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SPORTS: MORE THAN JUST an EXPENSIVE HOBBY? Soccer Teams Are New Toys for the Chinese Super Rich

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SPORTS: MORE THAN JUST an EXPENSIVE HOBBY? Soccer Teams Are New Toys for the Chinese Super Rich Sports $ Money SPORTS: MORE THAN JUST AN EXPENSIVE HOBBY? Soccer teams are new toys for the Chinese super rich. Why have they become soccer fans so suddenly? By Yaojuan The Chinese love soccer. It's not uncommon to see a stadium full of soccer fans. 新財富 FU cai in X / Syndication EMERGING MARKETS INSIGHT 10 Sports $ Money Considering that Xu Jiayin, Wang Jianlin to this, these men have been opening their game. In 2012 alone, the total amount of and Jack Ma all number among the wealthi- wallets to recruit the right people without rewards reached $23.7 million. est entrepreneurs in China and could have even blinking an eye. The money Guang- Xu Jiayin even ended up establishing a pretty much anything they want, just what zhou Evergrande used to ensure its path to football training school, sending young play- is it about the sports industry that has success proves this point. ers over to Europe for training. According to grabbed their attention? Although China’s It seems that when it comes down to it, if statistics, over these past five years sports industry is currently undergoing you want to dance you’ll have to be pre- Evergrande has invested no less than $480 reform, looking at China’s history and the pared to pay the band! million in football. current situation overseas, the industry In 2010, the Evergrande Real Estate Although these expenditures may have poses no small risk to wealthy investors’ Group took over the Guangzhou Football seemed like the acts of a kid with a new toy, businesses and reputation. Just look at the Club for $16 million. Soon after, Xu Jiayin they had a huge impact on the club. Over Glazer family, owners of Manchester began implementing changes in a number the past several years, the Evergrande United, the highest earning team in the of areas, first by hiring coaches and foreign team has become increasingly more com- world. Although they can be considered players. Coaches, from Jose Antonio petitive, winning four league championships financial experts, their investment in the Camacho to Marcello Lippi, were some of and the AFC Champions League in team 10 years ago has only brought them the best in the world, while foreign players November of 2013. These wins earned the an approximately 60% return. were setting new transfer records in the team a huge following in China. On the night The money spent by these men has been Chinese Super League. For instance, in of the AFC Champions match against FC considerable. First we have Xu Jiayin, who 2011 the team spent $10 million in transfer Seoul, ticket sales reached $8.8 million, set- has spent an enormous amount recruiting fees and the promise of a $7 million annual ting a new record for Chinese football and domestic stars and foreign players and salary to bring Dario Conca into the team. the AFC Champions League. coaches to pave the way for Guangzhou For a player in the Super League, having Does Xu Jiayin himself know how to play Evergrande’s AFC Champions League win in Evergrande take an interest in you could football? Not really. Although he may love 2013 . Next we have Jack Ma’s purchase of change your fortunes overnight. The aver- the sport, he understands he is just an ama- a 50% stake in Guangzhou Evergrande for age annual salary for frontline players in the teur. Although he may own the team, he $192 million in June of 2014. Then there’s Super League is $240,000, whereas there doesn’t enter the player’s changing room Wang Jianlin’s trip overseas to acquire a are more than 10 Evergrande players who nor does he decide who gets to play on the 20% stake in Atletico Madrid and the huge make more than $480,000 a year. field, let alone interfere with the decisions of amount invested in sports marketing leader Another strategy that Xu implemented is coaches. What he does understand, howev- Infront Sports & Media. offering high monetary rewards for match- er, is human nature and how to manage and Next, we had rumors indicating that the es, with rewards for a win or a tie at an create encouragement. Commercial returns Hangzhou Wahaha Group was looking to away game being far higher than a home aside, as a lover of football, his investments partner with Huawei, Alibaba and other companies to acquire Silvio Berlusconi’s AC Milan, before Berlusconi has settled on Thai businessman Bee Taechaubol as a buyer. Unlike most industries, Looking at the industry, it’s clear that people are the core of the huge expenditures are nothing out of the sports industry, and if you