Bau Duc and the journey of investing in football

In the most recent interview with reporters, Bau Duc (Mr. Doan Nguyen Duc - Chairman of Hoang Anh Gia Lai) said thatThe most important reason for the success of U23 Vietnam in general and the players from HAGL Football Academy in particular, is people.But to achieve today's success, Bau Duc's development process from a decade ago encountered many hardships.

Over the past 10 years, Hoang Anh Gia Lai's business orientation has had to change direction continuously, from focusing on real estate in the period of 2009 - 2012, to sugarcane in the period of 2013 - 2014, then to cattle in 2015 - 2016 and most recently, expectations for the fruit business. But even at the most difficult time, when he was burdened with a debt of tens of thousands of billions of VND, Mr. Duc did not intend to include the Football Academy in the restructuring or divestment plan.

In 2001, Mr. Duc bought the first division football team Gia Lai and changed its name to Hoang Anh Gia Lai.With the strategy of spending money to invest in quality players, his team continuously achieved great feats in the V-League. Winning the championship for two consecutive years in 2002 and 2003 in the top national tournament, along with many "blockbuster" football transfer deals.

In 2007, when a series of new bosses were just starting out in football, following the same path as previous bosses, which was to "throw money and make quick money", Mr. Duc traveled to Arsenal to learn a different way of doing things - developing sustainable football.

In a conversation with Coach Wenger, in response to Mr. Duc's question about what to do to develop Vietnamese football, the coach, who is a master of economics, said: "We need to develop youth training, with the foundation being the building of football academies."March 2007 marked a milestone for youth football in Vietnam, when Mr. Duc broke ground to build the Hoang Anh Gia Lai Arsenal - JMG Football Academy on a 5-hectare plot of land, which had previously been planted with rubber trees that were ripe for harvest.

Over the past 10 years, each year Mr. Duc has spent tens of billions of VND on operating this training center, not to mention unusual expenses for long-term training trips abroad, improving the quality of the Academy and the management staff. If the construction investment costs are included, the amount of money Mr. Duc has spent could be up to hundreds of billions of VND.

However, unlike the loss-making stories of many clubs, the Football Academy's operations were profitable in the years after it began operating.

The activities of the Football Academy appeared in the business results report of Hoang Anh Gia Lai until the end of 2010, then only appeared on the balance sheet in the following years. In 2009 and 2010, 3 years after starting operations, the annual revenue of the Football Academy consolidated into the results of Hoang Anh Gia Lai reached around 40 billion VND. Of which, the profits were 8.7 billion and 4.6 billion VND respectively.

In the following years' financial reports, data on HAGL - JMG Football Academy only appeared in two main items: unfinished construction costs and long-term prepaid expenses.

At the end of the third quarter of 2017, Hoang Anh Gia Lai recorded more than 48 billion VND in unfinished construction costs, an increase of nearly 10 billion compared to the beginning of the year, while player development costs in the long-term prepaid expenses category recorded 48 billion VND.

According to the explanation, player development costs include costs related to training and developing players of the Hoang Anh Gia Lai - Arsenal JMG Football Academy. This cost will be allocated within 7 to 10 years based on the term of the contract signed between HAGL-JMG and the players.

During the group's most difficult period in 2016, when HAGL entered its second restructuring phase (the first in 2013), HAGL's football academy received an offer from a tycoon who wanted to buy it back to take over and renovate it for hundreds of billions of dong. At this time, the HAGL Arenal JMG Football Academy complex was mortgaged for a loan worth 603 billion dong and bore an interest rate of 5.05-10.5%. However, Mr. Duc was determined not to sell his brainchild.

At the annual meeting at that time, Mr. Duc had mentioned putting football aside to focus on running the group through difficulties. But although Hoang Anh Gia Lai's business strategy had to change constantly, selling assets to ensure liquidity, the Football Academy had never appeared in any restructuring plan.

Although the difficulties with the group have not passed yet, the pressure of debt always weighs heavily on business activities, but when talking about football, the Mountain Town Boss still says that"If only we had invested in youth football training earlier, if only we had had a consistent national youth football training strategy earlier, perhaps Vietnam would have risen to become an Asian dragon in the football rankings, even having the right to reach the World Cup." While business strategies are constantly restructuring and divestment, football is still the only activity that has accompanied Hoang Anh Gia Lai for the past 10 years.

"The journey is long, with many ups and downs, and there were times when the economy was difficult, but I was determined to pursue it to the end and did not feel any hardship at all. On the contrary, I felt joyful and happy because after all the hustle and bustle of business, I still had afternoons to sit and watch the kids play soccer," Mr. Duc said when asked about "single-handedly invested in a professional youth football training center 10 years ago.