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Chinese athletes to benefit as government heads off potential for endorsement disputes in Olympic year

Ning Zetao of China celebrates after during the Men's 50m Butterfly Final at the National Aquatics Centre during day one of 2015 FINA World Cup Beijing on September 29, 2015 in Beijing, China. (Photo by Lintao Zhang/Getty Images)

  • China’s General Administration of Sport recently withdrew two regulation papers that affected the sponsorship and marketing of national athletes
  • These regulations have affected the ability of Chinese athletes to profit from their sporting success
  • With the 2020 Tokyo Olympics coming up, the GAS is keen to avoid public disagreements over income distribution with its athletes

Earlier this month, China’s General Administration of Sport issued a document announcing the abolition of 13 regulation papers governing the sports industry in the country.

Most of the changes were standard trimmings of red tape, from regulating square dance fitness activities to standardization of the work by certain departments within the GAS. But the repeal of two papers have piqued interest in the Chinese sport industry:

  • Regulations related to commercial activities of national athletes, enacted September 6, 2006
  • Interim measures for the administration of bonuses for national athletes, promulgated January 5, 2007

These two regulation papers have governed the marketing of sports and athletes for many years, particularly the first paper, which has been considered the industry guide on what is permitted and what is banned in the marketing of star athletes.

It contained clear rules, for example that “national team and national athletes are not allowed to directly or indirectly participate in business activities without organizational permission” and “the intangible assets of active athletes belong to the State and need to be developed by the State”.

As such, commercial activities for China’s sporting stars have fallen under the responsibility of their sport associations, with proceeds from individual sponsorships generally divvied up along the following percentages: 50 per cent for the individual athlete/players in the team; 15 per cent for coaching and backroom staff; 15 per cent to the linked sports association; and 20 per cent to intermediaries and agencies.

In terms of prize monies from events such as the Olympics, the guidelines stipulates that for individual sports, 60 per cent goes to the athlete, and 40 per cent goes to the linked sports association; for team sports, 70 per cent goes to players, coaches and backroom staff, and 30 per cent to the association.

Heading off trouble

Why the change now? With the Tokyo 2020 Olympics coming up, and the 2022 Beijing Winter Olympics on the horizon, it appears the GAS is determined to ensure that potential conflicts of interests are stamped out. Previous controversies have been regarded as a serious loss of prestige for the government.

Well-known examples include former Houston Rockets star and current Chinese Basketball Association chairman Yao Ming suing Coca Cola for a single yuan in 2003. The global drinks giant had used his name and image in its marketing with the Chinese national basketball team, while he was a brand ambassador for Pepsi.

Jianlian Yi of the China Olympic basketball team carries his country’s flag during the Opening Ceremony of the London 2012 Olympic Games. (Photo by Michael Regan/Getty Images)

In 2016, basketball star Yi Jianlian was fined $7,000 and given a one-game ban after violating a CBA rule mandating domestic players wear exclusively Li Ning apparel. Yi, a Nike endorser, had in protest taken off his Li Ning shoe, left it under the basket and walked off the court, complaining that the shoes were hurting his feet.

The GAS is particularly keen to avoid another Ning Zetao scenario. The first Asian to win the 100m freestyle at the World Aquatics Championships, in 2015, Ning had several controversial disagreements with the Swimming Management Centre of the GAS, which booted him from the national team in 2017, citing several violations Ning made in signing sponsorship contracts without the team’s consent. The most jarring was a deal he inked with Adidas, which was publicly awkward as the Chinese national team was sponsored by a Chinese competitor, 361.

More freedom

A source told SportBusiness that new regulations would be put in place soon, with new documents being drafted by the GAS’s legal team. It is understood they will have an increased focus on the rights and interest of athletes and, with regards to endorsement deals, will encourage more ‘collective deals’ –possibly under the “TEAM CHINA” umbrella set up late last year.

‘TEAM CHINA’ is a marketing initiative similar to the United States Olympic and Paralympic Committee’s “TEAM USA” trademark, which allows the USOPC broad rights to control commercial uses of the brand and sponsorship deals for national funding of athletes and athlete programs.

This new image and unified title will include the Chinese national teams for various sports as well as when they attend global events as a collective or delegation.

An official from the Sports Equipment and Equipment Centre of the GAS, who declined to be named, tells to SportBusiness: “Previously, whether an athlete could sign an agent to garner commercial and image rights deals was a grey area. This will be clarified with the new regulations. Essentially, the business activities for national athletes will be standardised, with more autonomy given.

Gold medalist Li Zhuhao of China(L),Silver medalist Xu Jiayu of China(R) and bronze medalist Ning Zetao (C)of China take a selfie during a medal ceremony. (Photo by Emmanuel Wong/Getty Images)

“2020 is a big year for athletes and their associations, with the Tokyo Olympics coming up. With more commercial deals and opportunities, the introduction of these new rules will help stimulate morale amongst athletes, and inspire them to better results, and also obtain more reasonable commercial returns for themselves.”

But Adam Zhang, chief executive officer for Chinese sports consultancy Key Solutions, notes: “At the end of the day, it’s a balance of rights and responsibilities. Traditionally, because China uses a national system and state funding to train athletes, most of them are considered civil servants, so their income must be allocated by the state. They won’t be allowed to simply use the system and fully enjoy the dividends of the free market economy.”

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