Policy Trends & Market Review
Government authority urges China’s sports industry to go global
China's General Administration of Sports recently published its 13th Five-Year Plan for the development of China’s sports industry (Plan). The Plan calls to:

• Grow the number of enterprises with proprietary brands, innovative capabilities and a competitive edge;

• Structurally reform state-owned sports enterprises and add more value to state-owned assets in the sports industry;

• Consolidate and restructure the sports industry, and push strong sports firms to go public;

• Encourage strong Chinese sports firms to build a presence overseas; and

• Promote outbound M&A in the sports industry, and encourage international organizations, sports enterprises or sports schools to invest in China.

China’s industry giants aim to leverage favorable policies to invest in the sports industry
To echo the Plan which endorses the integration/consolidation in the sports industry as well as overseas M&A by strong Chinese sports brands, China’s industry giants, including Alibaba, Tencent, LeTV, Wanda, Suning, Baofeng and Focus Media, started to acquire/invest in sports assets.
However, their areas of focus are different. While Tencent and LeTV aimed to purchase the copyrights in sporting events, Alibaba made equity investments in China’s Guangzhou Evergrande Football Club, and Wanda acquired Infront Sports & Media and World Triathlon Corporation, both are world premium sports assets. This May, Suning announced its equity investment in Champdas; another step towards its ambitious expansion in the sports data analysis sector following its takeover of Guoxin Sainty Football Club in December 2015. Focus Media plans to diversify its service offering package to include internet sports social networking, sports program production and sporting event operation, while Baofeng aims to incorporate copyrights in sporting events, events content platform, sporting event ticket service, and sports-related merchandise services into its investment portfolio.
China invests heavily in overseas football clubs
In 2016, Chinese investors continued their buying spree of Europe’s football clubs. In a growing trend, most European league football teams have either already been sold or are in the process of being sold to Chinese businesses. To date, 16 out of the total of 20 La Liga football teams have received Chinese funds. While Atletico Madrid, Malaga and Espanyol were fully or partially controlled by Chinese investors, other La Liga football teams received Chinese sponsorship or granted naming rights to Chinese firms. As for the Premier League clubs, CMC holdings-led Chinese consortium acquired a 13% stake in Manchester City football club for $400m in December 2015. According to an industry analysis report, this is because: (1) After years of profit loss amid an economic recession in Europe, football clubs are now undervalued. (2) A growing number of Chinese businesses are interested in this market but found it inaccessible. By acquiring overseas football clubs, Chinese funds may have access to premier sports resources and thus expand into the entire sports industry in a roundabout way.
CIConsulting report: hotspots of investment in the sports industry

China’s sports industry witnessed a boom since the end of 2014 fueled by favorable policies and soaring M&A. In a recently released report, CIConsulting Industry Research Center outlined preferred areas of investments in the sports industry. According to the report, a lot of sectors in this industry may have much room to grow, and may embrace exponential growth in the coming years. Top 5 favored areas of investment are:

