What Did Lippi Build in His Three Years at Evergrande?

Over the past three years, Lippi brought Evergrande enormous commercial value, on the pitch and off it.

Lippi is gone.

On February 26, Guangzhou Evergrande announced that head coach Marcello Lippi had recently asked the club to end his contract early for health and family reasons, and that the club had decided to accept his resignation.

His sudden departure took people by surprise. Most fans were still enjoying the pleasant surprises this elderly Italian had brought Evergrande and Chinese football over the past three years.

Three springs ago, when Xu Jiayin handed Lippi his letter of appointment as head coach, he already knew exactly what role the new man would play in Evergrande's future.

The year before, Evergrande had come through a triumphant season. In its first year back in the Chinese Super League it won the title with four rounds to spare and reached the quarterfinals of the AFC Champions League, and head coach Lee Jang-soo deserved much of the credit. His successor's job was to take Evergrande from the domestic stage to the international one, and to make it the best football club in Asia.

Three years later, Lippi left Guangzhou with five trophies: three Chinese Super League titles, one Chinese FA Cup and, weightiest of all, the AFC Champions League. The original hopes had come true one by one. More important, he and his staff spent those three years rebuilding the club's philosophy, technique and management, so that it can keep moving along the path already laid out for it.

Beyond the trophies and records, during Lippi's three years Evergrande also went from an ordinary Chinese Super League side to the most valuable football brand in Asia. In 2010, Xu Jiayin's Evergrande Group paid 100 million yuan for the team. When Jack Ma bought into it for 1.2 billion yuan in 2014, the club was valued at 2.4 billion yuan, more than 20 times as much in just four years.

The Evergrande brand gained a great deal too, most obviously through Evergrande Spring. The bottled-water brand was launched to ride the club's 2013 AFC Champions League title. Within a month, orders nationwide reached 5.7 billion yuan, and it had signed up more than 3,000 distributors.

This was a perfect marriage of football and business. Evergrande used the power of a large company to build a successful football club, and the team's results and the club's growing fame in turn brought Evergrande great brand value and commercial gain. Lippi was the most important piece of that puzzle.

In the end, Lippi left anyway. In three years he created a brief "Evergrande miracle" and revived the country's long-dormant love of, and hope for, the sport, just as he once made Chinese fans fall for Juventus and for Italy.

He made today's Evergrande, and through Evergrande he made himself once again.

Who Is Lippi

Before he took the Evergrande job, Lippi was best known as the coach who won the 2006 World Cup. His Italy side knocked out hosts Germany in the semifinal and beat France on penalties in the final, lifting the trophy for the first time in 24 years.

That was when fans around the world first took notice of Lippi. Long before that, though, his years coaching Juventus in Serie A had won him a large and devoted following, including a great many of China's "old-school" fans.

By coincidence, CCTV began broadcasting Serie A live in 1994, the very year Lippi became head coach of Juventus, "the Zebras." In his first season in charge he led Juventus to the Serie A title.

Across two spells at Juventus, eight years in all, Lippi won the club five league titles, three cups, four Italian Super Cups and one UEFA Champions League. Juventus fans of that era naturally grew fond of this stern, shy old man.

Evergrande valued Lippi's long experience at top European clubs and in major international competitions such as the Champions League and the World Cup, and hoped he could build a second Juventus dynasty in China.

"He can bring us the world's most advanced football thinking and top-level coaching and management, and his personal charisma gives us full confidence," Xu Jiayin said at the press conference announcing Lippi as head coach.

How Much Did Lippi Earn

Lippi himself said, "What finally won me over was the Evergrande club's passion for football and its great ambitions." Still, to land a world-class coach, Xu Jiayin also offered a salary full of "sincerity."

According to the football data website hamrofootball, leaving aside the pay of the rest of his staff and taxes, Lippi personally earned about 8.4 million euros (about 56 million yuan) a year at Evergrande. In February 2014 he signed a three-year extension at the same salary as his first contract, so from salary alone Lippi took home 23.4 million euros (about 157 million yuan) over his three years at Evergrande.

Xu Jiayin also set up bonuses of every kind for the team, and as Evergrande kept winning at home and in the AFC Champions League, this income grew considerable.

