Chinese Stock Market Jumps at Leader’s Soccer Stimulus Plan

Chinese President Xi Jinping announced recently that among the country’s economy, military, and cybersecurity, soccer is one of his top priorities. So much so, that like the other initiatives mentioned, he has assigned a high-ranking task force to the matter, to be led by Vice Premier Liu Yandong – the first time a member of the Politburo has been assigned to oversee the development of sport in the country’s history. In mid-March of this year, a soccer reform plan was issued by China’s State Council that included two new training camps and more funding allocated to the Men’s national team, and a plan for the creation of 50,000 new soccer schools across the country by 2025, according to Bloomberg. 

Chinese President Xi Jinping. Courtesy chinasportsinsider.com

Chinese President Xi Jinping. Courtesy chinasportsinsider.com

Xi has said before that he wants China to host and win the coveted FIFA World Cup, and would also like to see the Chinese Super League to be on par with the elite leagues in the world. The league thus far has unfortunately become known for match-fixing and less than desirable quality of play, but has drawn some bigger names in recent years such as Didier Drogba and Nicolas Anelka, who both played in England’s Premier League and returned after relatively brief stints in China. The Chinese Men’s national team, currently listed 82nd in FIFA’s latest world rankings, sitting below teams like Burkina Faso, Uganda, and Haiti, has only reached the World Cup once, but did have its best Asian Cup in some time, reaching the knock-out stages. The key learning? With Xi’s support and resources allocated behind the reform plan, soccer in China is all but guaranteed to grow from its current state, which isn’t necessarily a tough feat, given the landscape at present. Short-term, with regard to overall size and scale, soccer still might not be on the level in China that will turn the elite heads with the deepest pockets in the sport, but it will definitely be in a better place than it is today, and will be on the rise.

The Chinese stock market has responded well, initially at least, to the soccer stimulus plan, as it has become known. According to BloombergNine companies with ties to the domestic soccer league have seen their stocks jump on average +158% when Xi first hinted at a Chinese soccer revival effort back in March of 2014, and are outpacing the benchmark index by 42 percentage points. There is the potential that the Chinese Super League’s earnings will double this year, which would amount to $129 million. For reference, Premier League side Everton, who came in the final 20th spot in the coveted 2015 Deloitte Football Money League, earned about $161 million last year in revenue. This growth is certainly encouraging for the sport in a region where all indicators support that there is a domestic market ripe for cultivation, with most estimates coming in around 600 million soccer fans. The challenge for the Chinese Super League is that many of those 600 million fans are already loyal to other clubs around the world – and those clubs also recognize the growth potential within China and the rest of the Asian market.

China is the target of growth for some of these foreign soccer leagues, including the Premier League – more so off the pitch than on, but China is the site of soccer schools for some Premier League clubs, and will also be featured as a stop on the International Champions Cup this summer. These are just some of the ways that the Premier League, and other elite leagues around the world, are trying to gain more exposure in the Asian market to continue to build their brand(s).

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Companies in China have also been increasingly active in recent years in the global soccer community. Yingli Solar, the world’s largest manufacturer of solar panels, is based in Baoding, China, was a sponsor at the 2014 FIFA World Cup in Brazil, as just one example. Over the last several years we’ve seen the commercial and broadcasting revenue streams for soccer clubs become increasingly bigger and more important to a club’s overall total earnings. This is due in large part to the globalization of the sport and clubs’ ability to gain broader exposure around the world in previously untapped markets – Asia being one of them, China obviously included.

If the domestic on-the-pitch product can follow the strong start to the financial growth the companies involved with the Super League have seen as a result of the soccer stimulus plan, then perhaps foreign companies will be jockeying to get a piece of the action to be a sponsor for one of Shanghai’s clubs in addition to those in London.

 

What do you think about the Chinese soccer reform plan and the potential for the Chinese Super League? Let us know in the comments section below, or via Facebook or Twitter.

Reporting on the business side of the world's game.