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Wanda-Owned Infront CEO Philippe Blatter on China’s Sports Buying Spree

Philippe Blatter is President and CEO of Switzerland-based global sports marketing company Infront Sports & Media, which Dalian Wanda Group acquired in 2015 for more than $1 billion. A nephew of ousted FIFA chief Sepp Blatter, he is proving instrumental to turning China into a soccer nation, in accordance with a mandate that comes straight from Chinese President Xi Jinping.

Blatter spoke to Variety about why Chinese conglomerates, after muscling their way into global film and TV, are now on a shopping spree for sports rights and clubs in Europe, most recently snapping up the A.C. Milan soccer team — previously owned by former Italian Prime Minister Silvio Berlusconi — in August. Here are excerpts from the interview:

Chinese conglomerates are now targeting sports in a big way and Europe seems to have become a favorite shopping ground. Why?

We are seeing five significant changes behind the big interest in sports.

First of all, there is a strong support from the Chinese government. Roughly a year and a half ago, the Chinese State Council issued guidelines to enhance the country’s sports industry….It refers to promoting national health and fitness, creating a significant area of sports ground, and increasing the volume of the sports industry.

The second reason is that this law has allowed the bigger federations, like the Chinese Football Assn. and the Chinese Basketball Assn., to adopt a more business-oriented approach. This means that they are less dependent on the sports ministry and they are allowed to create their own commercial companies….

Another is a sort of liberalization of the media market. We have seen the emergence and strengthening of several OTT platforms like Tencent, Sina, and the like….

The fourth reason…is that Chinese companies and brands have grown tremendously. In 2015, the Fortune 500 list featured more than 100 Chinese companies….These companies are gaining more expertise in marketing, and they are discovering sports as an impactful communications platform, within China but also outside China, so you see many Chinese brands investing across Europe and in the U.S.

Supporting all this is the rise of the middle class in China, which has a significant purchasing power and is ready to spend money on lifestyle products, entertainment and sports. This is a change which has taken place in the past five to seven years. The Chinese middle class today…is around 110 million people. In 2015, it has for the first time outnumbered the middle class of the U.S.

OK, but why is Europe a favorite shopping ground?

Historically, Europe has always been the place where expertise and competence in sports sits. It’s where the headquarters of the big federations are — FIFA, UEFA, IOC. All the big leagues and well-known football teams are here, and therefore I think there is a natural tendency to look first to Europe. There is also other investment, obviously, in the U.S., but the structure of the sports business in the U.S. is quite different to Europe.

How so?

In the U.S., you also have very professional and successful leagues, like NBA, NFL, NHL, but the market works differently in terms of organization – if you consider the franchise system – and commercialization. It’s also a question of available opportunities for strategic investment and the related costs.

Soccer (known in Europe as football) is clearly a hot commodity. Chinese President Xi Jinping’s passion for the sport certainly plays a part in this. Wanda and FIFA recently signed a key partnership. How important do you think it is in China and why?

Football is a global phenomenon. We have seen it again at the UEFA EURO 2016: When the national team plays, it sparks national pride….The president has set three goals for China: that the Chinese team will play the FIFA World Cup; that China will host the FIFA World Cup; and that China will win it at some point in time.

Can you give me more specifics about the government effort to grow China into a soccer/football nation?

Sure. In certain areas, the heads of provinces shall report how many football pitches they’ve built. I’ve heard that football in certain schools has become compulsory. In the private sector Chairman Wang Jianlin of Wanda invested in Atletico Madrid not as a financial investment. The goal is to train between 30 and 50 12-to-14-year-old Chinese talents with potential….The recently announced China Cup is another example.

How long do you think it’s going to take before the World Cup is actually held in China?

I’m pretty sure the World Cup will be held in China, but I can’t say when. That’s a decision the FIFA congress has to make; it’s up to them to decide. But with 1.3 billion fans and with the great competence that China has in organizing top sports events — we only have to see the Beijing 2008 Olympics — I’m sure they would have the ability to host a big welcome.

Speaking of FIFA, do you think football has been tarnished and devalued by the FIFA scandal?

Obviously it’s never good for a sport — nor is it good for sports in general — when these types of things happen. But in the market right now I cannot say that I’ve seen big differences. What I see is a much stronger focus on compliance…Since 2011, we have implemented and continuously strengthened our group-wide compliance management system…Our framework follows the principles set out in various landmark cases and national bribery laws, including the U.K. bribery act, which is one of the most stringent. We have a very detailed system…a binding code of ethics, and regular trainings for all staff.

What are some of the other sports that are particularly interesting for the Chinese market right now?

Infront has in its portfolio of clients more than 25 different sports. Last year we delivered 4,100 event days, an average of more than 11 events for every day of the year, and many of these took place in China. For over 10 years now we’ve been working with the Chinese Basketball Assn. — staging on average over 400 games per season across different basketball competitions. And we’ve been able to develop a league which is comparable – in terms of atmosphere, in terms of look and feel – to an NBA match in the U.S….In 2005, when we started, it had very few sponsors, all Chinese. Today, the league has a big roster of top-notch sponsors from abroad, like UPS, Exxon Mobil, Stanley Black & Decker, Tissot, and many others, as well as top Chinese brands like Li Ning….In terms of audience, basketball is the No. 1 sport in China. Football is of course growing very rapidly, but last season we had close to 1 billion viewers who watched the CBA games.

Another aspect are winter sports. The Winter Olympic Games in Beijing in 2022 will clearly be a big boost for winter sports. With the middle class growing so fast, you will see that these people also want to practice winter sports. For example, Wanda owns a winter resort, and starting a couple of years ago bookings have risen tremendously, because people are interested in trying new sports.

Of course one of the drivers is the advent of digital, which is very big there. 

Yes, indeed. China is one of the most connected countries in the world and therefore they play a very important role. The No. 1 mode of sports consumption is on mobile and tablets, rather than on TV.

Getting back to Europe, are there any advantages, or disadvantages, for Europeans to have sports rights, and teams, in Chinese hands?

I want to make one thing clear: Our Chinese owners don’t control the way we sell media rights, or sponsorship rights, or the way we serve our clients. I think Wanda has understood very well that their investment into Infront is a partnership into a team….But with Wanda, it opens a new chapter in terms of access to a promising market. Chairman Wang and Wanda are extremely well-connected in this market…and obviously this is a big advantage. For example, Wanda has invested in dozens of cities across China, they have invested billions to create hotels, entertainment parks, shopping centers. Obviously if we want to hold an endurance event, and need the support of the authorities to close roads [to traffic] it’s much easier if you your owner has invested a few billions in that city.

Would you be able to give me a rough estimate of the amount of European sports rights that are directly or indirectly controlled by China?

Again, I don’t think Chinese are controlling rights. It is absolutely true Chinese have made significant investments in sports assets in Europe in recent years – Bloomberg estimated that these were worth around $1.7 billion since the beginning of 2015. In the past we’ve had similar investment from the Middle East and from Russian investors. The main difference is that the Chinese investors are more visionary: Their efforts are based on a long-term strategy.

 

 

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