The capital map of "Chinese Sports" reveals: 2.5 billion yuan in Manchester City is not just for the sake of excellence

The outside world believes that Chinese culture wants to build a "sports empire" through a series of large-scale acquisitions, but Xu Zhihao said in an exclusive interview with reporters that Chinese culture does not pursue high-quality investment in the sports industry, but instead focuses more on basic things, and shares in the Urban Football Group. In this way, they will do their best to graft the Urban Football Group's systematic knowledge, technology, and network with China football.

Original title:

China's sports industry announced

on December 21 that it would take over Shuntian football... Driven by policies and capital, China's sports industry was surging in 2015. In the wave of capital acquisitions, the emergence of Chinese Cultural Industry Investment Fund (hereinafter referred to as Chinese Culture) has also attracted market attention.

Through its "Sports Olympic Power", it won the copyright of Team China for 4 years, and defeated rivals such as CCTV with a sky-high price of 8 billion yuan to win the copyright of the Super League for 5 years; invested in sports companies such as Shengli Family, Meike International (00953, HK), Advantage Media...

Although every move is a big move, the most shocking operation of Chinese culture recently is to join hands with CITIC Capital to invest US$400 million (about 2.5 billion yuan) in the parent company of Premier League giants Manchester City. City Football Group is valued at US$3 billion and owns multiple teams. Previously, its only shareholder was the Abu Dhabi consortium from the Middle East.

Speaking of the much-watched "8 billion in five years", Xu Zhihao said that Chinese culture hopes to promote the positive development of the league, thereby enhancing the commercial value of the entire league. It also hopes that the club will truly invest in the club's own construction after receiving the funds, rather than taking money. Fight for high prices to buy players.

·About investing in Manchester City·

"grafting" the British system. China Football

Reporter: When it comes to Manchester City, many people's first impression is that of "local tyrants in the Middle East." The Abu Dhabi Consortium, the investor of the Urban Football Group, is a "rich" gold owner. How does Chinese culture get together with them?

Xu Zhihao: The concept of local tycoons in the Middle East burning money to play football is actually a misunderstanding. Of course, they are very rich, but their plans and arrangements for football investment are very professional. According to Manchester City's latest quarterly report, the club is profitable and its financial situation is better than Manchester United. One of their great characteristics is that after exchanging oil for strong capital, they bring together the world's top talents. In fact, there are very few Middle Eastern members on the board of directors of City Football Club. Most of them are top talents from all over the world. Their management is also relatively diverse, including British, Spanish, and Americans. Of course, the board of directors now also includes Chairman Li Ruigang of Chinese Culture.

City Football Group's management system and business model are very professional. They regard football investment completely as a business to expand, including investing in American and Japanese clubs, which are very cautious and have been strictly evaluated. This is also the reason why we are willing to invest in them. We have many similarities with Urban Football Group in terms of concepts. We are not simply pursuing high-level investment. If the city football group is grafted with China football, it will take root in China and play a role in many aspects of the football industry. In the future, they will have more projects implemented in China, and there will be more and more grafting with China football.

Reporter: You just mentioned that City Football Group will have many projects implemented in China in the future. What are the future plans for Chinese culture and City Football Group? How to build a platform to promote the development of China's football industry?

Xu Zhihao: Before announcing the investment in City Football Group, we did a lot of preparatory work and made detailed plans in this regard. The reason why we cooperate with them is to value the platform and systematic system of the Urban Football Group. These things can be grafted with many aspects of the China football industry.

Everyone knows that the development of the football industry is a pyramid structure. The spire is the national team, and the league below is the league. The league has to be divided into many levels... Only when the tower below is bigger and more solid, can the spire emerge. Of course, we are very happy to see Evergrande Club performing well in the World Club Cup, but this is only the performance of a single club and cannot represent the national team. The development of the national team still depends on the foundation. This foundation includes many aspects, such as the training and education of grassroots football at the bottom, and the development of the club at the top. This also involves how to allocate player nutrition, how to train, and how to build the echelon. Take Manchester City, a subsidiary of City Football Group, for example. They have now planned how to build the echelon five years later.

The progress and development of football cannot simply rely on traditional hard work and hard training, but also rely on the support of technology and data. City Football Group has a complete set of technical and tactical concepts, and we will do our best to integrate City Football Group into a systematic knowledge, technology, network and China football. Nowadays, City Football Group has already implemented many projects in China, but many of them cannot be disclosed yet, and we will slowly demonstrate them in the future.

