Chinese Football Association Super League (CSL) 2019 Annual Review of Commercial Performance Deloitte Technology, Media and Telecommunications Industry Deloitte Financial Advisory Table of Content Section Page Foreword 3 Chinese国内体育产业分析 Sports Industry Overview 4 Industry Analysis 5 Business Environment Review 8 Second Social Media Impact Comparisons 11 2019 Major Football Events 14 CSL中超联赛发展回顾 Review 1719 Competition Performance 20 League Impact 30 Commercial Performance 37 CSL中超球迷调研 Fans 41 Views on CSL 44 Recognition of Sponsors 50 Afterword 56 2 Foreword The curtain has descended on the 2019 China's sports industry has slowed down Ping An China Super League. The league due to macroeconomic environment, and continued to develop well in 2019, due to gradually shifted to structural adjustment the joint efforts of the CSL, clubs, and upgrading. In this context, CSL has sponsors, media and other stakeholders. entered a new stage of development with enlarged brand influence. Looking back on the 26-year history of the league, though much improvement has In the era of the mobile Internet, game been achieved, further effort will be watching and related consumption needed to focus on more comprehensive behaviours have changed dramatically. and systematic top-level design, more How to make more effective use of new Second clear and long-term-oriented strategic technologies and media to strengthen planning, and a more scientific and interaction with fans will be critical to effective organizational structure. We also further enhance the commercial value of need to show solidarity in the face of the the CSL in the next few years. challenges brought by COVID-19. Coronavirus may affect the schedule of The year 2020 will be a crucial year for CSL 2020, but it will not affect fan’s love of reform and development, from which the sports, football and life. After the epidemic, CSL will surely benefit. We sincerely hope we expect that CSL, football, and the that the CSL will become the most entire sports industry will play an important platform for the improvement of important role in restoring consumer China's competitive football. confidence, helping people strengthen their physique and return to the path of sustainable development. Yi LIU Yi WANG General Secretary of Chinese Football Deloitte China Partner Association 3 CSL 2019 Season Commercial Performance Sports Industry Overview CSL Review CSL Fans Transit Summary Second • The industry is growing slower in the short run due to macro factors. It is estimated that the industry has a marginal growth of 1.35 trillion yuan in 2020, 1.28% of the GDP. Under this premise, optimizing the industry structure will be the focus of future development, especially the areas like stadiums, services, competitions, training and other high value-added. • Compared with other sports, football is leading in media coverage and interaction among social media. As the core IP in domestic leagues, the CSL maintains high commercial performance • Policy stimulus, technology integration and consumer demand will drive the recovery of sports segment industry from the short-term negative impacts caused by Coronavirus. 4 Sports Industry Overview Industry China’s sports industry has experienced a rapid development Analysis Chinese Sports Industry: Overview Culture, Sports and Entertainment Gross Value-added (1978-2017) “Hong Shan Kou State Council Meeting” [2014]46号 Transit 1978 – 1992 1992 – 2014 2014 – Present Rising Growing Booming • Opening up of local market leads to • “Hong Shan Kou Meeting” initiates rapid • No. 46 policy paper sets in motion plan to gradual integration and success on the professionalization mobilize population and create the world’s Second international stage largest sporting industry by 2025. China at Olympics Sports leagues Sports stars Industry stats (2018) Gold Silver Bronze Football in 1994 54 16 Basketball in 1995 32 28 Output Sporting Average 15 5 22 Table Tennis in 1995 11 Value Population Spend 8 12 16 Volleyball in 1996 9 ¥2.4 trillion 420 million ¥2,974 19841 1988 1992 1992 2014 Note: 1. First time China participated. Source: General Office of the State Council; National Bureau of Statistics; Wind; Deloitte Research & Analysis 5 Sports Industry Overview Industry A cooling economy is expected to slow the growth of China’s sports industry Analysis Correlation between industry gross value-added and macroeconomic indicators Unit: hundred million yuan; % • Growth rate of sports industry’s is Gross Value-added 20,000 positively correlated to GDP growth1 Transit Gross Value-added Growth Rate 18,000 Nominal GDP Growth Rate • Macroeconomic factors expected to cap Household Consumption Level Growth Rate 16,000 industry gross value add at an estimated ¥1.35 trillion (1.28% of Second 14,000 ~13,500 GDP) in 2020. 