From Rags to Riches: Business Model Innovation Shifts in the Ecosystem of the Chinese Super League

Abstract

The Chinese Super League (CSL) has witnessed unprecedented growth in recent years via evolutions in Chinese football clubs' business models and the league environment.This paper analyses business model innovation (BMI) in the light of changing ecosystem factors via a case study of the Guangzhou Evergrande Taobao FC. It analyses the types of BMI and finds that BMI constancy and novelty are key to the club's success.The study identifies policy and investors as the two ecosystem factors with the most significant influence on the club's BMI. We argue that CSL clubs have unique and under-rated value capture structures, where the value is captured by their investors rather than by the clubs themselves. Being sensitive to the ecosystem is another key factor and we give guidance on how to anticipate ecosystem changes and adjust business models accordingly. This can be generalized to other organizations and industries.

Association between evergrande FC's club debt and Chinese super league's profitability from 2014 to 2019

“…In Europe, it has been found that investors in football clubs neither expect nor demand a financial return (14). In the East, massive capital investments from Evergrande FC and other CSL clubs backed by real estate firms boosted the CSL's popularity (9,15). We argue that the case for a causal effect running from high club debt to strong CSL growth in the examined period is highly probable.…”

“…Since December 2018, shadow rates have tightened substantially from cycle lows, and real estate entrusts, which issued shadow banking instruments and garnered considerable funds for the real estate industry's operations, including football investment, have plummeted (35). Meanwhile, in 2019, the Chinese Football Association implemented a series of regulatory frameworks, including strict wage limits (15), club names that must be not commercial (36), and club equity restructuring (37). These restrictive regulatory policies further amplified the negative effect of tightening monetary policy, thus crowding real estate enterprises out of CSL.…”

Kicking power play: china's football diplomacy as a geopolitical force

“…Financial and geopolitical challenges cloud China's image as a reliable economic actor. This may impact on its cultural and diplomatic sway in tandem (Liu, Skinner & Grosman, 2020;Sullivan, 2017).…”

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“…Financial and geopolitical challenges cloud China's image as a reliable economic actor. This may impact on its cultural and diplomatic sway in tandem (Liu, Skinner & Grosman, 2020;Sullivan, 2017).…”