xueqing’s revelations, Wang Jianlin made extremely stringent demands as far as construction quality, and currently he only signs contracts with large state-owned construction enterprises. The only exception to this is that Aerbin won complete contracts for 60% of the Wanda group’s construction projects in Dalian.

This has its origins in the profound impression that Zhao’s father made upon Wang Jianlin. In 2002, Wang Jianlin gave the contract for the construction of the Yongying Tower project to Aerbin construction.  Two years later, this project won the 2004 Lüban prize (The most prestigious prize in the Chinese construction world). Shi Xueqing recalled that in order to demonstrate his thanks, Wang Jianlin called a special news conference, awarding Zhao Wenyu 40 million RMB for his efforts.

After taking over control of the Aerbin group from his father, Zhao Mingyang began his march on the real estate industry. In February 2008, the Aerbin group successfully bought up Dalian Kaijian Real Estate Development, which was a real estate enterprise established on national top-level natural endowments. In 2009, the Aerbin group also set up shop in Panjin, Liaoning province, winning 650 hectares of land.

Very few people know that this “entrepreneur’s son” to begin with had extensive experience of being a peasant labourer. Aerbin village is located in the northeastern corner of Dalian, with many people but not much land, so most people leave upon reaching adulthood to go and find work. Initially after graduating, Zhao Mingyang did not stand apart from this example.

After having spent four years working on construction sites, Zhao Mingyang went to study car repair at the suggestion of his father , kept company from dawn until dusk by the rumble of an engine. From huge excavators to small cars, he became familiar with the performance of all different kinds of engine. As soon as he became wealthy enough, he went to the Mercedes-Benz showroom to buy an excavator. When the salesperson saw that this multi-millionaire was skilled in operating excavators, he completely shocked and awed.

Four years of experience in car repair have given Zhao Mingyang a special feeling for engines. He felt strongly about collecting all kinds of engines as his hobby. Tens of motorbikes were parked in his garage, from Harley-Davidsons to BMWs, from those bought in Germany to those made in Japan. However, he has never ridden most of them.

Similarly, he has also found a liking for collecting cars. Among the many cars that he owns, there is a Bugatti Veyron, a Rolls-Royce Phantom, as well as a Bentley convertible. What he is most pleased about, though, is the Mercedes-Benz RV that he bought for 14 million RMB. He claims that he personally designed and helped to build all the decorations in the RV, even though he had no experience of studying automobile drafting/design.

What Zhao Mingyang gets most excited about, though, is still football. He often gets up in the middle of the night to watch a match from one of the major European leagues, and he also often goes to watch live games in person, so he is very up-to-date with the various characteristics of Dalian footballers. On November 2^nd 2012,  in a meeting after his takeover of Shide football club, he suddenly started listing hat he saw as the talents, shortcomings and habits of various footballers.

“Seeing how surprised they were, I guessed that at the time they were wondering whether or not 　 I had found myself a private investigator.” Zhao told journalists from the Southern Weekend, sounding rather pleased with himself.

 1 plus 1 equals?

Actually, as early as 2009, Zhao Mingyang had almost bought Shide football club. At that point Xu Ming had already entrusted the team to Dalian Dongda Tendering co, deciding to put 70% of the club up for sale at a price of 420 million RMB and publicly inviting bids. For a time, Zhao  was the person closest to purchasing this stake. Even though the price was anything but cheap, Xu Ming kept on speaking of the condition that after the transfer of holdings, all of the real estate projects belonging to Shide would be contracted to the Aerbin group. For a time, this really caught Zhao Mingyang’s attention, but when it came to the point of signing a deal, Xu Ming turned back on his commitment, and Zhao chose to opt out of the deal.

At that time, Li Ming had only just resigned from his position as  General Manager of Shide Football Club. Zhao Mingyang gave him a phone call. Together, they decided to establish a new football team, starting from China League Two, the lowest tier of Chinese professional football. From the team’s successful registration in April 2009 to their promotion to the Super League in October 2011, the rate of Aerbin’s development went far beyond Zhao’s won expectations.

During Aerbin’s first year in the CSL, Zhao Mingyang spent more than 200 million RMB on football, and partly because of this, he is fast catching up to the owner of Guangzhou Evergrande, Xu Jiaying in terms of his vast prestige and influence.

