China’s richest man fires warning on soccer splurge

BEIJING, August 25 

China Inc’s record burst of investment in global soccer could leave investors burnt and out of pocket, says China’s richest man, Wang Jianlin, in the highest profile warning yet on a $4 billion splurge since 2015 that has stunned European football.

The chairman of the sprawling Dalian Wanda Group is himself a major sports investor, sponsoring the Chinese league and last year taking stakes in leading Spanish club Atletico Madrid and Swiss sports marketing firm Infront Sports & Media AG. But for Wang, owning a team is about influence — not profit, which he sees as easier to achieve through rights deals or owning competitions.

A score of smaller Chinese players have since followed Wang into the European soccer arena, encouraged by official enthusiasm for the game.

Part of the lure is mammoth TV deals as global viewers pay up to watch live sport: the English Premier League — the world’s richest — will see £8 billion coming in over three years. Not everyone along the scale, however, will see enough of that money to make a decent return, Wang warned.

“It can give you influence, but it won’t make you money. Every year you’re burning through cash — that is certain,” Wang told Reuters in an exclusive interview in Beijing. “It’s eye-catching, it attracts interest, but it’s hard to make money,” he said of the recent spate of deals.

Already a sponsor for global soccer governing body FIFA, Dalian Wanda struck a deal with German sportswear firm Adidas  in June to sponsor its endurance events and to promote soccer and basketball around China. Wang said Wanda was holding triathlon events in two Chinese cities this year, and 8 or 10 cities next year. He said his goal would be to hold events in as many as 50 cities in China.

While it is too early to assess how the soccer splurge will pan out, some brokers working on Chinese sports investments have queried deal valuations that they say have little precedent.

“At the prices they are buying it makes no sense to me. They are even buying minority stakes, where they have no control... Many of these teams are cash flow negative,” said one senior sports adviser, involved in deals between China and Europe.

The dash into soccer comes with the public backing of President Xi Jinping, who says he is an avid fan and wants China to one day host — and win — the football World Cup. — Reuters