China’s football clubs could be hugely profitable before they become internationally competitive
Excitement over China’s extravagant spending on big-name football players appears to be overdone, but bubble worries haven’t deterred clubs and businesses from making a foray into the huge market.
“In China, the volume of eyeballs watching football is going to be huge,” said Sholto Douglas-Home, chief marketing officer with UK recruitment services firm Hays. “It’s a whole virtuous circle. More broadcasting exposure means more sponsors, more money and better players, which eventually equals more broadcasting exposure.”
Chinese football witnessed a significant acceleration of interest in the past two years buoyed by political support with domesticteams splashing out millions of dollars to sign well-known players such as Argentine international Ezequiel Lavezzi and Senegal striker Demba Ba.
Still, there has been mounting criticism about the lavish spending that left nearly all professional clubs with heavy financial losses.
Chen Jingfeng, president of China Media Capital (CMC) which bought a 13 per cent stake of Manchester City and five-year broadcasting right of the Chinese Super League last year, is optimistic the teams will become profitable.
“Football has the potential to become a lucrative industry in China,” he said. “The market potential of Chinese football has yet to be tapped.”
Professor Chen Xiyao at the Shanghai University of Sport predicted that the size of sport businesses in China, ranging from sales of athletic gear to television broadcasting could top 800 billion yuan (HK$951 billion) annually.
Douglas-Home said the key lies in the capability of creating a winning team, both on and off the pitches.
Hays is an official partner with and also a sponsor to Premier League powerhouse Manchester City FC.
The reason for the partnership with Manchester City was the synergy between the recruitment service firm and the football club Douglas-Home said.
“The world of work and the world of sport have more synergies than people realise and we have been able to showcase those similarities across our digital assets,” Douglas-Home said.
Manchester City will tour China along with other European teams in July.
Last year, Chinese President Xi Jinping’s visit to the club during his trip to UK made headlines in the mainland press.
“There’s no question that President Xi’s visit has given us significant visibility in China,” said Omar Berrada, commercial director of City Football Marketing, part of City Football Group that owns Manchester City. “As well as working closely with our new partners, China Media Capital, we have exciting plans to grow and develop our presence in China in the months and years ahead.”
Chen of CMC said that top European clubs’ touring event would be just part of the efforts to develop Chinese football and football-related businesses.
“Helping China to develop young football talent and widening local supporters’ access to fan merchandise will prove to be a wise bet in future when Chinese football bring returns to businesses and investors,” he said.
CMC’s move to spend 8 billion yuan for the broadcasting rights for the domestic league for five years raised eyebrows last year at a time when Chinese national side was struggling to earn a ticket to the Fifa World Cup finals in 2018.
The company said it was planting seeds by signing the deal and believed the investment could come to fruition when the national team became competitive at international-level tournaments.
The mainland’s top planning agency unveiled a guideline on football development earlier this year, vowing to make China a global soccer powerhouse by 2030.
The ambitious blueprint was met with scepticism, but European clubs such as Bundesliga champions Bayern Munich have already rushed to capitalise on China’s football craze.
Last year Bayern partnered with Alibaba Group which owns the South China Morning Post to offer jerseys and other merchandise through online shops.
Douglas-Home said performance by a native Chinese player in Europe’s top leagues could be another huge boost to China’s football businesses, resulting in massive broadcasting exposure.