(MENAFN- AFP) China's most successful football team Guangzhou Evergrande Taobao are hot favourites to win the AFC Champions League on Saturday, but the club's business is far from a surefire bet.
Universally known as Evergrande, the side's full name is made up of its home city in southern China and the main businesses of its two owners, a property firm and Internet giant Alibaba, whose Taobao platform is China's main consumer-to-consumer e-commerce market.
They are managed by World Cup-winning coach Luiz Felipe Scolari, who has several of his Brazilian compatriots on the backroom staff, and another quartet on the pitch in the form of Robinho, Paulinho, Ricardo Goulart and Elkeson.
Spending millions has brought Evergrande unparalleled success -- they won their fifth consecutive domestic title last month, and in 2013 became the first Chinese winners of the ACL.
A win by any margin in Saturday's final second leg will see them lift the trophy again after they held opponents Al Ahli to a 0-0 draw in the first leg in the United Arab Emirates.
But they have not seen similar success in the boardroom, despite the backing of Evergrande's Xu Jiayin and Alibaba founder Jack Ma, currently worth more than $29 billion according to the Bloomberg Billionaires index, making him China's second-richest person.
Evergrande lost $75 million in 2014, a club statement showed. It had operating income of $53 million, 65 percent from advertising, 16 percent in ticket sales and seven percent from merchandise, but paid out $90 million on player and coach salaries alone.
- 'Scoring and ranking' -
Evergrande listed on the little-known National Equities Exchange and Quotations (NEEQ) earlier this month, pricing its shares at 40 yuan ($6.25) apiece, a statement showed.
With 375 million shares in issue, that gives it a notional market capitalisation of a jaw-dropping $2.35 billion -- putting it in a similar league to New York Stock Exchange-listed Premier League club Manchester United, which is worth $3 billion.
But the Beijing-based NEEQ market -- commonly called China's "third board" and aimed at small companies unable to meet stricter requirements -- offers a platform for sellers to trade shares directly with buyers.
According to the NEEQ system there have not been any transactions in the shares yet -- the club did not sell any or raise any money in the listing, and nor did either of its owners. The Evergrande conglomerate has 60 percent of the club, while Alibaba has the rest.
The exercise was probably a step towards promotion to the Shenzhen stock exchange, analysts said.
"The company won't be satisfied with a listing only on the third board," Phillip Securities analyst Chen Xingyu told AFP.
"Investors won't necessarily want to buy the stocks of a football club," he added. "Whether or not they will buy depends on the position it has in the industry and its scoring and ranking."
- Political points -
Loss-making is common among top football clubs worldwide, which often rely on the deep pockets of wealthy proprietors.
In China they often serve their tycoon-owners by providing political capital, a show of hometown loyalty or simply a trophy in a business empire.
Chinese President Xi Jinping is reportedly an avid football fan who hopes his country can host and even win a World Cup, and last year he recommended that the nation's children learn the game.
But China's national team has historically underperformed, much to the dismay of fans in the world's most populous country.
"Football clubs in China are run at a large loss for political gain of their owners," said Cameron Wilson, founder of Wild East Football, a website dedicated to the Chinese game.
"Evergrande won the Asian cup (AFC Champions League) and that gave China so much face and prestige. So of course, the top leadership is going to be very impressed," he said.
When Alibaba first took a stake in the club last year, Ma told a news conference that he did not know much about football.
But his firm has well-known ambitions in the sporting arena as it seeks to expand beyond e-commerce.
In September, it set up a new company to consolidate its sports-related assets and participate in media, events and ticketing. It sponsored a US college basketball game in Shanghai earlier this month, the first ever regular season NCAA game in China.
For diehard Evergrande fan Wan Linzhou, the club's stock is out of his reach -- but the university student would buy it if he could.
"After all, China's football market is so big and Evergrande Taobao is the first among this kind of stock," he told AFP.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.