China Wants A Piece Of Europe's Booming Soccer Business
Looking to build their branding and attract a more global audience, Chinese companies are increasingly eyeing the major European soccer leagues.
BEIJING — For Chinese investors, simply sponsoring Europe's soccer teams is no longer enough. The new ambition is to purchase them.
According to news reports, China real estate giant Wanda Group is negotiating to buy a 20% stake in the Spanish soccer club Atletico de Madrid. If the deal is closed, it's likely that Wanda chairman Wang Jianlin will eventually replace current club president Enrique Cerezo.
In 2012, Wanda launched a project called Star of Hope, which sent hundreds of soccer players to clubs such as Atletico Madrid and Valencia to participate in their youth training camps. In June, Wanda purchased Edificio Espana, a landmark building in Madrid, for 265 million euros ($388 million). Investing in a prestigious Spanish soccer club will certainly help Wanda's reputation, giving it a kind of segue into buying more European commercial real estate.
Europe's five major soccer leagues — the English Premier League, the Italian Serie A, the German Bundesliga, the Spanish Primera Liga and the French Ligue 1 — represent world soccer at its highest level. They attract the world's best players and are on the forefront of future of the multi-billion global sports industry. Their major league matches attract not just an audience in Europe but all over the world – it is, simply put, a huge market opportunity.
So Chinese enterprises are increasingly eyeing these European leagues when considering sponsorship opportunities. Since 2014, the Chinese multinational networking and telecommunications company Huawei has signed more than 30 sponsorship deals in 24 countries, of which 70% are sports related. Soccer represents most of Huawei's sports sponsorship deals.
Renren Network, the Chinese social network known as China's Facebook, has become the second Chinese social medium — after Sina Weibo — to sign an agreement with Spain's La Liga club Villarreal, paying it to sport Renren's logo on its jerseys.
Yingli's 2010 FIFA World Cup sponsorship in South Africa turned out to be highly lucrative, lead the Chinese company to extend agreements with FIFA.
Of Europe's top five leagues, Chinese companies seem most interested in the English Premier League. But its sponsorship opportunities are expensive, pushing some to instead invest in the more cost-effective Primera Liga. Dozens of Spanish soccer teams in various leagues have filed for bankruptcy in recent years, and some are forced to sell their jersey sponsorships for super-low prices to survive.
But simply showing a logo on jerseys or billboards has limited influence. Chinese companies are after not just brand-building but also a global audience.
Sponsoring sports events is a complex game of navigating negotiations and business rules. It's never easy to evaluate whether something so public and so glamorous is actually a good investment. It is crucial to accept the reality that sponsoring sports events doesn't bring an immediate return on investment. It will take a lengthy incubation period for Chinese companies to make the most of what sports can bring to brands with international ambitions.