HomeBusinessMultiple SportsChina

International sports organisations face a transformed landscape in China

The cost of doing business in China is increasing for many international sports industry players, says SportBusiness Asia-Pacific editor Kevin McCullagh.

Is there a sports market in the world that has experienced more seismic shifts in the last two years than China’s? Let’s recap some of the highlights and lowlights.

July 2019 – The NBA agrees a record-breaking digital media rights deal with Tencent for the 2020-21 to 2024-25 period.

October 2019 – The NBA’s business in China is rocked by the Daryl Morey tweet incident. The league goes on to suffer a reported $200m loss in revenue.

Kevin McCullagh

January 2020 – A sharp government response to the Covid pandemic puts a stop to all international sports events and most domestic events in China. These restrictions are essentially still in place and are expected to run throughout most of 2022.

September 2020 – The English Premier League terminates its digital media rights deal with streaming platform PP Sports. A series of other deals are subsequently renegotiated or end early as the previous market-leader in sports streaming all-but collapses.

February 2021 – Chinese Super League champion Jiangsu Suning collapses, after owner Suning withdraws financial support. Despite efforts by Chinese football authorities, the country’s club game remains in dire financial trouble.

Mid-2021 – Rights-holders formerly with PP Sports, including the CSL, the Premier League, Uefa, the German Bundesliga, and the Italian Serie A suffer swingeing cuts to their media rights values in China, in new deals agreed this year.

October 2021 – The NBA announces a rights deal with Migu, the outcome of which is that the league’s digital media rights income from China between this season and 2024-25 will be, remarkably, more than that envisaged at the time of the record-breaking July 2019 deal.

November 2021 – The WTA announces the cessation of all tournaments in China on the back of the Peng Shuai affair

December 2021 – The US announces a ‘diplomatic boycott’ of Beijing 2022. Allies including Australia, Canada and the UK follow suit.

For international sports organisations, particularly Western-based ones, the upshot of these developments is that China has turned from being a land of opportunity into one of the most challenging markets in the world.

The challenges fall into two broad categories:

(i) Economic – In the sports media business in particular, the paying audiences that it was hoped would develop for sport have not materialised. More broadly, international sports brands are facing in China an amped-up version of challenges witnessed in other markets – young audiences that are less enamoured with their product than previous generations and a dizzying amount of competition from gaming and other digital entertainment genres.

(ii) Political – The growing political rift between China and the West presents a separate category of challenge, particularly for Western-focused organisations. Most difficult of all, sports organisations are being asked whether they can align their ‘values’ with their business in China. In some cases, they clearly cannot answer these questions honestly or directly without damaging their business either in China or at home, and are thus coming under fire. In a world where rights-holders put their values at the heart of their brand-building, trumpeting them from the rooftops, realpolitik approaches may not be acceptable to fans and customers.

What does 2022 hold in store?

The next most likely candidate for an industry-shaking China story is of course Beijing 2022. At the time of writing, the US diplomatic boycott had just been announced. Such a move arguably sounds more dramatic than it is – the absence of a few B-list political figures from the opening and closing ceremonies at a Winter Olympics is not a huge deal. An athlete boycott would be much more consequential, although does not appear to be on the cards at present.

Even in the recent boom years, China was a challenging market to navigate for overseas sports organisations. Now, it requires an even more careful approach. Expert local knowledge, clear strategy, and contingency planning must all be in place.

Few companies, and few sports organisations with global ambitions, can afford to ignore the world’s second-biggest market. Organisations like the NBA and the UFC show that strong commercial outcomes are still possible. But the costs of doing business in China are rising. The WTA is the first major sports organisation that appears to have reached a tipping point where that cost has outweighed the advantages. Will more follow?

In the interests of political harmony and continued growth in the sports industry, we can hope for more economic stability in the Chinese market and a dialling down of East-West tensions in 2022. But there will be no escaping that this is a market profoundly changed from two years ago.

Most recent

The Drone Racing League has experienced a run of new business activity and audience development by leaning squarely into emerging trends such as legal sports wagering, 5G and blockchain technology, cryptocurrency, the metaverse, and STEM education. US Editor Eric Fisher reports.

The European Tour group examined a range of private equity proposals before opting to enter into a strategic alliance with the PGA Tour, according to deputy CEO Guy Kinnings. SportBusiness speaks to him about the organisation's latest set of accounts which show the financial impact of the deal.

In this week’s episode, podcast co-hosts Eric Fisher and Chris Russo interview Ken Solomon, Tennis Channel president. Fisher and Russo also discuss The New York Times Company’s $550m (€486.9m) deal to acquire sports media outlet of The Athletic, Fanatics’ market-shifting, $500m purchase of the sports and entertainment assets of The Topps Co., and the National Football League’s deliberations around the forthcoming Super Bowl LVI in California amid the ongoing Covid-19 pandemic.

From our partner Getty Images, we present a selection of the best sporting photography of the past year, with commentary from Getty's Global Senior Director of Sports Photography Paul Gilham.