In May several leading sports executives at the CAA World Congress of Sport were asked what keeps them up at night and what are they watching for the coming year. One of the more unusual answers at the time came from longtime entertainment executive now part owner of the Seattle Sounders of Major League Soccer, Joe Roth. China. He said bluntly.
“Since the president of China [Xi Jinping] has decided soccer is going to be a big deal and host a World Cup, the English Premier League has suffered, and I lost my second-best player [Obafemi Martins] because they’re paying double or triple the salaries,” Roth said. “The exportation of talent scares me.”
In the past month, not a day goes by it seems without another story breaking of Chinese business investment in professional sport of some sort in various places around the globe. With the government declaring that sport investment is a priority, the business leaders of the world’s most populous country have gone on fact finding education and spending sprees, as China gears up for runs with Olympics summer and winter, World Cup dreams and a proclamation to focus on being the best in at least three key sports at all levels; basketball, soccer and of all things, volleyball. That will also not diminish the interest in other Olympic sports like gymnastics and track and field, not will their outward business push diminish North American sports leaders like the NBA, the NFL and even the NHL (led by the Los Angeles Kings right now) in trying to engage the masses with brand exportation into the country. Even college sports (the Pac 12 has tried to lead a push into engaging on a large scale basis) and schools of all sizes see the dollars and value of both going into China for events and in recruiting student-athletes of all backgrounds in the biggest fascination in engaging with the country since well before Richard Nixon made his historic trip in the 1970’s.
What does it all mean for both the growth of Chinese sport, and for the coffers of professional sports around the world who are willing to take massive investment from Chinese businesses? Big bucks and potentially big exposure. As former NBA star Stephon Marbury, himself a sports and media icon in China, where he has reinvented his career and his persona for the better, told us last week during the filming of a movie about his life, the Chinese love sport and love to learn, but successful business still comes with a cautionary tale in a government monitored society. Partnerships come after lengthy study, cost benefit analysis and in many cases of government approval in a market which is still not fully open and is carefully scrutinized. Some western brands thrive, others who don’t adapt can lose millions, and the same goes with sports business, both for investment going into the country and for dollars going out.
How widespread is the recent Chinese spend? Some examples.
Dalian Wanda acquired Infront Sports & Media, World Triathlon Corp. and became partners with FIFA and FIBA and is heavily rumored to be involved with IMG/WME in a multi-billion dollar partnership to buy the UFC with IMG/WME also partnering with digital giant Tencent to look at even more expansion. Tencent has already partnered with ESPN on the broadcast side as well.
China Everbright and Beijing Baofeng acquired a majority of MP & Silva, one of the world’s largest media rights companies.
Suning Holdings is buying a majority stake in Italian club Inter Milan, Wanda Group, purchased a stake in Atletico Madrid, and Rastar Group acquired Espanyol in January, Billionaire Tony Xia has an offer for Aston Villa, while Jack Ma of Alibaba has spent big dollars investing in both rugby and eSports.
In May, NBA China announced that the first NBA Playzone, a basketball-themed family entertainment center, would open in Shanghai this summer.
And this week came perhaps the biggest news for North America, with ESPN reporting that Shanghai investor Lizhang Jiang, who founded the marketing company Double-Edge Sports in China and recently acquired the Spanish soccer team Granada CF, will take a five percent stake in the NBA’s Minnesota Timberwolves. If approved, Jiang would become the first Chinese stakeholder in the NBA and that would signify yet another shift in an ownership position which would have brought wide criticism only a few years ago, much like the hand wringing that came at first with Japanese investment in the Seattle Mariners and with Russian ownership for the Brooklyn Nets. None of those moves, nor has the investment other deep pocketed owners have made in sports like tennis, golf and horse racing, have slowed growth or frankly, eliminated opportunities for North American ownership for anyone. If anything they have helped escalate the market for billion dollar ownership in sport, and have helped even bring new brands looking to connect with the American marketplace into the fold, at entry points like soccer and basketball, hockey and racing. And as American clubs look globally for new markets to grow sponsor and digital investment, the influx of global money and awareness will not hurt.
The difference in China from all those other investments is because of size, speed and scope now, which for some like Roth may prove to be a very cautionary tale. With government still in such tight control of a society, is the dollar flow coming into sport elsewhere going to be a two way street, where an ROI with the billions of people in China a possibility? Or will it be cost and event controlled where engagement is more at the government say so than that of the free market their investors are buying into elsewhere? One thing is for sure, big dollars speak very loudly, and the daily investment Chinese businesses are making into sport certainly makes it one of the biggest, if not the most important, story to watch closely in the coming months.
Sport continues to be an expansive global business, and the Chinese have not just taken notice, they have become some of the biggest and most active players in the game.