China Evergrande Backs Out of Plan to Build World’s Largest Soccer Stadium

Evergrande said it would receive a refund equivalent to about $818 million, and intends to use the money to help repay a mountain of debt. The property conglomerate, which has around $300 billion in liabilities, defaulted on its U.S. dollar bonds last year and has failed to pay some of its debt in mainland China.

The massive stadium project had been a high-profile symbol of the excesses of Evergrande, which spent freely on activities far removed from its core real-estate business during the years when it was flush with cash. Evergrande bought Guangzhou’s soccer club more than a decade ago for 100 million yuan, the equivalent of about $15 million at current exchange rates, and used it to help promote its brand as the developer rolled out residential projects in cities across China.

The Guangzhou Evergrande Football Club won national accolades after clinching the Asian Champions League title in 2013—becoming the first Chinese club to win the tournament in more than two decades. The following year,

Alibaba Group Holding Ltd.

bought part of the team for 1.2 billion yuan, and it became known as the Guangzhou Evergrande Taobao Football Club. The deal came about after

Jack Ma,

Alibaba’s founder and then-chairman, had drinks with Evergrande’s chairman and founder,

Hui Ka Yan.

The team is an eight-time champion of the Chinese Football Association Super League, the country’s top professional soccer league. The club dropped both corporate sponsors from its name last year, and is now just known as the Guangzhou Football Club. Evergrande also sponsored a soccer school to groom and train young players, and boasted about its contributions to the country’s sports developments in its annual reports.

Several other Chinese developers also bought soccer clubs as China launched a national campaign in 2016 to become a “world-leading soccer power by 2050” through youth promotion and league development. Chinese President

Xi Jinping

has also spoken about his passion for the sport on numerous diplomatic occasions.

In April 2020, Evergrande paid about $1 billion for the land-use right of a parcel located in Guangzhou’s Panyu District. At the time, the developer said it would turn it into the world’s largest and most technologically advanced soccer stadium—a lotus-shaped spectacle that would be able to accommodate 100,000 people. It was to be called the Guangzhou Evergrande Football Stadium.

The stadium will “compete with global landmarks such as the Sydney Opera House and the Dubai Burj Khalifa for its beauty” and will be an important landmark as Chinese soccer goes international, said

Xia Haijun,

Evergrande’s former chief executive officer, at the ceremony that marked the beginning of construction.

Evergrande’s original plan was to invest as much as 12 billion yuan in the project. The stadium was supposed to be finished by the end of 2022. Construction has begun, but the project is far from completion.

Evergrande became engulfed by liquidity problems last year and is working on a debt-restructuring plan while it tries to deliver on promises to complete numerous unfinished residential property developments across China. Last month, Mr. Xia was ousted from Evergrande after he was found to have been involved in questionable borrowing arrangements.

After the developer returns the land-use right to the Guangzhou Municipal Planning and Natural Resources Bureau, the money Evergrande receives will go into a government-designated escrow account that will be used to pay back the company’s debts. That includes outstanding secured debt owed to state-owned Citic Trust Co., unpaid project construction fees, expenses related to the presold commercial housing and the unpaid wages of employees of Evergrande’s project companies, according to a stock-exchange filing.

The Guangzhou government also will take over the buildings and structures currently on the site, and intends to find another company to continue with the project’s construction.

Evergrande is expected to incur a loss of roughly 1.255 billion yuan from the transaction, it said in the filing. The developer said it had spent 2.1 billion yuan on construction and presold some commercial housing units on that land.

Write to Rebecca Feng at [email protected]

Evergrande said it would receive a refund equivalent to about $818 million, and intends to use the money to help repay a mountain of debt. The property conglomerate, which has around $300 billion in liabilities, defaulted on its U.S. dollar bonds last year and has failed to pay some of its debt in mainland China.

The massive stadium project had been a high-profile symbol of the excesses of Evergrande, which spent freely on activities far removed from its core real-estate business during the years when it was flush with cash. Evergrande bought Guangzhou’s soccer club more than a decade ago for 100 million yuan, the equivalent of about $15 million at current exchange rates, and used it to help promote its brand as the developer rolled out residential projects in cities across China.

The Guangzhou Evergrande Football Club won national accolades after clinching the Asian Champions League title in 2013—becoming the first Chinese club to win the tournament in more than two decades. The following year,

Alibaba Group Holding Ltd.

bought part of the team for 1.2 billion yuan, and it became known as the Guangzhou Evergrande Taobao Football Club. The deal came about after

Jack Ma,

Alibaba’s founder and then-chairman, had drinks with Evergrande’s chairman and founder,

Hui Ka Yan.

The team is an eight-time champion of the Chinese Football Association Super League, the country’s top professional soccer league. The club dropped both corporate sponsors from its name last year, and is now just known as the Guangzhou Football Club. Evergrande also sponsored a soccer school to groom and train young players, and boasted about its contributions to the country’s sports developments in its annual reports.

Several other Chinese developers also bought soccer clubs as China launched a national campaign in 2016 to become a “world-leading soccer power by 2050” through youth promotion and league development. Chinese President

Xi Jinping

has also spoken about his passion for the sport on numerous diplomatic occasions.

In April 2020, Evergrande paid about $1 billion for the land-use right of a parcel located in Guangzhou’s Panyu District. At the time, the developer said it would turn it into the world’s largest and most technologically advanced soccer stadium—a lotus-shaped spectacle that would be able to accommodate 100,000 people. It was to be called the Guangzhou Evergrande Football Stadium.

The stadium will “compete with global landmarks such as the Sydney Opera House and the Dubai Burj Khalifa for its beauty” and will be an important landmark as Chinese soccer goes international, said

Xia Haijun,

Evergrande’s former chief executive officer, at the ceremony that marked the beginning of construction.

Evergrande’s original plan was to invest as much as 12 billion yuan in the project. The stadium was supposed to be finished by the end of 2022. Construction has begun, but the project is far from completion.

Evergrande became engulfed by liquidity problems last year and is working on a debt-restructuring plan while it tries to deliver on promises to complete numerous unfinished residential property developments across China. Last month, Mr. Xia was ousted from Evergrande after he was found to have been involved in questionable borrowing arrangements.

After the developer returns the land-use right to the Guangzhou Municipal Planning and Natural Resources Bureau, the money Evergrande receives will go into a government-designated escrow account that will be used to pay back the company’s debts. That includes outstanding secured debt owed to state-owned Citic Trust Co., unpaid project construction fees, expenses related to the presold commercial housing and the unpaid wages of employees of Evergrande’s project companies, according to a stock-exchange filing.

The Guangzhou government also will take over the buildings and structures currently on the site, and intends to find another company to continue with the project’s construction.

Evergrande is expected to incur a loss of roughly 1.255 billion yuan from the transaction, it said in the filing. The developer said it had spent 2.1 billion yuan on construction and presold some commercial housing units on that land.

Write to Rebecca Feng at [email protected]