ENTERTAINMENT: Wanda, CMC Kick Up New Soccer Deals

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Bottom line: Wanda’s new FIFA sponsorship is an opportunistic and savvy move both politically and financially, while CMC’s new smaller soccer investment also looks like a good play to win goodwill from Beijing.

Wanda, CMC in new soccer plays

China’s recent fascination with global sports deals continues, with word of major new tie-ups involving 2 big fans of President Xi Jinping’s recent call to improve the nation’s poor performance in soccer. The larger deal has an opportunistic Wanda Group signing on as China’s first top-tier sponsor of FIFA, the world soccer body whose reputation has suffered lately due to a major corruption scandal. The second deal has the acquisitive China Media Capital (CMC) investing in in SoccerWorld, a British operator of sports stadiums.

Both deals have a strongly political element, since Chinese President Xi Jinping is personally a big soccer fan and has appealed to China’s private sector to help improve the nation’s performance at the world’s most popular sport. Some of China’s other top corporate leaders have also answered that call, including Alibaba (NYSE: BABA) founder Jack Ma, leading web portal Sina (Nasdaq: SINA) and electronics retailing giant Suning (Shenzhen: 002024).

That’s not to say that these investments aren’t good ones, since some might say these companies are positioning themselves to profit from the rapidly growing number of Chinese soccer fans. But such moves are also at least partly designed to gain goodwill from Beijing, and I’m sure the investors are hoping their moves will help them to avoid unwanted scrutiny in Xi Jinping’s growing number of clean-up campaigns.

Let’s begin with the Wanda deal, which looks quite savvy and is the brain child of Wang Jianlin, company founder and one of China’s richest men. Wanda will become China’s first top-tier sponsor partner for FIFA, in a deal that runs through 2030 and covers the next 4 World Cups, the world’s most popular sporting event. (English article; Chinese article)

In separate reports, Wang is quoted saying that others are following his lead and another Chinese company should make a similar announcement soon, and a third should follow by year-end. (English article) No money figures are given, but I would guess that Wang has probably paid more than $100 million for such sponsorship rights.

Such rights probably cost far more just a year ago before the current corruption scandal broke that has severely tarnished FIFA’s image. Wang is quoted saying he couldn’t have gotten this kind of sponsorship a year ago even if he wanted to, but that the FIFA’s abandonment by many major western sponsors has created new opportunities. Thus his move looks quite opportunistic and smart, since the current FIFA scandal will inevitably fade in the next 2 years and cost of new sponsorships will rise sharply.

CMC’s Smaller Soccer Play

Next there’s the deal by CMC, an investment arm of Shanghai Media Group (SMG) that made sporting headlines last year when it was part of a group that invested $400 million for a stake in Britain’s Manchester City soccer club. (previous post) CMC’s latest soccer play is relatively modest by comparison, and will see it invest tens of millions of dollars in SoccerWorld. (Chinese article)

SoccerWorld was founded in 1998, and moved into China in 2007 to promote the world’s most popular sport here. I’ve had a look at its Chinese website, and have to say that it looks quite amateur, perhaps in keeping with SoccerWorld’s own apparent desire to be an organization that promotes the sport among fans and enthusiasts rather than professionals.

I expect CMC’s investment is probably aimed at helping to improve SoccerWorld’s modest China operations, and also the company’s efforts to promote soccer in the country. But that said, CMC is also being quite shrewd in getting media coverage of its latest soccer play, as it tries to make sure Beijing is aware of its support for Xi Jinping’s soccer campaign.

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