Asia has become the driving force behind the world's most popular and lucrative national football league, despite being many thousands of miles and several time zones away from much of the actual action.
That has been underlined across the region in recent weeks as clubs from England have ventured east on pre-season marketing and PR assignments to play a few matches here ahead of their new season. English football is big business in Asia.
Nearly 40,000 soccer fans witnessed Liverpool’s 2-1 win over Leicester City in the final of the Premier League Asia Trophy in Hong Kong last Saturday. Before that the city's average match attendance was just 900.
On the same day, English champions Chelsea played a packed Bird's Nest stadium in Beijing against bigger London rivals Arsenal, fresh from a sellout tour of Australia a week earlier, before heading to Singapore for another two hotly anticipated matches.
“Asia is no doubt an important market for us,” Richard Scudamore, the Premier League's executive chairman, said. “And there is a lot of room to grow the business here.”
“It is quite remarkable to see there are more people watching soccer outside of our country,” Scudamore said at the Barclays Business of Soccer Luncheon last week.
In terms of broadcast audiences, China, India, and Thailand already account for three of the English Premier League's four-biggest overseas markets.
But judging by the levels of commercial activity around the sport, whether in terms of football club investments, sponsorship deals, or competition for media rights, we're still in the early stages of a burgeoning trend -- not just for English football but for the business of soccer in general.
According to Anthony Davies, chief executive of Barclays Hong Kong, more than 3 million people in Hong Kong, which has a population of 7 million, are interested in soccer.
Chinese soccer craze
Soccer’s growing popularity in Asia is underscored by the rise of China as a big spender, acquiring both soccer clubs and superstar footballing talent.
According to cross-border M&A advisory firm ThinkingLinking, China spent $2.5 billion buying overseas soccer clubs between 2014 and 2016, ranking first among all nations and spending seven times more than the US in second place.
Among the big deals was Chinese businessman Li Yonghong’s $800 million purchase of AC Milan, an 18-time winner of Italy’s top soccer league Serie A. Chinese companies have also acquired stakes in top-flight European football clubs including Manchester City, Atlético Madrid, and Inter Milan, and medium-sized English clubs such as Wolverhampton Wanderers, Aston Villa, and West Bromwich Albion.
Meanwhile, the Chinese Super League, founded in 2004, has stepped up its ambitions in line with the Chinese government's 2015 Football Reform Plan as the country vies to improve the standard of its football and eventually host or even win the World Cup.
As a result Chinese soccer clubs have been splashing out for top players on the international transfer market. Last year, Shanghai SIPG bought Brazilian midfielder Oscar from Chelsea for $68 million, setting a new record for player bought by a non-European team.
“China just decided to do it – both at the government and company level,” ThinkingLinking founder Mark Dixon told FinanceAsia. “It’s the result of the country’s sheer ambition to become a major player in this field globally and to bring home the know-how and kudos from each of these wins.”
China's ambition to become a global soccer superpower by 2050 has clear parallels with Chinese efforts to bring in technological and industrial know-how.
And it's not just China that has the English/European football bug. Other Asian countries were quicker than China to to tap into soccer’s growing popularity at home. For instance, Thai billionaire Vichai Srivaddhanaprabha bought Leicester City – champions of the 2015/16 Premier League – in 2010, four years before Singapore’s Peter Lim bought a majority stake in La Liga side Valencia in Spain.
Big business
Football’s huge popularity in Asia has turned the sport into a huge, potentially gargantuan, and increasingly profitable business, and is attracting a growing number of companies and investors who are seeking to capitalise on the large audiences and massive spending power of fans.
It's why the likes of Arsenal and Chelsea are increasingly reaching out to their Asian fanbases and why European club matches, including the world's biggest between Spanish duo Real Madrid and Barcelona, are increasingly kicking-off earlier, so Asian fans can watch them more easily. It's also why businesses with big Asian a presence are increasingly sponsoring English football shirts such as Standard Chartered (Liverpool) and AIA (Tottenham), and why Asian company adverts increasingly pepper the advertising hoardings around the pitches.
While there are currently no soccer clubs listed in Asia, the sport could also become a capital markets business soon. That's because some Asian-owned European clubs are now considering whether to list in Hong Kong in the next 12 to 18 months, both as a way to raise fresh capital and to boost their reputations.
Listing soccer clubs, not just European but domestic too, could become a trend in Asia. Since some local companies have invested in soccer teams, so some of these companies will need to cash out their investments at some point.
Most Chinese Super League teams are now named after their key financial backers like Evergrande, Greentown Group, Renhe Commercial, and Suning Appliance. In Korea, Samsung, Hyundai, and Pohang Iron and Steel are also key investors in local soccer teams.
Critics have warned of a potential soccer bubble crash. Some tensions have already surfaced: thirteen Chinese Super League clubs, for example, reportedly risk being barred next season for failing to pay their players properly.
But as Scudamore noted the increase in soccer revenue is much faster than the money spent by clubs.
“When Luiz Figo transferred from Barcelona to Real Madrid for £37 million ($48 million) in 2000, the amount was about 10% of our league’s revenue that year,” Scudamore said. “Now we are a £2 billion business but the highest transfer fee is only about €100 million.”
Steve McManaman, a former Liverpool, Real Madrid, and England footballer, said there is still room for soccer's popularity in Asia and China to grow if the region nurtures a world class soccer player in the years to come.
“I think what they need is a world class player – like Yao Ming in basketball – that people can really cheer for,” McManaman said. “As soon as there is an Asian superstar, the sport will grow rapidly.” And by that he means at an even faster rate than it is already.
