In developed nations across the Americas and Europe, populations have been participating in recreational sports and avidly watching professional teams for decades. This strong enthusiasm has given rise to a number of formal leagues that maintain global fan bases and function as multi-billion dollar enterprises. Needless to say, the business of sports is booming in both emerging and established economies.
I believe history reinforces that a thriving domestic sports sector yields significant patriotic, social and economic value for a country. This is best evidenced every four years during the FIFA World Cup, when soccer fans gather in large groups to cheer on their country’s team with strong passion and nationalistic zeal. Very often these same fans can be found playing at local soccer fields and purchasing gear shortly after matches.
In 2015, China is beginning to realize that sports—namely soccer—can deliver this same positive impact for its own citizens and economy. In fact, China’s State Council recently released projections that indicate athletics and fitness will contribute $800B (USD) to annual Gross Domestic Product (GDP) by 2025. This forecast led the General Administration of Sports to highlight the “great opportunities for […] investors, particularly in areas such as sporting events, overseas sports tourism, and venue management.”
Not surprisingly, most of this optimism is based on soccer’s global popularity and a strong belief inside China that the country’s population of 1.4B is ready embrace a new national pastime.
Chinese leaders are known to follow the world’s top soccer leagues, including the English Premier League and the Spanish Primera Liga. They understand these leagues have established worldwide visibility that underpins very profitable sponsorship, television and merchandise deals for team owners. But rather than simply invest in teams around the world, government officials and entrepreneurs want to replicate this successful model in China.
As the nation sets out to fuel greater interest in athletics and sports, President Xi Jinping is placing a major emphasis on soccer—the world’s most universally popular game. Mr. Xi made headlines earlier this year by appointing Vice Premier Liu Yandong to lead a small group of officials tasked with improving the national soccer team and rebuilding the domestic Super League’s brand following corruption allegations. According to Professor Ren Hai of Beijing Sport University, the government taskforce represents “the highest-level leadership panel ever set up for any [Chinese] sport.”
Efforts to enhance China’s soccer activities are already underway. In March, the country’s initial reform plan outlined increased funding for the national team, development of two new training camps and a vision to create 50,000 soccer schools over the next decade. These announced initiatives, coupled with the projected growth of China’s overall sports sector, have quickly contributed to an increase in share price for nine publicly-traded companies connected to soccer.
As a firm focused on high-value investment opportunities across a variety of geographies and sectors, Jynwel Capital believes China’s emphasis on soccer can spur a robust athletics, fitness and sports industry over the next decade. We look forward to analyzing and commenting on this trend via our blog during the coming months.