West Brom confident Chinese spending restrictions won't affect their business model
Albion are confident their business model will not be affected by Chinese spending restrictions.
The Chinese government’s clamp-down on investors moving money overseas has been given as one of the reasons behind Aston Villa’s current cash crisis as owner Tony Xia struggles to continue funding the club.
But unlike their rivals, the Baggies are not reliant on their Chinese owner Guochuan Lai bankrolling them each month because they operate under a stricter ‘spend-what-we-earn’ model.
Albion will need a small overdraft this summer, their first in 10 years, after splurging £40m of surplus funds in the transfer market last year.
But the Baggies expect that overdraft to be cleared as chief executive Mark Jenkins returns the club to the financially prudent approach from before the takeover.
Lai is committed to that approach, and wanted Jenkins to remain at the club before he resigned in 2016.
Albion’s Chinese owner convinced Jenkins to return in February this year after sacking chairman John Williams and chief executive Martin Goodman following their reckless spending.
Albion’s income will be slashed in half next season following relegation from the Premier League, but the players are being handed 50 per cent pay cuts to safeguard the club against the financial impact of going down.
The only Chinese money that has been pumped into the club has come via the sponsorship of the training ground by Lai’s company Palm, and the purchase of striker Yuning Zhang.
Albion’s shirts were also sponsored by a Chinese betting company UK-K8 last year, but they have pulled out and been replaced by Ideal Boilers following relegation to the Championship.
When Lai bought the club he said: “I have no wish to change the club’s ethos or embark on an unsustainable spending spree.
“My intention is to maintain the current ethos in terms of day-to-day management and approach.”
Zhang signed a three-year contract and joined Werder Bremen last summer on a two-year loan, although the German club do not want the striker next year.
He is unable to play for Albion in the Championship next year because he is not eligible for a work permit with China ranked outside the FIFA top 50.
The Baggies plan to either find him a new loan club or sell him to a Chinese Super League outfit.