Sieren's China: Making money with football stadiums

Business is booming for Reeze Fan. He's been building soccer stadiums, with in-built leisure centers, all over China since 2008. His company Soccer World already owns 25 stadiums in 20 cities and government officials continue to insist that he open up more. There is hardly any competition.

The soccer enthusiasm has increased across the country since President Xi Jinping said that it was important to revive soccer so that China could become a sports nation. He stipulated that a football pitch be built as part of every new housing project.

At the same time, Chinese investors have been placing their money in foreign football clubs. Aston Villa is 100 percent Chinese, Slavia Prag 60 percent, Espanyol Barcelona 56 percent and Atletico Madrid 20 percent. Deals worth three billion dollars have been made since the end of last year alone.

Hundreds of millions invested into new stadiums

Reeze Fan has an easy task when it comes to transforming China into a football nation and can count himself lucky. He is not responsible for the quality of the teams but he can guarantee that his stadiums are good. At the beginning of the year, he received funding from Sequoia Capital China and the state private equity firm China Media Capital. He plans to expand the number of stadiums run by his company to 60 by the end of 2017. The goal ist to be operating 150 by 2020 at a cost of 500 million yuan ($74.8 million) more.

Fan's business model is relatively simple. He draws up contracts with local governments to replace old football pitches with stadiums that have artificial turf fields, changing rooms and leisure centers, used by private individuals, schools and hospitals.

Income is generated by the rent paid to use the leisure centers which he says are in use at a rate of 75 percent.

Basketball vs. soccer

Fan has his eye on the yuan but is also a soccer player. When he studied finance in Scotland he would play the sport in leisure centers operated by the British company Goals. When he returned home, he decided to import this idea to China and used up the last of his pennies to find funds, to invite local politicians and acquire deals. He borrowed money from friends to open his two first leisure centers in Shanghai. At the time, it was a risky investment because the government had not yet set its mind on football and it seemed as if basketball might be more in favor.

Basketball would make more sense than football in the densely-populated cities of China because smaller pitches are needed and a basket can be screwed onto almost any wall. Yao Ming was the first world-famous basketball player from China. But when President Xi came to power he asked himself a simple question: Which is the most important sporting event apart from the Olympics for developing soft power? The World Cup! So he decided to promote football. Perfect timing for Fan. He not longer has to worry about scraping together funds.

Kicking a football instead of playing violin

Xi's wish is that in future there should be more children playing football than basketball, more children playing football than learning the violin. But within a decade China will not manage to become like Germany which has a club in every small town and a scouting system to find potential professional players.

Fan's plan is to develop his cooperation with Manchester City, whose backer is the same as Fan's - China Media Capital. The English club will send trainers to Chinese schools twice a year and their camps will be set up in his stadiums.

All he can hope for is that the next president does not choose to play a whole different ballgame when he takes over in five years.

DW's Frank Sieren has been living in Beijing for over 20 years.