Who is responsible for the devaluation of CSL media rights?

The Chinese Super League (CSL) has been in the spotlight ever since China Sports Media (CSM) announced their purchase of broadcasting rights to China‘s top-tier professional football league for RMB 8 billion in 2015. 

Recently, a dispute has arisen between the CSM and the Chinese Football Association (CFA) once again pushing the league to the centre of public attention.

As said in a report, CSM have held off paying the second-phase annual payment for the 2017 season, a fee that should have been cleared by July 1st. Although the company has already payed RMB 400 million of the RMB1bn broadcasting fees to the league, it has held off paying the remaining RMB600m this season.

The Chinese media company want to re-negotiate a fee reduction for the CSL media rights. This has created a knock-on effect on the media partnerships with China League One and China League Two, as their media rights partners are also expecting a similar revision of their contracts, according to a Weibo post by Soccer News on July 4.

There are a range of reasons why the CSM would be looking to exert changes to its deal with the CSL. In part it could be a response to the negative influence of two new policies on the league’s commercial value.

The new policies, recently introduced by the Chinese Football Association (CFA), is designed to control the high-profile purchase of footballers by domestic clubs and push the use of Under-23 players.

Under these new rules, the CFA have regulated the number of foreign players in squads and on the pitch, and have stipulated a minimum number of Chinese Under-23 players in the starting XI.

The rules also said, starting with the 2017 summer transfer window, if a club is in debt when it buys a new player, it must pay an equal amount into the Chinese Football Development Fund. In effect, transfer fees will double overnight.

Related: Evaluating the new CFA policies and their impact on Chinese football

“The CSL Company is in a positive negotiation position with the CSM to deal with the impact of these new policies on their businesses. We should actively mediate between the two sides to reach a favourable result. ” said the CFA at a media briefing.

Some argue that the CSM may overvalue China‘s top-tier football league despite the sports media ambitiously trying to advance the development of Chinese football. Others believe that it is a reflection of immaturity within the Chinese sports industry. 

As Xing Xiaoyan, an assistant professor from the Capital University of Physical Education and Sports put it, “on the one hand, the CFA and the government have not shown enough respect to other interested parties like rights holders, sponsors and club managers but on the other hand, the CSM failed to forecast all risks behind the deal, so that it does not have any more options now but to renegotiate to minimize losses. 

Xing also indicated that sports franchises and leagues are much too affected by policies in the country, which is why sports intellectual property may devalue.

Guo Bin, General Secretary of China Sports Industry Research Center of Peking University, agrees with Xing’s opinion. He explains that a well-established copyright distribution model is a necessity for the CSM to exploit the CSL’s marketing value. 

For the moment, Chinese viewers have not been accustomed to the popular pay-per-view model established in other countries. Therefore, a rights holder such as CSM should find a profit model that best suits the Chinese market. In Guo’s eyes, a win-win decision should be made by the CSL and CSM to promote the development of Chinese football in the long run.

Basically, these new policies about foreign and U23 players are intended to serve the benefit of youth training, but the ripple effect for the league’s viewership and market value as a whole can be devastating. In a negotiation letter, CSM said “the CFA have not communicated with us” prior to the launch of the new policies.

However, most industry insiders are optimistic about the upcoming renegotiation. CSM Chairman Li Yidong said, “we’re looking at friendly negotiations with the CFA and the CSL Company. We have signed up as a five-year partnership deal and this is only the second year. We are, of course, pleased to continue this cooperation.” 

Proofread by Raymond Fitzpatrick