Gao Speaks....

https://www.ft.com/content/599f0a1e-8910-11e9-a028-86cea8523dc2


“Southampton is not a pig to be fattened...”

Discuss.

 

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When Chinese real estate magnate Gao Jisheng acquired Premier League club Southampton two years ago, he joined an elite group of international businesspeople who own teams in the world’s richest football division. Unlike some of the billionaires, sheikhs and oligarchs who own rival English clubs, Mr Gao has no intention of spending huge sums on players, pledging to impose financial discipline and ensure the club becomes “self sufficient”. “I am not treating Southampton as a pig to be fattened and sold,” said Mr Gao in a rare interview in Shanghai. “I am treating it as a child. But my children must believe they cannot depend on the boss. I have said to Southampton: ‘I am now your father. But I am putting you on the right track: you need to feed yourself.’”

Southampton fans may not welcome belt-tightening at the club, which narrowly avoided relegation this year and is among the league’s lower-earning teams. It generated revenues of just £152.6m in the year to June 30, 2018, compared with £590m received by Manchester United, the league’s top earner. But the message of austerity reflects retrenchment in Mr Gao’s business over the past year. The Shenzhen-listed Lander Sports Development, which Mr Gao said is his chief source of income, reported a Rmb90m ($13m) loss last year. The boss of Southampton is my Hong Kong company. Whatever happens in the mainland, Southampton’s finances do not change Gao Jisheng, owner of Southampton Football Club Mr Gao, 67, lost control of the company in March when he sold a 30 per cent stake to a state-owned asset manager for Rmb1.3bn. Mr Gao’s family retained a 24 per cent stake in Lander, which generates most of its revenue from real estate but has attempted to branch into new business such as running sports events. “General sports businesses [in China] are in great difficulty, so if you partner with a state-owned company then your resources are larger,” he said. However, the transaction led the Premier League to quiz Southampton on whether the Chinese state had taken ownership of the club.
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Mr Gao, who acquired an 80 per cent stake in Southampton in a 2017 deal that valued the club at about £200m, said he remains in control of Southampton because it is owned by a Hong Kong company, Lander Sports Investment, which is unrelated to Lander Sports Development. “I told [the Premier League], you should look at who the boss of Southampton is,” he said. “The boss of Southampton is my Hong Kong company,” he said. “Whatever happens in the mainland, Southampton’s finances do not change. The Premier League was satisfied.” Mr Gao said the club benefits from his ownership thanks to his connections to China, where Premier League matches are widely watched. He pointed to a recent three-year shirt sponsorship deal with Chinese start-up LD Sports, saying the deal was worth “nearly twice” the £4.8m per season it received from its previous sponsor. It is a transaction that has led to further confusion about the Southampton’s sources of income under Mr Gao, with the club admitting LD does not yet have an operating business and would “launch this summer for the Chinese market”. Mr Gao dismissed these concerns. “All companies have their own style,” he said. “Asians tend to be low-key. As long as the money reaches Southampton’s bank account and it’s in pounds sterling then it’s OK,” he said. A flamboyant former government official, Mr Gao is one of several Chinese entrepreneurs who have emerged from obscurity to take ownership of European football teams in recent years. The acquisitions have produced mixed results. Chinese conglomerate Fosun has invested tens of millions of pounds into Wolverhampton Wanderers since acquiring it in 2016, rapidly improving its performance. But Chinese businessman Tony Xia was forced to sell his majority stake in Aston Villa last year prior to it earning promotion to the Premier League from next season. The Shenzhen-listed Lander, of which Mr Gao is chairman, originally announced that it would acquire Southampton. But Beijing’s strict capital controls aimed at limiting risky overseas acquisitions forced him to use a Hong Kong company to complete the deal, according to people briefed on the matter. At the time of the deal, Mr Gao had pledged the vast majority of his 54 per cent stake in Lander Sports Development as collateral for loans.
Documents filed by Lander Sports Investment in Hong Kong showed that the club is owned via another company registered in the British Virgin Islands, of which Mr Gao says he is the sole shareholder. His stake was valued at £147.5m last year, according to the document.

Mr Gao said despite recent losses, his main business there were “no problems” with his financial situation. The club could spend more on new players than it received from selling its current ones this summer, he added, with shoring up a leaky defence a priority for new signings.

