International sporting teams playing one-off games on Chinese soil for marketing purposes is hardly a new phenomenon. When it comes to Australian Football League club Port Adelaide, however, it is less about winning new fans and developing the sport as it is about building closer economic and cultural ties between Australia and China.
In June, Port Adelaide defeated Melbourne’s St Kilda in front of almost 10,000 fans in Shanghai, in what was the third annual competitive match-up in China between two Australian rules football teams. Most of those present were expats or travelling Australians, but that does not matter.
“Our strategy in China is commercially driven. We present ourselves as a business rather than a sporting club,” says Andrew Hunter, Port Adelaide’s general manager for China engagement.
The announcement of the first competitive AFL game in Shanghai in 2017 was met with derision, much of it coming from fans of rival sports, especially soccer, dismissing the attempts to develop a presence in a country with virtually zero AFL knowledge. The detractors misunderstood Port Adelaide’s intentions.
“People assumed that we wanted to develop the game in China, and we left ourselves open to ridicule,” says Hunter.
Nobody is laughing now, with the club collecting about $5m (€4.5m) a year, around 10 per cent of its annual revenue, from its Chinese activities.
The decision to focus on China, taken back in 2014, was a rational one, Hunter says: “At the time, China seemed a natural market to engage with due to the growing economic and political relationship between the two countries. Initially, we just wanted to have a go; there wasn’t a great deal of clarity but we believed there were opportunities.”
Growing beyond Australia
Port Adelaide is one of 18 teams in the AFL Toyota Premiership, a division which attracted an average attendance of close to 37,000 in 2018 – making it the fourth best attended domestic league in the world, behind only the NBA, the Bundesliga and the English Premier League. Despite the sport’s popularity in Australia, however, the league had reached a saturation point at home, making it difficult to find new revenue streams.
“There was a particular circumstance in which we were in a highly contested area,” said Hunter. “There are around 100 professional clubs in Australia, and the realization that we had too much competition for sponsorship and revenue lead the management to look into alternative revenue streams that were not necessarily in the Australian market. Our sport is only played in one country, so it was counter-intuitive thinking for most Australian clubs to consider revenue from other countries.”
The AFL clash between Port Adelaide and Fremantle Dockers in Adelaide in 2015 gave Chinese property tycoon Gui Guojie his first taste of AFL action, and within a year the billionaire was investing in Port Adelaide, and his international property company Shanghai CRED became a partner of the club.
In 2018, this led to a joint initiative between Port Adelaide and Shanghai CRED to create a business-to-consumer platform specifically designed to enable market access for small and medium-sized Australian companies looking to export premium products to China.
Named the CRED e-SHOP, this gave Port Adelaide’s corporate partners access to a platform to sell their products online in a way that leveraged Shanghai CRED’s extensive business networks in China.
Port Adelaide’s chief executive officer, Keith Thomas, said: “Just as we are discovering with our adventure of taking the previously unknown sport of Australian football to China, there are many challenges and unknowns, but the opportunities are enormous.
“We know that increasing exports out of Australia is a high priority for the Australian Government. We also understand that China continues to be a market that is hungry for these types of exports.
“It is about finding trusted and spending the time required to truly understand what Chinese businesses and consumers are looking for. This requires patience, expertise and, importantly, access and we are confident we can provide improved access through this initiative.”
This essentially allows Port Adelaide to play middle man for any deals on the platform, receiving a percentage of any transactions done. The strategic partnership between Port Adelaide and Shanghai CRED will ensure Port Adelaide’s presence continues in the Chinese city until at least 2023, with at least one game played there annually.
Organising the annual Shanghai game may not be profitable in terms of ticket sales, but it is still a crucial cornerstone of Adelaide’s China strategy.
“The game is an expensive endeavour and provides the platform and a highly visible moment,” said Hunter. “We haven’t tried to develop in China like, say, football. We have tried to present ourselves as a platform to facilitate exchange between Australia and China rather than try to develop the sport. The game means our partners can come together in Shanghai as part of the Festival of Australia.”
Ahead of the June 2 game in Shanghai, 500 businessmen from both countries attended a gala dinner in the city as part of this 10-day festival staged to promote Australian business in ten Chinese cities. Events like these clearly show the symbiotic gains that the Australian government makes with AFL initiatives in China.
