IT IS a reasonable bet to assume that a Chinese team could win the Asian Champions League this season. Three clubs from the Chinese Super League reached the last 16 of the and one team from the world’s fastest-growing football league is guaranteed to be in the semi-finals as Shanghai SIPG and Guangzhou Evergrande will meet in the last eight of the competition.
China is certainly continues to make all the headlines in Asia Pacific, with enormous transfer fees dominating the headlines. But amid the big cheques and the impressive growth trajectory – KPMG’s Football Benchmark/Soccerex predicts the sports industry in China will reach CYN 3 trillion by 2020 – the need to create a modern, commercially-oriented football economy is of paramount importance.
China can point to a new five-year sponsorship deal from Ping An Insurance as evidence of the high level of confidence in domestic football. Two years ago, the Chinese FA sold its broadcasting rights to China Media Capita for RMB 8bn for the 2016-20 cycle. Nice work if you can get it, as they say, but this has put pressure on club owners to monetize their offering. But all is not going to plan, it would appear. The CSL’s online and mobile rights have recently been transferred to Suning-owned PPTV after LeSports revealed that it had been difficult in attracting new subscribers.
As the various bodies scramble for an explanation as to why the public response has fallen below expectations, CMC believes the new imposed regulations around “irrational” player signings has possibly diminised the value of the product.
Although the latest TV deal is considerable, sponsorship is still the chief revenue stream for CSL clubs, but commercially, China is still some way behind more developed football nations. They have become very clever at exploiting naming rights – they clearly do not mind extending the name of a club if it means getting a sponsor or backer in the frame. An example is Alibaba’s 2014 investment in Guangzhou Evergrande, where the Chinese e-commerce giant added Taobao to its name.
Where China has plenty of upside is in growing its support base. With a population of 1.4 billion and a rising middle class, China has the potential to increase football attendances considerably. In 2016, crowds went up by some 27% on 2014 to an average of 24,000. That said, with ticket prices low and the use of non-football venues for matches means that matchday income is much lower than China’s western peers and possibly way below regional competitors such as Japan. And because club loyalty is generally built-up over many years, attendances can swing considerably in China – for example, Liaoning Hongyun went from 20,000 to 12,000 in the course of a year.
China’s football is, unsurprisingly, growing in an unorthodox way. The massive outlay in transfer fees is aimed at accelerating its development and while this may sit uncomfortably with the rest of the world, especially Europe, it is not sustainable. Although the government has, to a certain degree, provided encouragement for a swift “revolution”, it is likely that there will be a slow-down as the game finds its level. At present, the signs are positive, but as KPMG notes, the development of modern organisational structures and the optimisation of business operations will be a major area of focus for CSL clubs: “Those excelling off the pitch will undoubtedly be in a better position to succeed on the field.”