Industry, economy and success - Chinas Great Football Vision and What the Country is Doing to Win the World Cup

INDUSTRY, ECONOMY AND SUCCESS: CHINA’S GREAT FOOTBALL VISION &

WHAT THE COUNTRY IS DOING TO WIN THE WORLD CUP

Professor Simon Chadwick

Presentation content

■ Sport industry globally and in China

■ Football industry globally and in China

■ China’s vision for sport and for football

■ Principles of and model for China’s football

■ Emergent issues

■ Conclusions

■ Readings

Global sport economy

■ Estimated size of global sports industry

- $1.5tr (Plunkett Research, 2015)

- $700bn (A.T. Kearney, 2014)

- $145bn (PWC, 2012)

■ 2010 (PWC)

- North America 41%

- EMEA 35%

- Latin America 5%

China’s current position

■ 2006: sport industry worth US$1.8 billion (Statista, 2015)

■ 2010: US$2.9 billion

■ 2015: US$3.5 billion

■ Otherwise….?????

China’s industrial vision for sport

■ President Xi’s proclamation in November 2014

■ To create a domestic sport economy worth US$850 billion by 2025

■ Football to be focal point in drive towards this vision

■ Country to successfully bid for World Cup

■ Country to win the World Cup

■ Enabled by the state, delivered by the private sector

Global football economy

■ 2013 (A.T.Kearney)

- $25.1bn in 2009

- $35.3bn in 2013

- EMEA accounted for 43% of total industry size

- North America 38%

- Asia Pacific 13%

- Latin America 6%

China’s current position

■ On the field: men’s team FIFA ranked in 84th place (women’s 13th)

■ 2018 World Cup qualifying P5 W0 D2 L3 Pts2

■ World Cup record: qualified once (2002) - P3 L3

■ “The players have rarely played like men”

■ But….

■ Guangzhou Evergrande – Asia’s first super club?

English Premier League

■ English Premier League (Ernst and Young, 2015)

- £2.4bn tax contribution to the British economy

- 103, 354 supported jobs

- £3.4bn contribution to GDP

China’s vision for football

■ By 2020: 20,000 specialist football schools, 70,000 pitches, between 30 million

and 50 million primary and middle school students regularly playing the game

■ By 2030: 50,000 specialist football schools, China’s male national team to be one

of Asia’s best, female national team to be established as being world-class

■ By 2050: a first-class football superpower in top-20 FIFA rankings, have hosted and

won the World Cup

Why football?

■ The people’s game

■ The global game (hard power!)

■ Economy and industry

■ Soft power and diplomacy

■ National identity and nation branding

■ Health and well-being

■ Socio-cultural factors

China’s model for football

■ A hybrid

- Japan

- Europe

- United States

Principles of China’s model

■ Top-down investment

■ Bottom-up investment

■ External acquisition

■ Network influence

■ Football diplomacy

■ Entertainment

Top-down investment

■ Investment in football properties at the elite professional level of the game

■ Examples: overseas clubs – Atletico Madrid; sponsorships – Wanda; players –Hulk; managers – Marcello Lippi

■ Competence acquisition

■ Knowledge

■ Learning

■ Point of engagement

■ Heroes and icons

■ A quick fix?

Bottom-up investment

■ Investment in football at the grassroots level

■ Examples: Evergrande Academy in Guangzhou; Chongqinq Sports Campus

■ Sustainable supply of highly skilled labour

■ Numbers unprecedented

■ Long lead time in talent development

■ Inward flow of foreign coaches

■ Issue of coaching, as well as playing, competence

External acquisition

■ Acquisition of football properties at three levels

- Competence e.g. Manchester City

- Revenue-generating properties e.g. Infront Sports and Media

- Networking e.g. Ali E-Auto & Club World Cup

■ Broader industrial development issues

- Resource acquisition e.g. Angola 2011, Gabon 2017

- Political influence e.g. HS2, Northern Powerhouse

Network influence

■ Internationally, engaging in investments that contribute to the achievement of

China’s ultimate football goal

■ Wanda Corporation: Atletico Madrid, Infront, FIFA sponsorship; FIFA presidential

elections May 2015

■ Fosun: Wolverhampton Wanderers, Gestifute, Anderson Talisca, HS2

■ CMC: Manchester City, City Football Group, campus model, Abu Dhabi, Etihad, HS2

■ Domestically, also widespread engagement in football investments

■ Evergrande Real Estate Corporation, Alibaba

Football diplomacy

■ A game played on two sides

■ 2011 African Cup of Nations in Angola

■ Four stadiums built at cost of US$500million

■ China biggest consumer of Angolan oil

■ In GB, lineage from Tony Blair to George Osborne

■ Blair – a lever to enable market entry

■ Osborne – as a means to attract Chinese investment

Entertainment

■ Football at intersection of entertainment and social media

■ Massive Chinese growth in both areas

■ Alibaba (Guangzhou, FIFA sponsor), Suning (Jiangsu, Inter Milan), China Media Capital (Manchester City

■ Wanda’s Wang wants ‘to create an entertainment axis stretching from Beijing to L.A.

■ 20% stake in Atletico Madrid

■ AMC cinema business

■ Legendary Studios in Hollywood

■ Golden Globes

■ Considering a bid for Paramount Studios

■ Ownership of Infront Sports and Media

Emerging issues

■ Aligning vision, goals, implementation and management

■ Reconciling short- and long-term challenges

■ Grassroots –v- elite professional levels

■ Raised expectations among fans

■ Social unrest

■ ‘Face’

■ Strategic drift

And more emergent issues

■ Role of corporate hawks and intermediaries

■ Issues in creating horizontally and vertically integrated businesses

■ Integrated football supply-chain

■ Governance, network influence and multiple ownership

■ Football as entertainment and social media content

■ Extent to which football can deliver on China’s soft power and diplomatic agenda

■ Extent to which football can deliver broader investment returns

Conclusions

■ Bold vision allied to a seemingly sensible strategy

■ Attention often focuses on ‘big money’ and ostentatious expenditure

■ But grassroots receiving attention too

■ Implementation and management challenges

■ Range of other issues that are already posing issues for the international football community e.g. multiple ownership of sports properties

■ World Cup bid, national team, World Club Cup, Guangzhou Evergrande, Asian Champions League

■ Will China succeed?