Home Debt China’s First Soccer League Champion Shenzhen FC Dissolves Due to Debts

China’s First Soccer League Champion Shenzhen FC Dissolves Due to Debts

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(Yicai) Jan. 23 — Shenzhen Football Club, the soccer team that won the first edition of the Chinese Super League in 2004, said it has folded after failing to obtain a license for the new season because of debt pressure.

“According to the list of debt-clearing clubs announced by the Chinese Football Association, Shenzhen FC failed to pass the professional league’s admission for the 2024 season and cannot continue to compete in the professional football league,” the club announced yesterday.

Founded in 1994, Shenzhen FC finished at the bottom of the CSL last season and was relegated to the second division. The club has a debt of hundreds of millions of yuan, equivalent to tens of millions of US dollars, mainly from unpaid salaries and outstanding payments to suppliers, according to insiders.

Players were paid only four months of salaries in 2022, several Shenzhen FC players noted. Most had only received about one-third of their contracted pay as of the dissolution, with the longest period equal to 20 months of salaries, they added.

In 2016, heavily indebted Chinese developer Kaisa Group Holdings became the largest shareholder of Shenzhen FC through equity transfer and an equity pledge. According to some media reports, the developer has invested at least CNY6 billion (USD845 million) in the club.

Kaisa’s net loss was CNY7 billion in the first half of last year, while its net loss stood at CNY12.7 billion (USD1.8 billion) in 2021 and CNY13 billion in 2022, according to its earnings report.

Kaisa’s gearing ratio after pre-sales rose to 90 percent as of June 30, and its net debt ratio surged to 602 percent. Its bank interest-bearing and other borrowings totaled CNY117.9 billion (USD16.4 billion), while its unrestricted cash and cash equivalents were only CNY1.4 billion.

Foreign investors petitioned for winding up against Kaisa last July, with a hearing scheduled for Feb. 6 this year.

Shenzhen FC is the second CSL team to fold in less than a week after Dalian Professional Football Club, once owned by debt-laden real estate giant Dalian Wanda Group, announced its dissolution on Jan. 17 due to debt issues. Another Chinese soccer team, Jiangsu Football Club, dissolved after winning the 2020 CSL season.

Wang Jianlin, founder of Dalian Wanda, sold 10 Wanda Plazas as well as some Wanda Hotels and Wanda Cinemas last year.

Editor: Martin Kadiev

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