Publisher Theme
Art is not a luxury, but a necessity.

‘An inconvenient truth’ Expert offers sobering verdict on West Brom owner’s cash curbs


Controlling shareholder Guochuan Lai will not be in a position to pump his own money into West Bromwich Albion for the foreseeable future, a football finance expert warned.

Save for the £6 million purchase of Chinese international Yuning Zhang, who has since been sold, Guangzhou-based Lai has not ploughed any cash into the club since buying an 88 per cent stake from former chairman Jeremy Peace.

And Professor Simon Chadwick, a leading academic on Chinese football and Chinese investment, does not anticipate that changing any time soon.

Prof Chadwick says that even if the Chinese state relaxes controls on capital leaving the country, it will only allow Lai to invest in West Brom if there’s something in it for them.

The revelation comes after it emerged that Lai had told chief executive Mark Jenkins he was unable to pay a £3.7 million debt – that has risen in interest to £4.1 million – inherited from his £200 million takeover in 2016.

After encouraging a wave of investment in foreign football clubs, China clamped down on national outflow in 2017.

Read More

What’s happening at West Brom?

“These restrictions, even if they were relaxed, it won’t necessarily allow Lai to pay back this debt,” said Chadwick, who is in Shanghai for a conference on football participation growth in China.

“That’s dead money to the Chinese Government. If it agrees for large amounts of money to leave China it’s to make a potential return for China.

“Whatever West Bromwich Albion fans want and what Guochuan Lai wants is almost irrelevant because it’s all decided by officials in an office in Shanghai.

“It’s an inconvenient truth for West Brom fans.

“The Chinese Government is willing to spend and relax capital controls, but only for domestic infrastructure.

soccer.10ztalk.com/wp-content/uploads/2019/03/Chief-exec-tips-off-owner-Guochuan-Lai-as-West-Brom-continue-new-manager-search.jpg”/>
West Bromwich Albion owner Guochuan Lai

“The state dictates what money will be invested and that it should be done through projects like railway lines, schools, roads and hospitals.

“Maybe he has a more creative way of thinking about it. Perhaps a plan for the redevelopment of The Hawthorns, apartments, retail or a shopping centre.

“That might be a way for him to move money out of the country, but I don’t think the Chinese Government will sanction the release of funds for an inherited debt.

“I don’t expect the cavalry to arrive for Guochuan Lai or West Brom any time soon. Any fan of the opinion this will change soon is likely to be waiting a long time.”

Lai, who only flew over for one match last season, is not reneging on any promises of investment, it must be stressed.

In his welcome notes, the 45-year-old set out “to maintain the current management ethos in terms of day-to-day management” and to “supplement this with the opportunities that China provides.”

“I have not indebted the club and intend to keep it on a sustainable footing,” added Lai, who made his millions with Chinese construction firm Palm Eco-Town Development.

Chadwick, a sports enterprise expert at the University of Salford Business School, insists Lai’s outset statement was designed to reassure authorities in his homeland rather than rein in expectation among Albion fans about a major influx of cash.

soccer.10ztalk.com/wp-content/uploads/2019/06/An-inconvenient-truth-Expert-offers-sobering-verdict-on-West-Brom-owners-cash-curbs.jpg”/>
Professor Simon Chadwick, sports enterprise expert at the University of Salford

“For PR purposes that’s fine. Lai would have said that to communicate to the Chinese Government he was not going to expose them to any more risk,” Chadwick added.

“They won’t allow borrowing from Chinese institutions to spend overseas when there’s an unproven business case.

“It’s not just on football, but across all industry like vehicle manufacturing and pharmaceuticals.

“What Lai said was the right thing to please the state. The target audience for that statement was not West Brom fans, it was the Chinese Government.”

The penalty for any businessman that contravenes Chinese state policy can extend far beyond financial and commercial punishment.

Irrespective of stringent directives in China, Lai finds himself “caught between a rock and a hard place”.

“It’s difficult for him to invest in the club and difficult to sell because he’s going to find it very hard to negotiate a price and find a buyer,” Chadwick said.

“In many ways, he’s stuck. He’s a victim of state policy and a victim of himself for investing in West Bromwich Albion.”

Club accounts state there is ‘no fixed date for repayment’ of Lai’s historical loan and that it is ‘payable on demand’.

soccer.10ztalk.com/wp-content/uploads/2019/06/1561036096_219_An-inconvenient-truth-Expert-offers-sobering-verdict-on-West-Brom-owners-cash-curbs.jpg”/>
West Bromwich Albion's new owner Guochuan Lai arrives for the match against Everton
West Bromwich Albion’s new owner Guochuan Lai arrives for the match against Everton

Lai is responsible for the debt because his company, Yunyi Guokai Sports Development Limited, owns West Bromwich Albion Holdings Ltd.

That holding company owes the money to West Bromwich Albion Football Club Ltd due to a loan between the two accounts taken out by Peace in September 2014.

Speculation Lai had freed up funds by selling his shares in Palm, which sponsors Albion’s training ground in Walsall, has proven unfounded.

It’s thought the businessman still retains a healthy stake in the company he led as general manager for over 20 years.

For all your latest Albion news, opinion, analysis and transfer gossip, click here



Source link

You might also like

close
Thanks !

Thanks for sharing this, you are awesome !

Pin It on Pinterest

Share This

Share this post with your friends!