On July 21 a crowd of Chinese soccer fans rushed through downtown Shanghai, chanting, “Super Bayern! Super Bayern!” They wore red uniforms like those of the Chinese national team, but they were supporting Bayern Munich, the club that recently captured its 25th championship in the Bundesliga, the first division of the German professional league. Manuel Neuer, goalkeeper for both Bayern and the German national team who won the 2014 World Cup, delighted the fans with an unannounced appearance out of the pitch.
The Shanghai event was part of the offseason lineup sponsored by German automaker Audi. The team toured three major Chinese cities on July 16-24. The club faced Valencia of Spain in Beijing, Inter Milan of Italy in Shanghai and local powerhouse Guangzhou Evergrande Taobao in Guangzhou. According to the German club, the three exhibition matches on average attracted over 40,000 fans — more than double what the top local professional league matches drew during the last regular season.
Audi is not only the major shareholder of Bayern; it is also the No. 1 brand in the Chinese luxury car market. The Chinese economy has been showing signs of a slowdown, but the club and the automaker share a common interest in further cementing their brand image in the major and growing market.
Jorg Wacker, Bayern’s executive board member with responsibility for internationalization and strategy, said the club designed the tour to build up its profile in China and the rest of Asia. He claims the club has 400 million followers worldwide, and “90 million of them are in China.” To add to the team’s advantage, “last year’s World Cup boosted public interest for Germany,” where seven Bayern players were on the pitch in the final. Since soccer is the most popular sport in China and most of Asia, according to research by Japanese advertising agency Hakuhodo DY Holdings, the club intends to expand its fan base and conclude sponsorship agreements with Chinese companies, like the one it signed with solar panel maker Yingli Green Energy Holding.
It is not only the Germans, Spanish and Italians who made the pilgrimage to Asia during the offseason in July — English clubs stand out in this trend as well.
Cashing in on its overwhelming popularity, the Premier League has been holding an Asian tournament, the Barclays Asia Trophy, biannually since 2003. Sponsored by the bank, which also supports the domestic league, the tournament brought three clubs — Arsenal, Everton and Stoke City — to play a local all-star team in Singapore this year.
Attracting over 50,000 fans to the city-state’s National Stadium on July 18, Arsenal defeated Everton 3-1 in the final to win the trophy for the first time. Actually, fans in Singapore were the first to see Petr Cech, the Czech national team goalkeeper, play in an Arsenal uniform.
Another English club, Liverpool, had a much longer stay in the region this summer. Kicking off with a match on July 14 in Bangkok, it extended its visit to two Australian cities, Brisbane and Adelaide, and finished in Kuala Lumpur on July 24.
Liverpool was received by enthusiastic supporters everywhere they played. In Bangkok, Nonthakorn Akewanich, a 19-year-old university student, could not wait for his first chance to see his favorite team play live. Though he also enjoys local professional soccer matches, he admitted, “I like Premier League over Thai league,” and tunes into English soccer matches every week during the season.
“You don’t just have supporters in England. You have supporters throughout the world,” Brendan Rodgers, manager of Liverpool, told the press after the match against the local all-star team at Rajamangala National Stadium in Bangkok that accommodated over 40,000 fans even in the pouring rain during the second half. “It is our duty to come to these countries to thank and play in front of these supporters globally,” he said, adding, “It is not a chore for us to travel. … These are countries that support us in the global stage. We are very honored to travel to these countries.”
Premier League champion Chelsea made a trip to Thailand at the end of May. Even Reading, a team in the Football League Championship, the English league’s second-highest division after the Premier League, made an appearance in Bangkok on July 8. Players on the team, which is owned by three Thai businessmen, now carry the logo of local energy drink brand Carabao on its jersey, beginning with the team’s summer Asian tour.
These preseason matches have started to have an impact on the clubs’ finances. Chips Keswick, chairman of Arsenal Holdings, says in a financial statement issued in February that “last summer’s World Cup meant the window for participating in preseason activity was truncated.” Arsenal ended up with only one overseas game against the New York Red Bulls last summer, resulting in its match day revenue declining 4.7% to 42.9 million pounds ($67 million) for the half year until November 2014.
“Asian preseason match schedules are becoming a very important part of overall revenue for [soccer] clubs,” Pavle Sabic, director of market development at S&P Capital IQ, told the Nikkei Asian Review on the growing financial significance of preseason appearances, especially in Asia. Sabic, who authored a credit and financial risk analysis of 44 major European soccer clubs, published on July 13, added, “Periods where there is not enough opportunity to have as many preseason games can affect the clubs’ revenues.”
The ever-growing loyal fan base in the region is luring more corporate sponsors.
On July 22, Chelsea made available to fans its new jersey, which bears the logo of Yokohama Rubber, its new principal jersey sponsor. The Japanese tire maker agreed to pay 40 million pounds a year over a five-year period to display its company name on the Chelsea shirts.
Chelsea is one of the most-watched Premier League teams on television worldwide, with over 31,000 broadcast hours. The club claims a fan base of over 500 million. “This is the first time we have made such a large investment in marketing,” Yokohama Chairman and CEO Tadanobu Nagumo said in an interview with Chelsea TV, the team’s television channel.
The front of the English Premier League team’s uniform is some of the most coveted real estate in corporate advertising. For the past decade, Samsung Electronics held the rights to that prime location. But when the South Korean smartphone maker decided not to extend its contract, Yokohama Rubber stepped in with an offer that was more than double what Samsung had been paying.
It is supposed to be the second-largest shirt sponsorship deal in English soccer history after General Motors agreed to pay $559 million to Manchester United through the end of the 2020-21 season for the right to place its Chevrolet logo. The American auto giant is now forking out 2.2 times what Man U’s previous shirt sponsor, Aon, paid.
