On November 13, Wang Jianlin, Chairman of Wanda Group, attended the 2015 CCTV Financial Forum & Chinese Listed Companies Summit, where he gave a speech about the outlook of the domestic sports sector. The transcript of his full speech is included below.  

Today I’d like to share my thoughts on the sports sector.. Because time is limited, I’ll focus on three main points.

The first point is my personal understanding of the sports industry. In my opinion, the sports business should be largely dependent on private investments and be able to make money for investors. If however it relies solely on government subsidies to survive then I regard it as a public institution. After Wanda announced its entry into sports, many people just assumed that sports is only about running a football club or a basketball team, which is a very shallow understanding of the industry. I’ll now go on to explain the three categories of companies which I’ve group into A, B and C.   

A is the international sporting organizations, such as the organizing committees of high-profile international sporting events as well as individual sporting events. It’s very challenging for any company to acquire control of these organizations. Of the hundreds of sporting organizations around the world, only a handful are family-owned and most are non-profit organizations, such as the International Federation of Association Football and the International Olympic Committee. Strictly speaking, these organizations are companies, because they collect revenue by selling broadcasting rights and are sitting on billions of dollars in cash in their bank accounts.

B is companies commissioned by sporting organizations to sell broadcasting and marketing rights. Wanda recently purchased one such company; Swiss-based sports marketing firm Infront Sports & Media. Infront exclusively handles marketing and broadcasting rights for seven Olympic winter sports federations including ice hockey, skiing and skating. Such companies rarely organize or operate sporting events. Lastly, companies in the C category are the individual sports competitions or clubs. That’s why I’d like to point out that you don’t need to be operating a sports club to be involved in the industry.

The second point I’d like to talk about is the growth of the industry in China. Sports is still in its infancy in China. According to government statistics, China’s revenue from sports and related industries was less than US$50 billion in 2014. Please note that figure only includes sales of sports apparel. According to international standards, the sports industry only covers revenue from sporting events, sports representation and sports advertising. In this respect, China’s entire sporting market is worth less than US$25 billion. The U.S. sports market was US$500 billion in 2014, and that per capita sports consumption is 80 times higher in the U.S. than China. In the last 10 years, the U.S. sports industry has been expanding at a pace several times faster than the country’s GDP growth. The exponential growth is the result of a shift from basic necessity to enjoyment, as people tend to pursue pleasure from sports and entertainment pursuits as their wealth grows and spare time increases.

China’s sports market is very small now, but the government has set ambitious goals. The State Council proposed the domestic sports market should reach RMB 5 trillion, or US$800 billion by 2025, at which point China will become the world’s largest sports market. The expansion of the sports...

On November 13, Wang Jianlin, Chairman of Wanda Group, attended the 2015 CCTV Financial Forum & Chinese Listed Companies Summit, where he gave a speech about the outlook of the domestic sports sector. The transcript of his full speech is included below.  

Today I’d like to share my thoughts on the sports sector.. Because time is limited, I’ll focus on three main points.

The first point is my personal understanding of the sports industry. In my opinion, the sports business should be largely dependent on private investments and be able to make money for investors. If however it relies solely on government subsidies to survive then I regard it as a public institution. After Wanda announced its entry into sports, many people just assumed that sports is only about running a football club or a basketball team, which is a very shallow understanding of the industry. I’ll now go on to explain the three categories of companies which I’ve group into A, B and C.   

A is the international sporting organizations, such as the organizing committees of high-profile international sporting events as well as individual sporting events. It’s very challenging for any company to acquire control of these organizations. Of the hundreds of sporting organizations around the world, only a handful are family-owned and most are non-profit organizations, such as the International Federation of Association Football and the International Olympic Committee. Strictly speaking, these organizations are companies, because they collect revenue by selling broadcasting rights and are sitting on billions of dollars in cash in their bank accounts.

