The changing face of the business of sport in China

Ahead of one of China's biggest international sporting events, the Rolex Shanghai Masters (of which ANZ is a major sponsor), I caught up with Tournament Director Michael Luevano to get an insight into how the sports business in China is evolving.

"Shanghai audiences demand a premium experience and this must be delivered through every touch point of your brand's connection."
Louise Eyres, Group GM Marketing, ANZ

Michael's also deeply involved with Formula 1 and international equestrian in China. Shanghai as a city is committed to becoming a global sporting capital and he explained how much has been achieved in just two decades..

“In my professional opinion after 20 years of producing sports events in China, in the next 20 years, China will outspend, outperform, outbuild and produce the world's greatest athletes," he says.

“A large part of this catalyst will come from overseas investments in sponsorship of both athletes and events."

DISTINCT PHASES

Luevano began staging events in China in 1995. He sees three very distinct phases in how brands and companies engaged with Chinese consumers over the last two decades.

I found it fascinating that just like in the west the role of the celebrity endorser also came to have commercial significance and has evolved to being very important to the Chinese consumer.

Michael Chang's emergence in the tennis world in China in 1998 signalled this change lifting both the profile of tennis in China as well as the connection of major brands to people of interest - he was the catalyst and the Chinese consumer reacted positively to him.

This combination of personality and performance has seen Novak Djokovic, Roger Federer and Rafa Nadal amass phenomenal followings in China.

In the present day Michael sees the biggest change being the concept of queuing and purchasing a ticket – most sporting events today in Shanghai are fully ticketed and paid for by the consumer.

The infrastructure of stadiums has also progressed over the past decade to deliver the experience now demanded by businesses and consumers. Corporate hospitality areas, bespoke kitchens and VIP Corporate/Client boxes were all added to new arenas to increase enjoyment at events whilst increasing revenue.

With the world's sporting experiences being easily accessible to the Chinese consumer through television or travel, they are starting to demand this same experience at home.

“Shanghai audiences demand a premium experience and this must be delivered through every touch point of your brand's connection," Michael says.

In terms of the Rolex Shanghai Masters, he believes the consumer experience is possibly two to three years behind that of a Grand Slam event. But the gap is narrowing as merchandising, brand activation and social media integration become embedded in every Chinese global event.

SPEED RACER

The advent of Formula 1 racing in Shanghai has led to some the most notable changes in the business of sport in China. First staged in 2004, the inaugural edition of the race drew an audience of 250,000 spectators - an incredible achievement.

Despite the initial success, over the next three years interest waned and by 2007 the audience was down to 120,000 core fans. Since then it has recovered, reaching 202,000 over three days in 2015 - not a small feat for a non-participation sport.

But in Michael's view the challenge with Formula 1 in China will be to further develop its online streaming audience and customise the broadcast packages. Even China is seeing a slow but steady decline in traditional free-to-air television broadcasts viewers.

Offering streaming rights as well as free-to-air broadcast of major events will support and offer a much stronger returns on investment to key broadcast partners, according to Michael.

Equestrian and show jumping events have been held in Shanghai for the last three years as part of the Longines Global Champions Tour.

Whilst very early in the engagement cycle in this type of sport, there is the strong belief that a new market segment has been found. This event seems to have captured a truly elite, young urban wealthy fan.

PARTNERS

The biggest challenges in staging new events in China, Michael says, whether Formula 1 or show jumping is not what you would typically believe. High rights fees or heavy staging costs are not the primary concerns.

The primary concern, especially when government funding is being used for the project, is to have a good showing of public and consumer support, he says. Corporate partners can be important factors to bring the event credibility and revenue but once a decision has been made by the necessary authorities it cascades from there.

Educating the consumer, driving interest in ticket sales and breaking through the clutter of the many competing advertising messages are the principal challenges of sport in China. The country's surging population should ensure growth in the industry has much further to go.

Louise Eyres is Group GM Marketing, ANZ. ANZ is a Diamond Sponsor of the Shanghai Masters.