[Seocho-dong Legal Story] Would It Have Been Different If He Had Gone to Ansan 9 Years Ago... The Untold Story of Lee Jae-myung and Seongnam FC's Connection

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyung-min] Professional football club Seongnam FC has been relegated to the second division again. It is the first time in four years since their promotion to the first division in 2018. On the 9th, Seongnam drew 1-1 in an away league match against Gimcheon Sangmu, confirming their relegation regardless of the remaining three matches. Shaken both on and off the field throughout the year, Seongnam ultimately failed to overcome the crisis.

Seongnam suffered external pressure as it became the subject of a prosecution investigation over donation allegations involving Lee Jae-myung, leader of the Democratic Party of Korea. It was even criticized as a remnant of the previous administration. Seongnam Mayor Shin Sang-jin publicly stated during the season that he was considering dissolving or selling the club. Even if the club survives, being relegated to the second division next year means it is highly likely to become a soulless "ghost club." The city is expected to drastically cut the budget. Key players have no reason to stay with a financially struggling team and are likely to transfer.

Would the fate have changed if the team had moved to Ansan nine years ago? Football insiders familiar with Seongnam’s background worry that the connection with Lee, who politically acquired Seongnam in October 2013 and re-established it as a civic club, might ultimately end in the tragedy of the team disappearing.

On the Brink of Moving to Ansan... Lee Jae-myung Reversed the Decision

Originally, Seongnam planned to relocate its base to Ansan City, Gyeonggi Province, nine years ago. The move was nearly finalized, but Lee suddenly reversed it.

In August 2013, the Unification Church Foundation, which operated the club, withdrew, leaving the club in a difficult position. Seongnam City and then-mayor Lee were reluctant to acquire the club, citing strong opposition from local Christians. The Christians were opposed to taking over a team previously operated by the Unification Church Foundation. However, the club was not on the verge of dissolution. Ansan City in Gyeonggi Province extended a helping hand. The club decided to transfer its base to Ansan by transferring some players and reducing the club’s asset size, which was valued at 38 billion KRW at the time, and moved quickly to re-establish the club. Then, in October 2013, Mayor Lee and Seongnam City suddenly reversed their stance by announcing their intention to acquire the club, withdrawing from the relocation procedures and contracts with Ansan City. The club happily accepted Seongnam City’s sudden proposal to keep the "Seongnam" name, which evoked memories of the glory days of the Seongnam club during the Ilhwa era, for the sake of "old football fans."

[Image source=Yonhap News]

With Insufficient Public Subscription, Lee Jae-myung Also Visited Local Churches

Although the club was set to be re-established, there was an obstacle: money. Lee calculated that a total of 15 billion KRW would suffice, consisting of 7 billion KRW from the city budget, 5 billion KRW from corporate sponsorships, and 3 billion KRW from public subscription shares. However, the plan did not proceed as expected. Seongnam City contacted about 40 companies with annual sales exceeding 100 billion KRW within the city but failed to secure 5 billion KRW in corporate sponsorships. Public subscription shares amounted to only 680 million KRW.

Lee decided to personally promote the public subscription shares. In February 2014, he visited churches in the area. He went to large churches with congregations ranging from 100 to 1,000 members and spoke to the congregation after the pastor’s sermon, urging them to participate in the club’s public share subscription. He emphasized that the club’s predecessor, Seongnam Ilhwa, was operated by the Unification Church Foundation before it left, hoping to gain support from church members.

Meanwhile, the prosecution believes that Lee and Seongnam City also approached local companies with "pending issues." According to the prosecution, they resolved issues such as permits and zoning changes for companies in exchange for sponsorship of Seongnam FC. Companies known to have provided sponsorship funds in this manner include Doosan Construction (4.2 billion KRW), Naver (3.9 billion KRW), NongHyup (3.6 billion KRW), Bundang CHA Hospital (3.3 billion KRW), Alphadom City (550 million KRW), and Hyundai Department Store (500 million KRW), totaling six companies.

Despite Receiving Hundreds of Billions in Sponsorship, Support for Players and Performance Declined

From 2014 to 2017, when Lee was the club owner, the team received hundreds of billions of won in sponsorship funds, but support for the players gradually decreased. In sports, it is natural that when a club’s finances become stable, support increases, the quality of players improves, and better results follow. However, Seongnam did not follow this pattern according to various indicators.

Only in the first season after re-establishment in 2014 did the club spend heavily. According to the annual player salary statistics released by the Korea Professional Football League, Seongnam’s total player salaries in 2014 were 6.123 billion KRW, ranking sixth among all clubs. Uzbek foreign player Server Djeparov received a salary of 1.116 billion KRW. However, player salaries were gradually cut afterward: 4.726 billion KRW in 2015 and 4.571 billion KRW in 2016. In 2017, when the club played in the second division after relegation, salaries dropped to 3.898 billion KRW. Performance also plummeted. In 2014, the club finished 9th in the regular league but won the FA Cup. Qualifying for the 2015 AFC Champions League (ACL) as champions, they reached the round of 16. The regular league position was 5th. In 2016, the club finished 11th in the regular league and was relegated from the first to the second division. In 2017, they finished 4th in the second division.

[Image source=Yonhap News]

Prosecution Analyzing Seized Items... Related Persons Expected to be Summoned

Will the truth behind the donation allegations involving Lee Jae-myung and Seongnam FC be revealed? The Criminal Division 3 of the Suwon District Prosecutors’ Office Seongnam Branch (Chief Prosecutor Yoo Min-jong), which is investigating the case, is reportedly reviewing the circumstances surrounding Lee and Seongnam City’s acquisition of the football club and fundraising since August 2013. At the same time, they are analyzing materials secured through recent raids. After sending prosecutors and investigators to Doosan Construction and others on the 16th of last month to secure materials, the investigation team conducted three rounds of raids at 37 locations over 20 days. The day before, they inspected seven locations including NongHyup Bank Seongnam Branch, Alphadom City office in Pangyo, Hyundai Department Store Apgujeong main branch, and Pangyo branch.

Once the analysis of the seized items is complete, related persons are expected to be summoned for questioning. The summons could happen as early as this week. Jeong Jin-sang, Director of Political Coordination at the Democratic Party leader’s office (then Seongnam City Policy Director), is considered the most likely to be summoned first. Jeong approved most of the club-related matters at the time. Lee may also be summoned afterward. The prosecution is considering applying charges of "bribery through a third party" against Jeong and Lee. However, Lee’s side denies any illegality, claiming that all acts of receiving sponsorship funds during his tenure as club owner were "advertising activities, which are the club’s inherent business," so a fierce legal battle is expected to continue.