Chinese Teams Face Paying Twice for Soccer Stars Under New Rules – Bloomberg

Chinese teams will effectively pay twice to purchase soccer stars after authorities announced regulations designed to curb overspending that threatens to create a bubble in the $5 billion global player-trading market.

Money-losing clubs that buy players will be liable to pay an equivalent sum into a fund designed to promote the development of soccer in China, a priority for President Xi Jinping’s government. The move could limit teams’ ability to make big-money acquisitions and stem the flow of foreign recruits.

“All clubs should bear the overall interest for the healthy development of the Chinese football industry,” the statement said. The Asian nation was the fifth biggest spender on players in 2016, trailing only powerhouse leagues in England, Spain, Germany and Italy.

China has recently emerged as a major investor in world soccer, with some of its wealthiest business leaders and companies buying into clubs at home and abroad. Top South American and European players have been lured there, with teams paying some of the sport’s highest transfer fees, together with salaries far higher than the same individuals could command elsewhere.

Thursday’s regulation change comes weeks before the opening of the summer transfer window, the busiest period for the global trade of players. More star names, including Diego Costa, a striker at English champions Chelsea, have been linked to lucrative transfers to China.

The rule change is likely to affect most, if not all, Chinese Super League clubs, which had a combined revenue of 1.5 billion yuan ($220 million) in 2016, according to state-run news agency Xinhua. Those receipts were dwarfed by the $450 million spent on recruiting foreign talent the same year. Millions more have been paid in salaries to players like Carlos Tevez, an Argentine striker reaching the end of his career whose Shanghai team is reportedly paying him more than any other player worldwide.

Chinese authorities had warned clubs over reckless spending before. Earlier this year a statement from the government told teams to cool “irresponsible spending.” Shortly after, a new law was passed to cut the number of foreign players allowed per squad.

Teams were also told to avoid so-called “ying-yang” contracts with players, where financial details filed with the government differed from those agreed.