Suning enters Inter Milan to expand overseas markets, and China's capital fully enters European football

Why does China capital frequently target European football? All because there are huge economic benefits behind it. As the largest single event in the sports industry, football's annual global output value exceeds 800 billion euros. In terms of league revenue alone, in the 2013 season, the Premier League achieved total revenue of US$5.5 billion, Bundesliga US$3 billion, La Liga US$2.5 billion, Serie A US$2.2 billion, and Ligue 1 US$2 billion. The total revenue of the Chinese Super League in 2013 was only US$290 million, which is far behind the five major leagues in Europe.

Original title: With 2 billion yuan entering Inter Milan, is Suning the successor or the new overlord?

After witnessing the wealth of Russian financial groups, wealthy people in the Middle East and local tycoons in Southeast Asia, European football is gradually feeling the power of China's capital.

On June 6, as a century-old powerhouse in the history of European football, Inter Milan, which has won three Champions League championships and 18 Serie A championships, announced that it had changed hands again 33 months later. But this time, its new owner is no longer a Southeast Asian consortium, but Suning Group, a football upstart from China.

On the same day, Suning held a press briefing on the acquisition of Inter Milan in Nanjing, announcing that its Suning Sports Industry Group had obtained Inter Milan by subscribing for new shares and acquiring old shares for a total consideration of approximately 270 million euros (approximately 2.010 billion yuan). 68.5% stake in Club Milan.

This is the first time that a China company controls a major European football club. Since Wang Jianlin invested 45 million euros to purchase a 20% stake in Atletico Madrid Football Club, China capital began to penetrate into the European sports market on a large scale, of which football was the main target. As many events such as this year's European Cup, Centenary South American Cup and Olympic Games are held one after another, 2016 will usher in a huge sports feast.

In fact, the strong intervention of China capital is timely. On the one hand, European football has a good fan base and the business model is more mature; on the other hand, the current European economy is sluggish, and bargaining in the European football market is a lower-risk investment method. Simon, professor of sports business at the University of Coventry Business School in the UK. Chadwick said that the China government has proposed that by 2025, the entire China sports industry will reach a scale of 5 trillion yuan, becoming the world's number one. "The government's direction allows companies to smell business opportunities. They hope to obtain government support and additional preferential policies in the future by investing in the sports industry." Simon said.

"Bargain" Inter Milan

At the press conference, Zhang Jindong revealed some details of Suning's entry into Inter Milan. Before the Spring Festival this year, Zhang Jindong met with Inter Milan Club President Tohir for the first time and developed a strong interest in Inter Milan. Later, Zhang Jindong made a special trip to Italy and visited Massimo, former president of Inter Milan. Moratti. "Mr. Moratti's enthusiasm and focus on football deeply moved me," Zhang Jindong said."His total dedication to Inter Milan has created the greatest story and the most touching story in the history of football development in the century."

Zhang Jindong said loudly at the meeting that Suning will continuously inject capital and resources into Inter Milan to help Inter Milan dominate Serie A and dominate Europe. Zhang Jindong said that Suning invested in the acquisition of Inter Milan for three reasons. "First, the acquisition of Inter Milan is an important part of Suning Group's layout of the sports industry; second, the acquisition of Inter Milan will help Suning Football Club comprehensively improve its technical system and operational capabilities; third, the acquisition of Inter Milan is also an important part of Suning's global layout. Suning will actively use Inter Milan's popularity around the world to help Suning expand overseas markets. Inter Milan will become an important business card in Suning's internationalization process."

In fact, Suning's stake in Inter Milan is more like a bottom-hunting operation. In the past three years, Inter Milan's total turnover has declined year by year, from 201 million euros in the 2012-2013 season to 146 million euros in the 2014-2015 season. At the same time, Inter Milan has not been able to enter the Champions League for five consecutive years, and its ranking in Serie A is also difficult to satisfy fans.

