The soft power (and big business) of sport in APAC

" The [Asian sporting] market is undeveloped and, with the Middle East, the big growth areas are in events and in infrastructure"
Guy Por, MD, Repucom

The move is sending ripples through one of the world's true growth industries and looks likely to add a further lift to China's ascendancy to global superpower.

Dalian Wanda is China's biggest property company with revenues in 2013 of $US40 billion. Founder Wang Jianlin has amassed a personal fortune of some $US25 billion which sees him vying with e-retail tycoon Jack Ma for the title of China's richest man.

These massive resources are now being harnessed, through Wanda Sports, to realise the soft power and big business potential of the world's favourite past-times.

A research paper released by consulting firm A.T.Kearney offers backing to Wanda's enthusiasm for sport. The report notes the global sports industry – encompassing such streams as rights, sponsorships, ticket sales and merchandise – is growing faster than GDP across the globe.

“The sports industry generates as much as $US700 billion yearly, or 1 per cent of global GDP," note the report's authors. European football dominates the market, leading the pack of sports offerings, easily ahead of the NFL (Gridiron), MLB (Baseball), F1 (Auto racing), and NBA (Basketball).

GRAVITY SHIFT

Much of the global sports market is focussed in the US and EU, with major apparel brands and events almost exclusively in these centres of the sports universe. However, Wanda's stirring seems reflects a shift in gravity towards Asia.

For Guy Port, Managing-Director (Australia) of the sports marketing company Repucom, it's already happened.

“Asia has obviously been one of the hot spots in terms of sport," he says.

He cites the example of the Australian Open tennis tournament which shifted its brand to be Asia's Grand Slam event.

In football, Port says the rising popularity of the Asian Champions' League is attracting serious sponsorship and marketing dollars to Asian league teams, including those in Australia. Overall, he says, there are opportunities for growth.

“The [Asian] market is undeveloped and, with the Middle East, the big growth areas are in events and in infrastructure," Port says.

Wanda aims to eclipse its sports industry competitors, aiming at annual income of $US10 billion, with reference to A.T.Kearney's numbers, will constitute around 14 per cent of today's entire sports market by 2017.

Such a revenue stream would make Wanda Sports the world's biggest sports brand and hasten China's status as the centre of global sports.

According to Ray Roessell, managing director of the Hong Kong based boutique sports marketing firm i3, Wanda's strategy is driven by political as well as commercial thinking.

“It's soft diplomacy," he says. “Sports is a bridge. It transcends nationalities. But there's a commercial side too."

Wang told reporters "China's sports industry is still in its cradle but the government has launched a plan to promote it....If the goal is realised, sports really is a very promising industry."

Football's global popularity has put it front and centre of the Chinese government's soft power aims and commercial agendas. Current president Xi Jinping is an avowed football fan and has made it clear China's football stakes will have to improve both on the field and off. It helps that Wang Jianlin is also a football tragic.

Wanda has already developed significant ties with top Spanish club Atletico de Madrid via a 20 per cent purchase of the club in 2015. Most recently, the group has sunk a reported $US260 million into leading German football club FSV Mainz 05 in a so-called 'superpartner' deal. It has also been linked to cash strapped English clubs like West Bromwich Albion.

Wanda Sports has also purchased a majority interest in Infront Sports and Media, which holds rights to broadcast the FIFA World Cup in some regions and is continuing to consider further headline purchases and mergers as part of its ambitious global strategy.

CROWDED FIELD

Asia's, and particularly China's, sports industry is becoming a crowded field.

Australian sports agencies too are adding to the numbers. Local sports management company Gemba inked a major deal in August to work with Adidas in China.

For Gemba though, it's not just football.

“Through our research we've seen that basketball is particularly popular among the younger people in China," CEO Rob Mills told media in August, 2015. “More traditional sports like badminton and table tennis are popular with old people."

“Football will be a big mover in China in the next few years."

The coming period is almost certainly going to see a further ramping up of activity in the Asian sports sector, particularly in China.

Football will almost certainly be generating the biggest headlines. There are rumours China will host the 2026 FIFA World Cup, for instance. Additionally, the FIFA Presidential election to be held in February may see a former Asian football administrator, in the shape of Prince Ali bin Hussein, scoring football's top job.

Clearly, sport in general and football in particular is gathering more of its momentum from Asia.

Ray Roessell says “there has been a big push since the Olympics" in China to move on sports and “we are now seeing the development of the commercial side."

With Wanda's ambitions, push may have just become shove.

James Rose is a freelance journalist who has written for The Guardian, The New York Times, The Washington Post and many others.