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Southampton owner says club is not a ‘pig to be fattened’

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Southampton owner says club is not a ‘pig to be fattened’

Southampton FC Ltd

Southampton owner says club is not a ‘pig to be fattened’

Chinese real estate mogul Gao Jisheng vows to ensure finances are self-sustaining

Gao Jisheng at a match in Southampton. He said in an interview: 'I am treating [Southampton] as a child. But my children must believe they cannot depend on the boss' © Reuters

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.

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.

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