12,000 10,078 10,000 8,000 7,811 6,475 6,000 5,494 4,041 3,563 4,000 3,136 2,689 2,220 2,000 1,555 1,836 983 1,265 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020F Note: 1. We took out the outliers in 2015 and 2018 statistics because of new calculation mechanism, and gross value-added of 2015 is affected by No. 46 of 2014 state guidance paper. Coronavirus impact excluded. Source: National Bureau of Statistics; Wind; Deloitte Research & Analysis 6 Sports Industry Overview Industry The structure of China’s sports industry has begun to shift as higher, value- Analysis added segments gain growth momentum Components of gross value-added (2015-2018) Unit: hundred million yuan; % Competitions Fitness Value-added Venues Sporting goods Reflecting China’s historical role in the global CAGR 25% 55% 77% 27% 10% economy sporting goods manufacture has （2015-2018） Transit been the main economic driver of the sports industry. High value-added areas such as stadiums, leisure and fitness, service China United States and sports competitions have lagged, 5,494 6,475 7,811 10,078 34,988 offerings significant development 1% 1% 1% 1% Second opportunities. 2% 3% 3% 5% 9% 10% 10% 23% 9% 10% China’s sports industry is structurally 10% 27% different to more developed markets: 1 Labor-intensive textile and 10% manufacturing industries have Including leisure dominated. and venues 2 Sporting populations are relatively 68% 79% small and consumer willingness to 77% 75% spend on sports is limited. 57% 3 Professional competitions started late and commercial performance has not yet been fully realized. 9% 2015 2016 2017 2018 2017 Source: National Bureau of Statistics; General Administration of Sports; PRNewswire; Plunkett Research; Statista; Deloitte Research & Analysis 7 Sports Industry Overview Capital Investors are sourcing deals in high value-added products and services Boost Sports-related investment (2016-2019) Sub-sector investment (2018 & 2019) Number of investments Unit: % Amount raised per deal Transit 12% 300 1.4 10% 4% 7% 34% 245 15% 1.17 Funds raised Second 1.2 Inner: in 2018 1.03 Outer: in 2019 200 191 13% 59% 0.82 Although investment 29% Venues, competition 154 0.8 levels and fundraising operations and fitness activities have slowed, 17% became popular deal sizes have investment themes in increased, indicating 2019. 100 0.550.55 82 investors are being 0.4 more selective and Venues and competition operations quality-focused. Competition marketing Fitness 0 0.0 Value-added service 2016 2017 2018 2019 Sporting goods High value-added Source: CVSource; Deloitte Research & Analysis 8 Sports Industry Overview Marketization Football is both the most liberalized and commercialized sport in China Ability Fund sources for sports competitions (2017 & 2018) Unit: % Facilitated by policies and capital investments, liberalized 5% operation and commercial development of sports competitions Transit has been further improved. 10% As of 2018, 85% of all sports competitions were self-financed by organizers themselves and 5% by governments. 8% Among all sports competitions, football events have the highest degree Self-supported: funded Second of market liberalization and commercialization. All football events by organizers and registered with the General Administration of Sports acquired sponsors 16% sponsorships by themselves. Sports Competitions Mixed: self-supported, but N = 2,580 subsidized by the General Proportion of self-financing1 competitions, by sport (2018) Administration of Sports Inner circle: 2017 Outer circle: 2018 Football 100% Grant: funded by state E-sports 100% or local government 76% Basketball 86% Winter sports 60% Swimming 50% 85% Gymnastics 47% Shooting Note: 1. Self-financing data is based on statistics from General Administration of Sports. Teenager competitions are usually subsidized by government which will partially affect proportion of self-financing data Source: General Administration of Sports; Deloitte Research & Analysis 9 Sports Industry Overview Business Sports marketing has focused on three high-profile areas Environment Key sports marketing initiatives in 2019 Football Basketball Winter sports • Blackfish technology, a membership based Transit consumer platform, and its e-commerce platform Huanqiuhaohuo renewed their commercial • CBA announces five new sponsorship deals, partnership with streaming service PP Sports three resource replacement platforms and one Domestic official merchandise. • China Taiping Insurance secures women's Super competitions League and League A for the next three years Second • iFLYTEK signed partnership deal with La Liga’s • China Life named insurance partner for the FIBA • China’s State Grid, China Life, Wen Tou RCD Espanyol Basketball