B is companies commissioned by sporting organizations to sell broadcasting and marketing rights. Wanda recently purchased one such company; Swiss-based sports marketing firm Infront Sports & Media. Infront exclusively handles marketing and broadcasting rights for seven Olympic winter sports federations including ice hockey, skiing and skating. Such companies rarely organize or operate sporting events. Lastly, companies in the C category are the individual sports competitions or clubs. That’s why I’d like to point out that you don’t need to be operating a sports club to be involved in the industry.

The second point I’d like to talk about is the growth of the industry in China. Sports is still in its infancy in China. According to government statistics, China’s revenue from sports and related industries was less than US$50 billion in 2014. Please note that figure only includes sales of sports apparel. According to international standards, the sports industry only covers revenue from sporting events, sports representation and sports advertising. In this respect, China’s entire sporting market is worth less than US$25 billion. The U.S. sports market was US$500 billion in 2014, and that per capita sports consumption is 80 times higher in the U.S. than China. In the last 10 years, the U.S. sports industry has been expanding at a pace several times faster than the country’s GDP growth. The exponential growth is the result of a shift from basic necessity to enjoyment, as people tend to pursue pleasure from sports and entertainment pursuits as their wealth grows and spare time increases.

China’s sports market is very small now, but the government has set ambitious goals. The State Council proposed the domestic sports market should reach RMB 5 trillion, or US$800 billion by 2025, at which point China will become the world’s largest sports market. The expansion of the sports industry will also expedite the development of tourism and other sectors. If that goal is finally achieved, more than 10 million Chinese people would be directly hired by the sports industry by 2025, and a greater number of people would work for sports-related businesses. Sports a promising industry with outstanding growth potential. Compared to sectors like technology, manufacturing and e-commerce, a sporting event or brand has the ability to increase its value over time and survive a longer time. As we know, every one of the internationally recognized sports competitions has been in existence for dozens of years or even a century, and they are not going to die out or evolve no matter how advanced technology has become.

The third point is on Wanda’s plans and ambitions for its sports business

In the first place, we will continue to grow the sports business. Since acquiring Infront Sports & Media and World Triathlon Corp., Wanda has become the world’s largest sports business by revenue. But that’s not enough. The sports industry for its unconsolidated nature, and globally there is no sports company with annual revenue more than US$10 billion and no one single company can control much of the industry. Wanda’s goal is to further expand the industry and make itself the world’s first company with sports business revenue exceeding US$10 billion. To that end, we have to keep increasing the size of our portfolio and developing new sports business.

Secondly, we hope to have a greater say in the global sports industry. China’s sports market was very small in the past, and the country had little influence in the international sports industry. For instance, many Chinese people play tennis now, and some cities host international tennis competitions every year, with some even offering bigger prize money than the Grand Slam tournaments. However, these tennis competitions cannot attract the world’s best players and are rarely profitable as a result. Why? Because a powerful interest group has been established among the organizers of the five Grand Slam tournaments. The International Tennis Federation is subject to their influence and is reluctant to develop the sixth tournament. Despite lucrative prize money, Chinese tennis competitions are not internationally recognized, and that means these games can hardly gain international prominence no matter how much reward money they are offering. What Wanda is doing now and plans to do next is to acquire more companies in the B category to amplify China’s global sports voice. For example, buying Infront-which controls rights for seven Olympic winter sports federations-had some positive impact on China’s successful bid to host the 2022 Winter Olympic Games.

Thirdly, we want to bring top international sporting events to China. Why are we buying the two companies? Infront Sports & Media has recorded an annual business growth of about 10%, compared to approximately 20% for World Triathlon Corp. The growth rates are very impressive in the Western market, but higher growth numbers are not our ultimate goal. Our plan is to bring major sporting events to China to accelerate the development of the entire industry in China. I cannot elaborate in detail on our cooperation with World Triathlon Corp because an official acquisition agreement has yet to be signed. However, I can tell you that well-organized Triathlon events will be held in three or four Chinese cities next year, which will be attended mostly by foreign athletes, including the world’s top athletes. We also plan to launch two or three major events exclusively available in China and even Asia, which may be announced in the first half of next year, at which point you will have understood why Wanda is buying such companies.