  • new sporting events such as skiing and marathons. These niche sports will become more popular after Chinese citizens are more exposed to these sports;
  • the sports sector which is likely to benefit significantly from favorable policies, particularly soccer;
  • the sports service sectors. For example sporting event operation which has benefited from the restructuring of the sports industry;
  • sectors driven by the demand for sporting events such as sports equipment; and
  • recreational and participation-focused sectors such as sports tourism and outdoor sports.
China eCapital: how to hit the RMB 5tn market size target of China’s sports industry
China’s State Council released a guideline in 2014, in which it proposed that the Chinese sports industry amounts to RMB 5tn by 2025. Recently China eCapital released a report, specifying in details how to split this “five trillion yuan” task. According to the report, spectator sports (professional sports) sector is expected to grow from RMB 300bn in 2016 to RMB 1.6tn by 2025, while participatory sports sector will grow from RMB 1.2tn now to RMB 3.5tn. The report also lists the preferred areas of investment as being sports intellectual property rights, sports ecology and smart gymnasium in spectator sports sector, and body building, sports training and fitness sports venues in participatory sports sector.
The report states that two kinds of firms may benefit from this grand ambition- enterprises offering diversified and integrated service packages with a focus on top-level exclusive copyrights in sporting events and media platforms, and those with the highest growth and likely to become an icon in a specific sub-sector. The first category includes LeSports, CMC, Suning, Ali Sports, Baofeng, Wanda and Tencent. Enterprises under the second category may continue to grow its specific scope of business, or elect to get its business scope incorporated into the first category in the future. Whichever category, the sports industry is a long-term investment which not only requires huge capital at the early stage, but also a team with strong entrepreneurial skills and outstanding business operating capabilities.
Sports Agency: another hotspot for investing in the sports industry?
Industry statistics of IBIS World shows that the US sports industry reported $500bn of revenue in 2015, with $8bn or 1.6% coming from the sports agency market. Assuming by 2025 China’s sports industry would amount to RMB5tn, of which 1.6% comes from the sports agency sector, the total market size of the sports agent sector would be worth $80bn. Why this sector has failed to attract enough attention from investors remains a mystery.
Sports industry: acquisition surges yet profitability uncertain
The sports industry, represented by soccer, has become one of the most talked about subject in the market. Instead of being driven by major sporting events and supportive policies, the rise of the sports industry has depended on investments in the primary market—many traditional enterprises are expanding overseas and into the sports industry; many acquisition funds are established for this purpose.
However, deficiencies in the sports industry remain: as the industry is not highly market-oriented, there are no clear business models or profit expectations. Industry analysts say the sports industry itself does not have strong profitability; however, a new profit model may be developed from the sideline of the industry.
Enterprises seek to share a slice of the cake in the sports industry
Over the past two years, the sports industry has reached into all aspects of urban life, the incentives being investments and favorable policies. Internet and start-up businesses also fueled this trend. With conglomerates having purchased the intellectual property rights of overseas sporting events, the masses may now choose from a variety of sporting events.
New hardware, cell phone applications, and sports communities have brought brand new concepts to sports. Thanks to that, sports such as Body-building are no longer confined to their traditional form.
In the future, the sports industry will continue to boom due to the impetus from policies and investments. Many enterprises are aiming at profiting from this boom. To materialize the objective, new business models have to be developed, and it is recommended that each enterprise focuses on their specialized area.
Chinese billions flood into soccer, snaring Brazil's "Hulk" in record deal
Chinese money has long flowed into all sorts of sectors: technology, health care, retailing, you name it. Now it’s soccer, a move that follows Middle Eastern and Russian investments into the game. In recent months, a dizzying array of deals have roiled the industry -- from signing soccer players and coaches to Chinese investments in storied clubs and buyouts of sports-media businesses.
What differentiates China is the speed and scale of the country’s new-found appetite for all things soccer. Led by some of the country’s richest men, including Dalian Wanda Group Co. founder Wang Jianlin and Alibaba Group Holding Ltd.’s Jack Ma, Chinese businesses are at the table for almost every soccer asset up for sale.
Chinese enterprises have been investing overseas at a pace and frequency that is faster and higher than ever recorded, and the sports industry has recently hit a sweet spot with the Chinese investors.
Alibaba, Wanda, Evergrand, Suning, CMC, LeTV, have spent considerable fortunes in the overseas sports industry. It is notable that Chinese enterprises are now seeking to control sports clubs and purchase rights to operate sporting events, rather than merely sponsoring them like they used to.
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Member Highlights
Investment Opportunities in the Sports Industry: Soccer
The goal of this article will be to describe investment opportunities in the sports industry as well as provide background information and expertise about sports leagues, teams, athletes, brands, media and other relevant topics. In terms of global popularity in Sports, two of the biggest sports are soccer and basketball. For this piece, we will focus on soccer. As the sport of soccer continues to grow in global popularity, a number of investment opportunities will arise.
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Featured Expert
Jimmy Lynn
Jimmy Lynn is the managing partner of JLynn Associates, a global strategic advisory firm focused on sports-related media, marketing, and retail for a diverse set of clients including teams, athletes, leagues and associations, media outlets and other businesses.
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