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Growth in China

League focus – China Super League

Despite suffering from peaks and troughs since the advert of the professional game, Chinese football has developed steadily and significantly over the last 20 years, with growth running significantly greater than that of GDP in the country. However, while recent headlines are dominated by the signings of high profile international coaches and players, football in China’s path to stability is a slow one.

 

CSL revenue

As a whole, revenue development among CSL clubs is weak. Clubs still depend largely on a 'parent company', or in the case of Tianjin Teda FC the government, to cover their expenditure. Escalating salary costs for high-profile players can only be covered this way. 14 of the 16 CSL clubs recorded a loss while only Evergrande and Liaoning recorded a profit.

  • Evergrande profit - 85.9 million yuan
  • Liaoning profit - 17.95 million yuan
  • Fuli recorded the biggest loss - 153.49 million yuan

Total ticketing revenue improved in 2013. Despite widespread ticket price increases, the average attendance was more than 20,000 per game. CSL and AFC Champion League champions Evergrande F.C. exceeded 0.1 billion yuan in ticketing revenue.

Excluding Guangzhou Evergrande and Beijing Guo’an, the ticketing revenue for CSL clubs are between 10-20 million yuan.

Clubs generated modest revenues from merchandising in 2013. Although the total quantity is less than 10,000,000 yuan, there is cultural shift towards a demand for club branded product/merchandise.

 

CSL club ownership

The real estate industry dominates the CSL ownership landscape with 9 real-estate related organisations owning clubs. The reliance on a single industry is a concern, although there are signs that consumer electronics, online and fast-moving consumer goods are starting to become involved with CSL clubs.

 

Salaries

Since their CSL debut three years ago Guangzhou Evergrande’s spending on salaries has increased dramatically, driving salary inflation across the league.  The salaries of players in traditionally strong teams remains almost the same as in 2012. Salary spending of around 54m yuan is sufficient to maintain a stable mid-table team.

The introduction of overseas coaches to the CSL has stimulated rapid growth in the salaries of coaches. Salaries have increased significantly since 2011, with a growth rate of 20% or above for three consecutive years. In 2013 there was a 43% increase.

The future

The CSL continues to develop with significant strides made both on and off the pitch. The main challenge continues to be revenue development, with only a limited number of clubs able to cover their costs. While all clubs have the safety net of corporate ownership to fall back on, the historic turnover of club ownership shows that this position is not viable in the long-term.

From the brand value perspective, there is close relationship between the value of the CSL and the results of the national team. The CSL value will increase when the national team or club teams are successful on the international stage. The 2002 World Cup is a prime example, so is the performance by Evergrande in 2013 Asian Cup Winners Cup. Without the stimulus of high-level international competition fans can lose interest in the CSL.

The economic value of CSL is closely linked with its competitive value. The concept of ‘large investment = large output’ is generally acknowledged in this industry. However, in order to make investment more professional so as to avoid barbarous growth, it is up to clubs and managers to strive for development with more practices.

Weak revenue development

Ticket revenue of 0.1 billion yuan

FMMI has worked in China since its inception across a range of areas and with multiple clients. The information contained in this feature is from a report produced in conjunction with NetEase/www.163.co

 

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