In the autumn of 2013, Inter Milan's largest shareholder changed from the Morati family to Tosil of Astra, Indonesia's largest consortium, and 75.67% of the club's equity changed hands. The 68.5% shares purchased by Suning this time came from Tosil and Moratti respectively.

For this transaction, Shenyang, investment consultant of Orient Securities, believes that it is a commercial integration. "Investing in football is the core of Suning Sports Outdoor Channel marketing. By bringing in and going out, domestic players and brand companies will be introduced into the entire European market."

Min Jie, a professor at the Institute of Sports Economics at the Central University of Finance and Economics, believes that the cooperation between Suning and Inter will provide domestic clubs with many references from the perspective of profit model and business value. "Generally speaking, the club's profits include: TV broadcast income and sponsorship income distributed by the league, which are relatively large abroad and relatively small domestically; on the other hand, the club itself has sponsorship, tickets, franchises, advertising income and player trading income. If Suning can learn from Inter's business models and bring them to their own current clubs, it will also be a good choice for the joint-stock transformation of our national clubs. This will greatly increase the income of domestic clubs."

Why does China capital focus on European football

In addition to Inter Milan, AC Milan Club, which is also a football giant in Milan, Italy, is also sought after by China companies. Recently, foreign media reported that a consortium composed of China companies including Evergrande Group, Baidu Group, Kweichow Moutai Group, Huaxia Happiness Foundation Company, Alibaba, Huawei and other companies is preparing to acquire 70% of AC Milan's shares. The consortium adopts an equal distribution method, with each company holding about 10% of the shares.

In fact, it has become increasingly common for China capital to acquire or invest in European football clubs in recent years. In January 2015, Wanda Group announced that it would invest 45 million euros to purchase a 20% stake in Atletico Madrid Football Club and join the club's board of directors. This was the first time that a China company had invested in a top European football club; in November last year, A-share listed company Interactive Entertainment invested more than 60 million euros to control La Liga team RCDEspanyol, which is the first time that a China company has controlled a football club in one of the five major European leagues. Coupled with the earlier acquisition of a 46% stake in European football brokerage company MBS for RMB 290 million, China capital is fully entering European football.

In the football industry chain, the upstream includes event leagues, clubs, athletes, football brokers, sports training, etc. as the participants in the event; while the downstream includes event copyright and broadcasting, etc., in addition, there are also derivatives services such as football supplies and football lottery tickets for consumers. The research paper of Guojin Securities pointed out that compared with the imbalance that domestic sports products account for 80% of the overall sports industry, the sports industry development of Europe and America is more balanced.

With this year's European Cup, Centennial South American Cup and Olympic Games held one after another, huge economic benefits also attract domestic enterprises to share a piece of it. Take the European Cup as an example, according to UEFA official website statistics, although the European Cup 2012 in the European debt crisis, but its total revenue still reached 1.345 billion euros. Research institutions predict that the average live audience of this European Cup will be 147 million per session, with a cumulative audience of 6.6 billion. In China alone, more than 1.2 billion people will watch this European Cup.

In addition, many European football clubs are also willing to promote in China through capital marriage. According to data released by PricewaterhouseCoopers, the total profits of China's sports market in ticketing, acquisitions and advertising in 2015 are expected to reach US$3.4 billion. The British "Financial Times" cited Yao Ming as an example, saying that his success in the NBA has led to the rapid popularity of basketball in China, and the huge market value behind it is immeasurable.

However, excluding these capital factors, China companies also hope to accelerate the development of domestic youth training by acquiring foreign clubs. Wang Jianlin said that the purpose of investing in Atletico Madrid is not to hold shares, but to provide more channels for young people who train in Europe to rise."Only when you invest in the club will the club truly care about you, and will it really cultivate you well and give you more opportunities to compete." Since 2011, Wanda Group has sent 30 teenagers aged 8-12 to Spain every year to study football. In three years, the number has reached 90. Based on the six-year contract, by 2017, the number of China young football talents studying in Spain will reach 180. To support the plan, Wanda invests up to 20 million euros in sponsorship fees every year.

Editor: Nancy