Reporter: Sports Olympic Power, a subsidiary of Chinese Culture, owns the copyright of the Chinese Super League for the next five years. The Premier League is the most successful football league in the world. In the future, will it cooperate with City Football Group or learn from the Premier League experience in the development of copyright in the Super League?

Xu Zhihao: The Premier League has successfully presented football matches as media products. They not only participate in copyright sales, but also participate in product design. When we inspected the Premier League, we found that they had very detailed requirements for each club, ranging from how to sell tickets for each game to make the stadium full, to which player should be interviewed by the media after the game, where to be interviewed, and how to use the background board during interviews, how far the distance is, and how to match the colors. Each design has a very detailed plan, and each design has a purpose behind it, all of which is to make video products more attractive to the audience.

These are also what we should learn from them in the process of cooperation with the City Football Group. The Super League broadcast is not very complete yet. We will communicate with the Super League companies and clubs to make this product better.

·Regarding the huge amount of copyright·You

cannot forcibly promote the paid game watching model

Reporter: Winning the copyright of the Super League at a price of 8 billion yuan is still unbelievable to many people. What dimension is Chinese culture considered?

Xu Zhihao: This is both a big opportunity and a big challenge for us. The foundation for the development of China football and football clubs is the league. The development of the league depends on investment. Although top clubs are rich, the development of the league does not depend on one or two clubs. For example, La Liga has two super teams, Real Madrid and Barcelona, but their commercial value is far inferior to that of the Premier League. The reason why the Premier League is strong is that the level of each club is relatively average. Even a strong team may be killed by a weak team. This increases the ornamental value and commercial value of the league itself.

Similarly, from the perspective of the development of football in China, the development of leagues and clubs is very important, but we do not have the ability to invest in every club, and media copyright is a good entry point. Inject funds into clubs in this way. For many small and medium-sized clubs, this fund is very important and can promote club development.

We hope that this will promote the formation of a positive cycle. As long as a positive development cycle for the entire league can be established, we believe that the commercial value of the league will increase. Of course, in this process, we also need to reach a consensus with the Football Association, the Chinese Super League, and various clubs so that these funds can be truly invested in the development of the club itself, rather than using funds to fight for high prices to buy players.

Reporter: At present, it is difficult for the traditional copyright distribution model to achieve an average annual sales volume of 1.6 billion yuan. Outside analysis shows that Chinese culture may launch a "paid to watch games" model in the future...

Xu Zhihao: In the long run, paid to watch games is a very important link in the development of sports content. Only with this link can the value of sports media be enhanced and then fed back to the league. However, in China, this requires a step-by-step process. This process also requires communication, interaction and understanding with broadcast platforms and fans of all parties. It cannot be pushed hard. Forcing the payment model is not in line with the current situation in China.

However, in other fields, iQiyi has announced that it has reached 10 million paid members, which shows that everyone is still willing to pay for high-quality content. However, judging from the current situation in China, the form and rhythm of payment need to be gradually explored by all parties. For the long-term development of sports content, payment is one direction, but for the specific product of the Super League, a process of gradual exploration is needed. We will study it in detail, but the possibility of implementing it soon is not particularly great.

Reporter: Li Ruigang, chairman of Chinese Culture, once said that in the future, mobile broadcasting will be "the best solution for the payment model for sports competitions." Now that Chinese Culture has launched micro-whale TV, will it deploy PC or mobile platforms in the future?

Xu Zhihao: We are thinking and discussing various strategic options in the future, but at present, there is no clear conclusion.

Reporter: We know that Chinese culture has invested in many sports companies such as Sports Olympic Power, Shengli Family, Advantage Media, and Meike International. How does Chinese culture consider the layout of the sports industry?

Xu Zhihao: Chinese culture began to invest in the sports industry a few years ago. It did not start when the sports industry became popular this year. For example, we invested in Shengli Family a few years ago. We have always firmly believed that when the country's economic level reaches a certain level, everyone's demand for culture and entertainment will continue to rise, and sports are a very important part of it. Therefore, we have been optimistic about the sports industry for a long time and started investing early. However, in the past, the sports industry was not so market-oriented, but there were not so many investment directions and targets. Now that national policies have been liberalized, they have played a very important role in promoting investment in this area.

Our investment focuses very much on basic areas, and of course we must also balance business options. Many people are staring at the top of the pyramid, but in the long run, only the top of the pyramid is not enough. We also need to look at the bottom. In fact, we have made a lot of efforts and attempts in this regard, including investing in the City Football Group. What we value is not just them. Having a strong Premier League team, but they have built a very solid, strong and scientific system. These systems can help us develop and play a role in many fields from the bottom up, especially in the lower-level fields.