According to global sports research company Repucom, the soccer league boasts 1.2 billion fans globally, and this translates into higher fees for broadcasting rights. A report compiled by A.T. Kearney last November indicated that TV broadcasting revenue of the English Premier League has jumped 2.2 times within the last 15 years to 1 billion euros ($1.1 billion) a year. Ligue 1, the top division of the French soccer league, saw its rights revenue increase by 2.7 times to 748 million euros, and Bundesliga’s by 64% to 628 million euros.
As of 2013, media rights accounted for 40% of soccer revenues and “TV rights provided major revenues across the world,” the A.T. Kearney report says. Sabic of S&P Capital IQ added that “Asia is significant in terms of viewership and clubs are beginning to explore these commercial opportunities.” As the popularity of the sport rises, additional merchandising opportunities will also be created.
“Investment in sports business in Asia and the Middle East has been increasing, not only because of the opportunities in large emerging markets like China,” said Andy Hata, president of Repucom Japan. “Moves by European clubs to seek local corporate sponsors have stimulated Asian companies to invest in the club. That in turn has stimulated local rivals to look into sponsoring the soccer business.”
One notable example that Hata cited was Manchester United, which now has sponsorship deals with financial companies in the region, including Shinsei Bank of Japan, China Construction Bank, BIDV of Vietnam and others. In its 2014 annual report, the club says it “intend[s] to continue to grow our sponsorship portfolio by developing and expanding our geographic and product category segmented approach, which will include partnering with additional global and regional sponsors. Emerging markets such as Asia, which we expect to be a key focus for many of our prospective sponsors, are an important element of our sponsorship efforts.”
Asian money has been making its way into Europe, not only as partial sponsorship deals but also for buying up clubs and other core assets.
Wang Jianlin, chairman of shopping mall operator Dalian Wanda Group of China, has been on a shopping spree in the sports market. After paying 45 million euros for a 20% stake in Spanish soccer club Atletico Madrid earlier this year, Wanda in February announced that it had acquired Swiss-based sports marketing company Infront Sports & Media, which holds the broadcasting rights for the World Cup in Asia.
At Wanda’s semiannual meeting in Beijing this July, Wang explained his rationale for targeting Western sports assets. “There are hundreds of tennis tournaments globally but only five are under the meticulous care of the International Tennis Federation: Wimbledon, the French Open, the U.S. Open, the Australian Open and the German Open. Three Chinese cities are vying to offer international tennis tournaments. Their prize money may be even higher than that of the five top tournaments but not all top players choose to attend these Chinese tournaments when invited,” he said.
That is because the points awarded for these tournaments, which determine the rankings, are nowhere near what the five major tournaments offer. “These resources are attainable only through mergers and acquisitions,” Wang said.
Wanda, China’s biggest operator of cinemas, has seen tremendous success in the growth of China’s movie industry. “China’s film industry posted growth of 35% for six consecutive years,” he said at the semiannual meeting, but for the tycoon the “sports industry is even more valuable.”
Thailand’s two largest brewers, Singha and Thai Beverage, have been sponsors of Chelsea and Manchester United for years. The contract renewal with Chelsea in 2013 saw the media exposure of the company’s lion logo increase considerably, because it was displayed on the club’s media interview backdrop alongside such global names as Adidas and Samsung.
Thai Beverage, last year extended its shirt sponsorship deal with Everton for three years. The company reportedly paid 16 million pounds to have its name emblazoned across the center of the jersey of the nine-time league champion. At over a decade old, the partnership is the longest running in the league.
Soccer dominates the scene, but other sports are also eager to win Asian attention. A.T. Kearney estimates the sporting events market in the Asia-Pacific totaled $9.7 billion in 2013, with soccer taking up the largest slice at $3.6 billion. In second place, however, is the “U.S. sports,” including Major League Baseball.
Whenever a ball gets hit high up in the right center field at Yankee Stadium, a sign with unfamiliar script written in big white letters appears on television screens. New York-based insurer MetLife has tweaked its longtime corporate ad space, adding its name in Japanese katakana script last spring.
The insurance company is trying to make a leap forward in Japan, dropping the name “Alico” — an abbreviation of American Life Insurance Co., which it acquired from American International Group in 2010 for $16.2 billion — from its local company name in July 2014.
“The main target of the billboard in Yankee Stadium is middle-aged to elderly males,” according to Shunsuke Goto, brand marketer at its Japanese operation. Even though Ichiro Suzuki and Hiroki Kuroda left the team, Masahiro Tanaka, the highest-paid Japanese baseball player according to Forbes, is still on its starting rotation. Viewership is substantial, as baseball is by far the most popular sport in Japan.
Many other sports are trying to make headway in Asia. Basketball is another U.S. sport that is beloved by Filipinos. According to a survey by Hakuhodo DY, the sport is very popular in China as well. Daisuke Fukushima, executive manager of the sports business division, told the Nikkei Asian Review that “I advise companies to either put up ads at the NBA matches or sponsor a local pro league to attract Chinese consumers’ attention.”
“In an era of economic uncertainty, what’s clear is that the balance of global economic power is shifting to the east and south,” PricewaterhouseCoopers said in its report on the global sports market outlook to 2015. Therefore, “sports [will] seek new revenues from the growing middle classes in emerging nations,” including Asia.
Of course, there are negative effects as well; PwC also says that in Asia “there is already concern that the obsession with overseas [soccer] leagues … may actually be stunting the development of local clubs and the game as a whole.” However, the expansion of the sports market and corporate moves to capture growth are sure to continue in the foreseeable future.