But the amount spent will be determined by the club’s profits, which were £28.6m last year, mainly because of the sale of players such as defender Virgil Van Dijk to Liverpool. “The club’s financial situation is good this year and it doesn’t require more investment,” said Mr Gao.

 

Trust us to get a sugar-daddy with no actual sugar.

 

My guess is that the original intention was to 'fatten the pig' probably to get money out of China or to diversify, but the Chinese government's actions put a stop to things like that happening. Buying us using other sources has curtailed plans somewhat, so we are back where we were but no worse...having to finance club activities from within. Disappointed that we aren't getting some owner input....but that was always limited by league rules. We are in a period where problems from the past are hopefully being sorted out, but we mustn't expect miracles. We are fortunate to have a good manager who should be able to see us through this period safely.

 

I question his motivation for buying the club. He doesn’t appear the be a football fan and it seems a very risky move for someone who is backed by the struggling Lander Sports Development.

If the purchase wasn’t motivated by footballing or investing reasons, then maybe it was simply to move money out of China. The whole thing feels very opaque.

 

Kat said she wanted to leave the club in safe hands to move forward...................oh well.

 

My thoughts are simple on this:

1. The club are still looking to be run in a self-sustaining manner. In a way I’m glad about this. Since Liebherr looked to sell and we eventually were to Gao, there has been an under current from some fans about spending money and “where’s the investment” but our plan had always been since 2010 to be self sustaining. As all clubs should be.

2. Our owner sounds dodgy as. No idea where this will end up.

 

Are you really disappointed we aren’t getting owner input? That bit doesn’t bother me.

The fact he is a real estate mogul makes me raise an eye brow.

 

Yeah I'm actually relieved that he's not going to pump loads of money in comparison to his whole ownership which concerns me hugely.

 

Would have been nice to have a bit more money, but overall I feel more positive about this article than negative. Doesn't really tell us more than we already knew, but does suggest that the club is being left alone to sort itself out for the moment. May not be a pig to be fattened, but also isn't a cow to be milked (at the moment).

 

The bit that disappoints me is that Katharina lied and sold herself out to someone who quite clearly will not be taking us forward.

I have no issue with being self-sustaining but I’d rather Gao was well out of the picture. Do not trust him.

 

I think it was more a case of being too far down the line before it became apparent that he was going to struggle to raise the money from inside China. Was it always the plan that Kat held onto 20% or did that happen because of the money problem? Don't know about not trusting Gao, but I am certainly concerned about his financial situation being linked to a country like China where they change the rules at will. Perhaps we shouldn't be too afraid for Saints though...we have no vast sums to be filtered out so are more valuable as an asset to be sold...then we can worry about the next owners.

 

I just like how he slipped a Star Wars quote into the interview.

 

Actions speak louder than words and i'll still reserve judgement on his ownership until we are actively being asset stripped and the product on the pitch and results are not acceptable any longer, although I fully understand some fan's concerns.
There is obviously some interest in looking after and improving the important part of the club from my perspective (the football side) from above by the actions of reorganising it and bringing in a progressive coach and we have already brought in a new player to bolster the squad for next season for a decent fee.
Perhaps I will turn out to be one with his head in the sand but i'm not stressing about our future just yet and I still think that we will have a good season for our relative status next season.

 

Kat did what was best for her bank account with a tiny bit of concern for financial security for SFC. As Fran said, Gao invested in a pig he thought he could fatten but recent Chinese Gov. restrictions have put paid to that. Would be nice if he was going to invest but very obvious he ain’t now. Self sustain? Very difficult in today’s PL environment. Again, we’re in a very challenging position.

 

This ^^

 

Maybe I should make another phone call!

 

Moving money out of China is what i thought it was from the start, I'm not in any way a financial expert but using a 'business' in somewhat more independent Hong Kong to get the loan and servicing it with money from china to create an asset in the UK that he can use as collateral is what i said to begin with too, so this doesn't change anything from my perspective.

As was said during the takeover he is just here to carry us forward as was currently being done, not to invest a lot of money or take any money out. That's what he seems to be doing. It feels like people had a lot more expectations of this than i had?