In the 2013 season alone, Evergrande paid out 253 million yuan in bonuses. Twenty percent went to the coaching staff, and Lippi, as head coach, received 8% of that share. That item alone earned him more than 20 million yuan.

Salary and bonuses together, Lippi earned close to 200 million yuan in his three years at Evergrande. The club's generosity also put him third on Forbes' list of the best-paid coaches, behind only Pep Guardiola of Bundesliga side Bayern Munich and José Mourinho of Premier League side Chelsea.

How Much Did Lippi Spend

Evergrande could not have risen so far so fast without Xu Jiayin's "big spending."

As early as the Lee Jang-soo era, Evergrande had begun paying high prices for foreign and domestic players. After promotion to the Chinese Super League in 2011, it signed Cleo (28 million yuan), Dario Conca (64 million), Feng Xiaoting (15 million), Jiang Ning (14 million), Zhang Linpeng (12 million) and others in one sweep, spending more than 170 million yuan on signings in that single season.

After Lippi arrived, his son took charge of signing foreign players for the club. Transfer spending rose every year, and that item alone came to more than 300 million yuan a year.

The foreign players delivered very different returns. Brazilian striker Elkeson, signed for 47 million yuan in the 2013 season, is seen as Evergrande's most successful signing of recent years and became the heart of its attack. The Italian imports Alessandro Diamanti and Alberto Gilardino, signed last season for 57 million and 41 million yuan respectively, were mediocre.

Evergrande now spends 500-700 million yuan a year. By a rough count, Xu Jiayin has written the team checks totaling more than 2 billion yuan since Lippi took over.

How Much Better Did the Team Get Under Lippi

Evergrande's most successful signing was in fact none of these stars on the pitch, but Lippi himself.

Counting this year's Super Cup and AFC Champions League matches, in the 1,018 days from May 17, 2012 to February 26, 2015, Lippi coached Evergrande in 128 matches and won 85, a win rate of 66.4%.

He was not the coach with the best record at the club: his predecessor Lee Jang-soo won 67.12% of his matches in charge of Evergrande. But measured against Lippi's own 30-year career, this was his peak. Lippi has had spells of two years or more at four teams, Cesena, Juventus, the Italian national team and Guangzhou Evergrande. His career average win rate is 45.99%, and at every earlier team it was below 60%.

Lippi's Evergrande was known for its attacking power. Its former front line of Conca, Muriqui and Elkeson was the most feared in Asia and dominated opponents to a startling degree.

The Chinese Super League records for most points in a season (77), most points at the halfway mark (41), longest unbeaten start to a season (22 matches), biggest title-winning margin (18 points over the runner-up), most goals in a season (78), best goal difference in a season (59) and most wins in a season (24)... In Lippi's first two years, Evergrande's biggest problem in the Chinese Super League was finding anyone to beat it.

The AFC Champions League became the best test of Lippi's coaching and of the club's real strength. In 2011, Xu Jiayin had said the team should win the AFC Champions League within three to five years. For a team just promoted to the Chinese Super League, this "unrealistic" goal drew wide doubt and even ridicule at the time.

Only two years later, Lippi helped Xu Jiayin hit the "target" ahead of schedule, and public opinion swung quickly to Evergrande's side.

How Much Money Did Lippi Bring the Club

While Lippi was paying high prices for foreign players from Europe and South America, he was also bringing the club good returns by improving its results.

In Xu Jiayin's first four years in charge, the club's annual spending rose from 100 million yuan in 2010 to 700 million in 2013, but its revenue also rose from 60 million yuan to 600 million.

Evergrande's biggest source of income is pitch-side advertising boards at its home ground, the Tianhe Sports Center. In 2013, the list price for the first minute of pitch-side advertising at Evergrande home games was 2 million yuan (buyers in practice got discounts), and this item alone brought the club 400-500 million yuan.

The team's strong results directly filled its home stands, and ticket prices rose with demand. In 2012, Evergrande's home season tickets cost 350 yuan at the cheapest and only 800 yuan at the most expensive, depending on the seating area. This year the cheapest season ticket is 500 yuan (a student ticket) and the most expensive has reached 2,500 yuan. Compared with last season, some of the better seats cost as much as 700 yuan more.