ordinary, and yet China’s wealthiest still want to get the right people, remain entranced by sports. that takes money. Interception! Although these wealthy men may appear to be laymen when it comes to sports, tak- ing a closer look shows they may actually know what they are doing. Unlike most industries, people are the core of the sports industry, and if you want to get the right people, that takes money. When it comes EMERGING MARKETS INSIGHT 11 Sports $ Money For a player in the Super League, having Evergrande take an interest in you could change your fortunes overnight. Alibaba bought a 50% stake of Guangzhou Evergrande soccer team. have certainly not been a waste of money. entrepreneurs are involved in an industry Investing in one of the local football teams The huge success of the Evergrande not their own, this hasn’t prevented them was most likely a quick way to create an team eventually caught the attention of from enjoying taking swipes at each other. emotional bond with locals and help main- Alibaba’s Jack Ma. Although some might Not long after Alibaba’s acquisition, Wang tain good community relations. think, as a Hangzhou native, Ma may have Jianlin’s Dalian Wanda Group announced Also, in recent years, the cultural and a soft spot for the Hangzhou Greentown that it would be acquiring a 20% stake in sports industry has been one of Wanda’s Football Club and its owner, real estate Spanish club Atletico Madrid for $50.85 mil- important development directions. tycoon Song Weiping, when it comes to lion (the group ended up spending $56.27 On Feb. 10 of this year, the Wanda Group investments Jack Ma has always held to the million). While making this purchase, Wang announced that it had led three well-known idea, “If you can’t be No.1, invest in No.1. If Jianlin didn’t forget to take a shot at organizations and Infront management in you can’t do that, then cooperate with the Evergrande by pointing out that Jack Ma successfully purchasing Switzerland-based No.1 in the field.” had spent the amount of money the entire Infront Sports and Media for approximately Jack Ma might as well be coming from Atletico team was worth to purchase only $1.2 billion, with Wanda holding a 68.2% another planet when it comes to under- half of a domestic team. Xu Jiayin was of controlling stake. standing football. He has said that at the course not very happy when he heard this This billion-dollar purchase set a new time Song Weiping told him, “Stay away comment and followed with a barb of his record for wealthy Chinese entrepreneurs from football. You don’t understand it.” own, “It would be meaningless for us to go getting involved in the sports industry. And Although this may seem like sound advice, to Europe or some other country to buy a quite a purchase it was: Infront is the sec- Jack Ma has pointed out that he was never top class team. What we want to do is make ond largest sports marketing company in an expert on the Internet or computers our [China’s] teams become the best in the the world, and one of the world’s largest either, and everyone knows how that world.” companies for sports services and related turned out. Of course both sides have their own rea- broadcasting. Covering 25 different sports, In June of 2014, Alibaba spent $192 mil- sons for staying at home or going abroad. the company broadcasts more than 10 lion to purchase a 50% stake in Ever- For Wanda, the purchase of Atletico goes events every day. Its greatest value, how- grande, changing the team’s full name to beyond a love for football. Wanda has been ever, probably lies with the marketing rights Guangzhou Evergrande Taobao. looking to expand in Europe, for instance for the 2018 and 2022 World Cup matches. What’s interesting is that although these purchasing the Edificio España in 2014. While yachts and private planes and EMERGING MARKETS INSIGHT 12 Sports $ Money helping this industry grow in the country. that it was cooperating with hupu.com to On Dec. 19, 2014, the central government establish a $320 million sports industry released “Several Opinions of the State fund that would focus on sports operations, Council of the People’s Republic of China on training, media and other related sectors; Accelerating the Development of the Sports China United Travel has announced that it Industry and Promoting Sports Consump- will be registering $800,000 in capital to tion” in which it called the sports industry an establish a subsidiary sports company; important part of continued economic Toread Outdoor Products has announced growth for the country and stated that its that its subsidiary company in Tianjin would goal was to see the industry grow into an be working with an asset management $800 billion industry by 2025.
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