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Daejeon Citizen Takeover: What do we know?

At the beginning of October reports began circulating in the Korean media that Daejeon Citizen were to be the subject of a takeover. The Mayor of Daejeon had declared that the city government wanted to sell and that talks have taken place with a potential buyer. But, what do we know so far?



Daejeon became the first 'citizen' club in K League, one which is owned by the city government and funded by tax-payers of that city. However, due to a slump, which has seen the Purples slip from being a fairly stable K League 1 side in the earlier part of the decade, to propping up the second division as the 2010s come to a close, Daejeon City Mayor Heo Taejung revealed that he wanted to sell the club.

What's Been Said?

When the news first broke earlier in the month October, Mayor Heo went on record to say: "I am questioning why we are putting 80 million won of tax payers money into Daejeon Citizen."

Not even a week had passed following Mayor Heo rather shocking comments and already were reports that Daejeon City Government were in talks with a large national corporation in order for them to take over and turn Daejeon Citizen to a corporate-run club.

Mayor Heo, in a press conference, said: "Recently there has been some behind the scenes contact with a large domestic corporation regarding investment. The corporation which is interested in Daejeon Citizen has not been made public but negotiations are ongoing."

"The scale and way in which the corporation in question will invest, and how this will be implemented is still under negotiation but we have seem to have come to some consensus. This round of negotiations this time are aimed specifically about the desire of local football fans, to turn Daejeon Citizen into one of the best football clubs in the country, which was in line with the corporation's vision."

What Do We Know?

Who Are The New Owners?

Mayor Heo said, via Yonhap News: "Because there are still some administrative procedures yet to be completed, the name of the corporation cannot be revealed but they have the financial ability to take full control of the club."

A large Korean company is set to take over and the first name to be mentioned in the media was the Shinsegye Group. Shinsegye will no doubt be known to most for their department stores, but the group’s subsidiaries also include Shinsegye Construction, Shinsegye I&C (IT services), E-Mart, E-Mart Traders, E-Mart 24, Seoul Express Bus Terminal, Starbucks Coffee Korea, Johnny Rockets, as well as the Westin Chosun Hotel, and is regarded as the largest retailer in Korea with total assets of 370 billion Korean won.

In Joongdo Ilbo it was reported that, according to a well-informed official from inside the Shinsegye Group, there have indeed been negotiations with the City of Daejeon regarding Daejeon Citizen Football Club.

However, contradictory to the above, in the same article, Shinsegye's official line on the matter was: "No official negotiations or proposals have taken place concerning a takeover of Daejeon Citizen. We've also confirmed this at group level [not Shinsegye Department Stores] about the operation of a sports team, but it was confirmed that there have been so such negotiations."

However, after a week of little else being said on the matter, OSEN reported that it will be actually be KEB Hana Bank who will takeover the club. KEB Hana Bank already act as K League's main sponsor.

A source said: "In order for Daejeon Citizen to grow there have been negotiations with a large domestic corporation and the outcome is that Daejeon Citizen's new investment is to be from KEB Hana Bank. It is expected that within the month Daejeon City Government and KEB Hana Bank will come to an agreement."

The same report said that despite apparent interest from Shinsegye and Hanhwa, KEB Hana were offering  the largest investment and so the decision was made to go with one of Korea's largest banking firms. Furthermore, there is the possibility of KEB Hana taking over complete running of the club.

However, on Thursday 24th October, to add yet another twist, KEB Hana Bank released a statement via Chungcheong News to say: "Reports relating to a takeover of Daejeon Citizen by KEB Hana Bank are without foundation. There is no official process regarding a takeover." 

Confusing times for Daejeon Citizen fans.

Name Change?

If Daejeon Citizen are no longer a citizen team then will this be dropped from the name? Well, most likely not as Daejeon actually began as a corporate-run team. When the K League was played in neutral venues up until in the early-to-mid 90s, some K League matches were held at the Hanbat Stadium in Daejeon and proved to be popular amongst football fans. But with no team nearby for the people of Daejeon to identify with, a consortium of Donga Group, Kyeryong Construction, DongYang Department Store, and Chungcheong Bank established the club to give the citizens of Daejeon a team to identify with, hence the name 'Daejeon Citizen'. However, due to the IMF Asian Financial Crisis in 1998, three of these companies went bankrupt and later the final company, Kyerong Construction, pulled out. This lead to Daejeon Citizen becoming the citizen club as we know it today in 2006.

Daejeon Citizen fans need not worry about their club becoming unidentifiable from its roots as in News 1 Mayor Heo said: "In this working-level of negotiations, a club founded in 1997 and has been operating for more than 20 years, it is of utmost importance that Daejeon Citizen's identity, traditions, and values are carried forward and the club stays in the Daejeon area, this is all a pre-condition for the corporation and the way in which and to what extent it will invest."

In the same article Heo also said that the sale 'isn't a case of the city trying to get rid of the club, more a case of the city wanting to find investment'.

Timeline

Negotiations are said to be still ongoing but the takeover is expected to be completed as soon as the end of October this year. But, with the 2019 season almost over, Daejeon won’t become a Chaebol club, a club owned by a large corporation, until the 2020 season. Next year will be Daejeon's fifth in a row in the second division after falling through the trap door in 2015 on a record low of 19 points in K League 1.

Assets

Finances are a major issue with Mayor Heo, on account of having to put 80 Million Korean Won ($9.4m) into the club every year and questioning why such a large amount of tax payers’ money is being pumped into a club which is vastly under performing. Mayor Heo would rather a large corporation takeover and take the strain off Daejeon City Government.

However, what will become of the team's club house and stadium will depend on whether any new owners take over of the club completely or whether they are simply looking to invest. If it is indeed a  takeover, the new owners will then own the clubhouse as well as Daejeon World Cup Stadium, which at present is owned and run by Daejeon City Government. What this could mean is a new name for the stadium, as per Hanhwa who own Daejeon’s baseball team, Hanhwa Eagles. What was once called, and often still referred to as, Daejeon Hanbat Stadium, is now Hanhwa Life Insurance Park and so a similar situation could occur with Purple Arena.

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