That excludes tickets for big matches such as those in the AFC Champions League. Take the AFC Champions League final on November 9, 2013. Evergrande drew up a new ticketing plan for the match with eight price tiers, from 400 yuan at the bottom to 8,000 yuan for a VVIP ticket at the top, with most tickets priced at 2,000 or 3,000 yuan. That one match brought the club at least 55 million yuan in ticket revenue.

As early as 2013, Evergrande's ticket sales passed 100 million yuan, and its home attendance held steady at around 40,000, one of the top two in the Chinese Super League. For most Chinese Super League teams, more than 10 million yuan a year in ticket revenue is a hard goal to reach.

How Lippi Changed the Chinese Super League

Evergrande's arrival and success set off a new arms race in the Chinese Super League.

Before Evergrande joined the league, the best-paid domestic players earned around 3 million yuan a year. In 2008, total player salaries in the Chinese Super League were just over 400 million yuan and grew by about 100 million a year, until Xu Jiayin bought Evergrande in 2010 and upset that balance.

Several of Evergrande's key players, including Zheng Zhi, Gao Lin, Rong Hao and Feng Xiaoting, earn 5 million yuan a year or more. Former Guoan player Huang Bowen, back from South Korea, earns even more, at 7 million yuan. Evergrande also pays huge Chinese Super League and AFC Champions League bonuses; the league bonus alone runs to 69 million yuan.

As Evergrande used high salaries to poach players from other clubs, the league's other traditional powers were forced to raise pay to keep their squads settled and stop raids, while clubs with some money of their own followed Evergrande in signing well-paid foreign players. Guangzhou R&F, Shanghai SIPG and others rose quickly as a result.

Against this backdrop, Chinese Super League salaries began climbing steeply after 2011. In the 2011 season, total salaries across the league passed 800 million yuan, up 57%. In 2012 they passed 1 billion yuan, and in 2013 they reached 1.4 billion, more than three times the level of five years earlier.

By 2014, total player salaries in the league reached nearly 1.8 billion yuan. Seven teams paid their players more than 100 million yuan in total, and three, Guangzhou Evergrande, Beijing Guoan and Shandong Luneng, paid more than 200 million yuan. Those three also had the best results.

The arms race shows no sign of stopping. For the new season, Evergrande paid 15 million euros (about 110 million yuan) for Ricardo Goulart, a current Brazil international, making him the first player in Chinese Super League history to cost more than 100 million yuan.

How Much Did the Evergrande Brand Gain

Once Lippi had led the team to outstanding results and made Evergrande the best-known name in Chinese football, the rest of Evergrande Group's businesses gained too.

Take its core business, Evergrande Real Estate. From 2009 to 2014, the company's annual sales rose from 30.3 billion yuan to 131.5 billion yuan, roughly quadrupling in just five years.

It is hard to prove how much of that revenue football drove, directly or indirectly. But Evergrande Real Estate's sales grew faster than the industry average, which is especially striking at a time when the government was restricting residential development.

After Evergrande won the AFC Champions League, the group seized the moment to launch "Evergrande Spring" and enter the premium bottled-water business. Within a month, Evergrande Spring had taken 5.7 billion yuan in orders nationwide from more than 3,000 distributors.

At Evergrande Spring's national partners conference in January 2014, Xu Jiayin revealed his sales targets for the first time: 10 billion yuan in 2014, 20 billion in 2015 and 30 billion in 2016. Such bold talk recalls the day Evergrande took over the Guangzhou team and set the goal of "winning the AFC Champions League within five years."

Football also opened the door to a partnership with Alibaba. On June 5, 2014, Evergrande and Alibaba Group signed a strategic cooperation agreement under which Alibaba would invest 1.2 billion yuan for 50% of the Evergrande football club. On that basis the club is now valued at 2.4 billion yuan, about US$384 million, enough to rank among the world's top 20 football clubs.

Xu Jiayin also said that after the capital injection the club would hold 2.4 billion yuan in cash, and that it plans to bring in 20 strategic investors, issuing new shares equal to 40% of the club, 2% to each. Once it meets the conditions for a listing, it will also seek to go public.

The strategic investment gives the club more money for its future, and the Alibaba partnership opens up even more possibilities. Simple ones include selling Evergrande tickets and merchandise on Taobao, or using Taobao to promote and sell Evergrande Spring.

Appendix: Timeline of Lippi's Three Years in China