In addition, from an investment perspective, we will be involved in the entire sports industry chain, but we will focus on key points, hoping to invest resources and capital in some areas to effectively promote the development of some things, and these things are often basic work.

Reporter: Chinese culture now has many high-quality targets in its hands. Will companies like Sports Olympic Power go public in the future?

Xu Zhihao: In the long run, if there is an opportunity to graft with the capital market, it can more effectively promote the development of the industry. This is also an effective tool. But when we make these investments, we will not simply operate capital and cash out. This is not the investment philosophy of our Chinese culture. We hope to take root in it, invest long-term, and generate good business returns.

·About the sports industry·

Capital promotes the industry but cannot surpass it.

Reporter: Some people say that every link in China's sports industry chain will appear in the future with a market value of tens of billions or even hundreds of billions. What do you think of this view? Will Chinese Culture strive to cultivate sports companies with a market value of tens of billions or even hundreds of billions?

Xu Zhihao: There will be opportunities in the long run. In the short term, we still need to do a lot of basic work first. At present, we can also see that the sports industry concept is quite lively in the secondary market and the stock market. If the sports concept that everyone values is really to be implemented, it still requires solid work.

The current development of the sports industry largely lies in policy dividends and government support for the development of the industry. However, on the other hand, the period of such policy support is still relatively short, and many effects need to be gradually demonstrated. There are not so many sports companies that have grown up in the past, and this market cannot be said to be a very mature, open and free competition market. Many companies have just begun to grow and will take some time to develop. But with such a large population and such a large market in China, we believe that there are opportunities for great companies to emerge in all aspects of the sports industry, and our Chinese culture also hopes to participate in this process.

Reporter: Since the beginning of this year, the capital market has been pursuing the sports industry. There are more than 30 sports concept stocks in the A-share market alone. What do you think of the impact of capital influx on the sports industry?

Xu Zhihao: The sports industry is now in a very hot stage. There are reasons for this fire. On the one hand, it is policy. On the other hand, everyone is fully aware of the potential of this industry, so a large amount of capital is pouring in. Capital and policies can effectively promote the development of this industry. In this process, those who originally took one step can take two or three steps, but at the same time, they may also take too big a step at a time and take three steps and then take another step back.

Conversely, in a market economy, capital's impact on supply and demand also requires a dynamic balance stage. The influx of capital is helpful to the development of the industry, but supply will inevitably exceed demand or exceed supply in some areas, which will cause changes in capital and valuation, which is relatively normal.

From the perspective of industry investment, the concept of O2O was very popular last year. In the short term, industry integration will be rapid. Some strong people will become stronger and stronger, and many companies will be eliminated. However, this situation will occur in every industry. The key lies in The development of each industry has its own development laws. Capital can promote it, but it cannot surpass it. Many new business models and new consumption habits require time to slowly cultivate, and the product itself is very important for users to accept new business models.

Reporter: You also mentioned O2O just now. In the context of "Internet +", the concept of Internet + sports is very popular, especially sports O2O startups that are mushrooming. Some people say that after the bubble, most sports O2O startups will die in the future. What do you think of this phenomenon?

Xu Zhihao: Sports O2O is still in development, and it is difficult to draw a conclusion. However, sports O2O companies that can survive and grow have the support of large capital first; Secondly, it is better to polish the product, putting the user experience first. The third is that its business model can conform to the objective laws of industrial development, rather than saying that the nature of business can be changed because of a sports or Internet concept. In the end, we still have to return to products, users, and objective laws of industrial development.

Reporter: Some professionals say that the sports industry is inseparable from the development of other industries, especially the cultural industry. Chinese culture is one of the best developed companies in the cultural industry and sports industry. What do you think of the integration of the sports industry and cultural industries?

Xu Zhihao: There are many intersections between the sports industry and the cultural industry. China people often say that style and style are not separated. For example, sports stars and entertainment stars have similarities. From the perspective of sports leagues in developed countries, sports star-making is very important and a very important part of attracting attention and enthusiasts. This is why we are involved in sports brokerage.

Let's look at the Super League and other broadcasts. In fact, broadcasts are originally media products. How to absorb the experience of the cultural industry and how to build media products is also a connection point in itself. Looking at well-developed sports leagues abroad, media content and product revenue account for a very large part of total revenue. Therefore, how to transform sports into an ornamental and entertaining content product requires a lot of knowledge and skills.

Editor: vian