After paying a record-breaking Rmb8 billion ($1.3 billion) for the five-year broadcasting rights to Chinese Super League football and buying a chunk of oil-backed English soccer club Manchester City, Li Ruigang is eyeing more high-quality sports assets globally, the Chinese media mogul said on Wednesday at the Boao Forum in Hainan.
Sport, which accounted for just 0.64% of Chinese GDP in 2014, is on the cusp of something big, with football leading the way as the country flexes its financial muscles in search of top-quality assets, including a growing line of soccer players from South America and Europe. But it’s not just football that the chairman of state-backed investment firm China Media Capital has his eyes on.
“My team has been paying close attention to sports assets overseas, not just football assets,” Li said in response to a question posed by FinanceAsia during a panel discussion on the industry.
He declined to provide further details but said his aim is to invest in international sports companies with advanced management and operational skills and experience that could be brought back to China to benefit the domestic sports market.
“Until I invested in Manchester City, I didn’t realise the operation of a football club could be a teaching case of a business school. It’s not simple at all. It’s completely different from what we experienced while investing in China’s Super League,” said the man sometimes cast as China’s Rupert Murdoch.
He recalled his experience last weekend watching the derby between Manchester City and Manchester United, one of the world’s best supported clubs, before flying over to Hainan. “We were wearing suits and ties to watch the match, which could be a [great] experience. It could be an important part of business development,” he said, noting the current differences with top-flight Chinese football.
Whether football fans in Europe and elsewhere are as equally enamoured as Li by the way the so-called people’s game is increasingly bound by the demands of corporate culture is another thing.
In October 2015, China Media Capital outbid China’s largest national broadcaster China Central Television amongst others to win exclusive global broadcast rights to the China Super League for the next five years.
Less than two months later, a China Media Capital-led consortium paid $400 million for a 13% stake in City Football Group, the Abu Dhabi-based owner of Manchester City, whose football academy Li toured with President Xi Jinping during Xi’s state visit to the UK in October last year.
The Chinese government published a comprehensive blueprint last year to reform sport in China, not least football, with the aim of elevating the standard of Chinese football and one day hosting the football World Cup in China.
Li said Chinese investors should go beyond pure investment and be involved in the operation and management of international sports firms while making investments.
The Chinese are coming
“Japanese, Arabs, and Russians used to flock to give money to different football leagues, including UK’s Premier League. Now [the] Chinese are coming,” he said. “Maybe we are not able to run international sports tournaments or football clubs now but through investments we will develop and improve our ability to run international sports assets.”
CMC’s transactions also illustrate the untapped potential of China’s sports industry, which has grown more slowly than other areas of the economy including the technology, media, and telecoms sector.
“I personally think more and more capital will be pouring into the industry as it just starts to release the potential. Many investors are still studying the true value of the industry,” Li said.
Yao Ming, the former NBA superstar and current owner of the Shanghai Sharks, a Chinese basketball team, echoed this sentiment.
Yao said the sector has been shifting from being driven mainly by government capital to being driven by a combination of government, social capital, and market transactions, as well as by growing Chinese demand for better quality sports content.
As a result competition is getting fierce in China for sports-related businesses such as broadcast rights, paid content, and tickets sales.
“We are not competing with ourselves of yesterday, but with UK’s Premier League, Spain’s La Liga, NBA as well as China’s [booming] film industry,” he said. “Our sense of urgency is about how to win a place and cultivate our own consumers.”