“The Middle Kingdom is by far the biggest market for Australia. In 2018, it took almost a third of Australia’s exports, worth over $80bn (€72.4bn),” says Australian Minister for Trade, Tourism and Investment Simon Birmingham. “The government has supported the AFL’s drive, with the Trade Minister Steve Ciobo attending the 2018 game in Shanghai
“This will not only be a great opportunity to help promote the game in China, but also presents a platform to promote Australia as a world-class tourism destination.”
Tourism Australia is partnering the AFL’s drive as China continues to be Australia’s largest tourism market, with 1.4 million visitors from the Asian country spending over $11bn (€9.9bn) in Australia in 2017-18.
“Whilst we are seeing Chinese tourists flock to our shores in record numbers, there is still huge potential for growth given China’s population, its continued economic growth, proximity to Australia and the continuing growth of direct flights between Australia and China”, adds Birmingham.
For Port Adelaide, the Chinese strategy is in large part about attracting bigger sponsors. In July, Adelaide announced that multinational professional services network PwC was coming on board. “PwC and the Port Adelaide Football Club are philosophically aligned – both are innovative businesses, driving commercial activity in key growth markets, such as China,” said PwC Adelaide Managing Partner Jamie Briggs.
What could turn out to be the most profitable venture for Adelaide is international education – not a typical field for a sport club to get involved in. Port Adelaide is positioning itself as a major player in this lucrative sector, which is worth around $40bn in China and $20bn in Australia.
“This is a really interesting economic sector and somewhat immune to the vagaries of Australia-China relations, and booming in both countries,” says Hunter. “It is a platform that tries to encourage flows of students and education brands between the two. It has a rich potential in terms of commercial and education exchanges makes people smarter and more worldly.”
Port Adelaide has already agreements in place with the University of Adelaide and the Jincheng Group of Hangzhou. Negotiations with four more institutions are ongoing. “We often have a presence of both sides as we deliver a football program in China and manage an internship program for Chinese students in Australia,” says Hunter.
…and so does China
Port Adelaide investor Gui believes that getting involved in a sport like Aussie rules can benefit Chinese companies who are looking to break into the Australian market, or expand down under.
“Chinese companies need to strengthen links with the community if they want to do business in Australia, which is different from China, where it is common for companies to isolate themselves,” he says.”Chinese companies often have problems in Australia as they like to erect brick walls on their land and then build their project behind those walls.”
He believes that more engagement with the local communities in Australia helps improve relations with the public and the media down under. That is what Port Adelaide is trying to do, according to Hunter: “We also work with Chinese companies that have interest in Australia and increase their recognition, getting people more comfortable about the brand.”
Other AFL clubs are trying to follow Adelaide’s example. St Kilda president Andrew Bassat, a businessman who has links with China, tells SportBusiness: “We know creating relationships with Chinese companies and engaging Chinese Australians living in Melbourne will take time but we have already had some success with engagement programs involving Chinese students studying in Victoria and will expand these activities over coming years.”
The Melbourne-based club partnered with Australia’s largest independent oil and gas company, Woodside Energy – which signed a major LNG deal with a Chinese firm in April – and Monash University – which not only seeks Chinese students but has prominent links with Chinese educational institutions – ahead of the Shanghai showdown.
Port Adelaide’s activities do not mean that the AFL is going to take off in China as a sport. From a sporting perspective, the AFL still doesn’t have a significant presence.
“Chinese people are not familiar with it at all and I don’t think one game a year in Shanghai will change much,” says Zhang Tingting of Yutang Sports, a Beijing-based sports consultancy. “There are always people looking to try something new and different, but there are many options for those people. It could be that these games have a benefit in another way, but I don’t think there is interest from the average Chinese person.”
It may well be the case that there are new fans of Chinese descent who can be persuaded to take a look at the AFL, but these fans may already be down under.
“There is enormous opportunity to better engage Chinese [living] in Australia,” says Andrew Collins, chief executive of Mailman, the Shanghai-based sports digital marketing agency. “There are over 500,000 Chinese in Australia now, largely ignored by the AFL. Through Chinese-language engagement strategies, ticketing, fan hosting and events to better build the connection, I see more opportunity in their own backyard.”
That may well be true in regard to new fans but in terms of commercial opportunities, Port Adelaide is leading an AFL push into China that may become a blueprint for all Australian sport organisations.