Zhao Mingyang had never before anticipated that, due to Xu Ming’s “mishap” at the beginning of March 2012, he would be have another opportunity to become the boss of Dalian Shide football club.

In searching for a new owner for Dalian football, the Dalian football association gave themselves rather a headache: their bottom line was that Shide, the flagship of Dalian football, could not be allowed to leave Dalian. In the end, Zhao Mingyang became the new person-in-charge, “because the willpower that he has invested in football is extremely strong, he can then give football a more pure reputation.” This was how a leader of the Dalian football association evaluated Zhao. “With Dalian football confronting its greatest crisis, it was Zhao Mingyang that stood up, and it was with the support of Zhao’s otherwise not overly generous hand that Dalian football rose once again.”

From the beginning, the upper echelons of Dalian Aerbin, with Li Ming included, were resolutely opposed to Zhao Mingyang’s takeover of Dalian Shide.

On November 9^, 2012, the foreign manager of Dalian Aerbin, Aleksandar Stanojevic, announced his resignation. 17 days thereafter, he became the head coach of Beijing Guo’An. Stanojevic’s departure  caused a lot of grief among Dalian fans. But they had even more difficulty in understanding Zhao Mingyang’s subsequent decision to appoint the local Dalian guy, Xu Hong, as Stanojevic’s replacement. Xu Hong a former player for Dalian Wanda, is deeply admired by Zhao Mingyang, even though his coaching CV since hanging up his boots has been markedly average. But his connections with Dalian football association officials are very close. Quite a few fans are worrying that the merging of two teams, each with their distinctive styles will quite likely end up with human resources consumption meaning that the sum of the parts is less than the whole.

Where are the benefits?

How much money did Zhao Mingyang actually spend in buying up Shide? One member of the Dalian Football Association with relations to the Shide Group Accounts Department revealed to Southern Weekend journalists that Zhao bought Shide by assuming responsibility for the 330 million RMB that the Shide group owes to the Bank of Dalian.

A high-ranking member of Aerbin supported this revelation. He explained that Shide group owes 2 billion RMB to the Bank of Dalian, and that the 200 million RMB worth of stock that the Shide group held in the Bank of Dalian was converted into a 160 million RMB holding, and after this offsetting, there was still 330 million RMB of debt to be handed over.  According to this source, “Whoever bought Shide would have to pay the outstanding debt of 330 million RMB.”

Each share that the Shide group held in the Bank of Dalian, priced at around 8 RMB each, was liquidated. When they were listed on the Shanghai United Property Right Exchange in July 2012 at a price of 4.3 RMB each, not one person enquired about them. Evidently, the Bank of Dalian rushed to make clear that they had no relationship with Xu Ming, so as to get rid of the obstruction of listing on the market.

The total assets of all Shide players amounts only to around 100 million RMB, but Zhao Mingyang wants to fish out 330 million RMB to pay the bill. What is important is that according to what Zhao has said, due to being put to a lot of trouble by real estate regulators, Aerbin’s 2012 sales income, initially forecast to be around 7 billion RMB, “according to the current outlook will only end up at around 5 billion RMB.” He said, “This year, I have not broke even one square metre of ground in construction projects.”

From November 2^nd, when he turned up at the Shide training base in his Maybach, one month has passed, but still Zhao Mingyang is waiting. A high-ranking member of Aerbin stated that Zhao Mingyang is still waiting for policy approval from the government.

Zhao Mingyang claimed he himself has no desire to list Aerbin on the market, and equally has no interest in developing his political connections. “If stability and firmness allow me to retire then that is fine by me.” But now, the happiness that football gives him doesn’t seem so simple and straightforward any more.

In October 2012, Zhao Mingyang went to Tianjin with the front office managers of the club, looking for the general manager of Tianjin Teda, Li Guangyi, to push for the transfer of Chen Tao. In order to bargain down the price, Zhao Mingyang drank two bottles of red wine sitting on the table, and during the banquet, somebody mocked him for getting no small number of benefits for football.

Zhao Mingyang, who had drunken himself red in the face extended his arm, peering around at the people him, saying repeatedly, “where are the benefits?”