RCD Espanyol majority shareholder Rastar reports profit slump in 2019 H1 despite “Wu Lei effect”

Chinese manufacturing business Rastar Group, the majority shareholders of LaLiga club RCD Espanyol, released their first-half financial results for 2019, which showed a net profit of ¥47.8m (€6.1m/$6.7m) in its football operations, which account for 41.18 per cent of the company’s total operating income.

In 2016, Rastar invested $55m (€50m) for a 54-per-cent stake in the LaLiga club.

The report shows that Rastar achieved an operating income of ¥1.2bn (€152m/$167.8m) in H1, a decrease of 31.5 per cent over the same period in 2018, while the net profit for the group also decreased by 10.7 per cent to ¥126m (€15.9m/$17.6m) yuan.

This was similar to the performance of their football operations in H1. The 2019 H1 report shows revenue of  ¥462m (€58.5m/$64.6m), according to Cs.com.cn. In comparison to the same period in 2018, they had achieved ¥491m (€62.2m/$68.7m) , a decrease of 5.9 per cent.

Net profit showed a sharper drop of 58.1 per cent, from ¥114.1m (€14.4m/$15.9m) in H1 2018 sinking to ¥47.8m (€6.1m/$6.7m) in H1 2019.

There were positive numbers from their gaming division, Rastar Games, which achieved a net profit of ¥837m (€106m/$117.1m) in H1 2019, a year-on-year increase of 24.1 per cent. Rastar’s car model toys and infant and children products businesses both had year-on-year revenue drops of 2.49 per cent and 28.9 per cent respectively.

The decrease in revenue and profits for their football operations is in spite of the popularity of Chinese international player Wu Lei, who was signed in January this year. Espanyol claimed his first game in their 2-2 draw against Villarreal was followed by more than 40 million people in China through various online television platforms.

In June, Espanyol signed an agreement with China Mobile under which video content, including live reserve team games, will be hosted on the mobile telco’s video platform Midea Entertainment.

Chinese technology company iFlyTek has also jumped on board in July to sponsor Espanyol, and made Wu an official ambassador.

Earlier this month, Espanyol reportedly signed a new front-of-shirt deal with LD Sports – the mysterious, newly-launched Chinese content platform and shirt sponsor of Premier League club Southampton.

On Thursday, Espanyol  secured a return to the group stages of the Uefa Europa League after a play-off round victory over Ukranian side Zorya Luhansk.