Business magnates dig for gold in Chinese sports market

As more than tens of billions of capital flow in, Chinese sports market is embracing an all-star roster of investors with open arms. 

Business tycoons like Alibaba, Suning, Wanda Group, Tencent, LeTV Sports and Ti’ao Power, which have difference business “genes”, march into the rising market and unfold their layouts ready to tap into the goldmine of the emerging sports industry. 

The prospect of Chinese sports industry is exciting to expect, yet the immature current situation of the market indicates that those companies cannot expect an immediate payback of their investment.

Heavy investment

More than billions of capital injection each time makes sports an expensive game for business giants. Weeks ago LeTV Sports acquired media rights to all AFC events across all platforms in China from 2017 to 2020 with an offer of US $75 million. In addition, the online streamer also buy 20% stake of World Sports Group, a sports marketing, media rights distribution and events management company. Meanwhile, a Beijing-based company named Ti’ao Power, which is under control of CMC, announced its8 billion yuan’s acquisition of broadcast rights to Chinese Super League for next five years. 

Refreshing your memory, you will find many Chinese companies actively get themselves involved in the capital game. 

Staring from January, Wanda Group invested 45 million euros for 20% stake of La Liga side Atletico Madrid, 1.05 billion euros for 100% of Infront Sports & Media and 650 million euros for World Triathlon Corporation; Tencent Sports secured five-year deal to exclusively live stream NBA for 500 million dollars.; Alibaba set up a sport company on September and struck a strategic partnership with NCAA for two years; Sunning backed PPTV Sports sealed a deal to exclusively broadcast La Liga games across all platforms in China for a 250 million euro fee.

Dual stimulus 

Support from government policy and new opportunities in sports market make more players involved in the game. The Chinese State Council issued a reform plan in last October and projected a business size of 5 trillion yuan for sports industry, making sports resource an key focus for investors. 

Apart from that, Beijing and Zhangjiakou’s successful bid for rights to hold 2022 Winter Olympic Games also enhanced their confidence for sports industry. 

Operation and services

Even if a continuing investment and high growth rate cannot drive the market to be fully developed in a short time so it’s not likely for those investors to get payback of their investment or make profit in the short term. For now they are more considering revenues sourced from the broader impact beyond sports industry, such as peripheral products sales and events tourism etc. 

The Chinese sports industry is still at a stage where the market and people need to be cultivated. Bringing in top events IP is the easiest thing to do, the main challenge lies on the follow-up work, including rights distribution, service optimizing and the balance of the relationship and interests between sports sponsors and content consumers, which is key to the success for those companies. 

Source: Xinhua