Suning Sports, owner of the Chinese streaming platform PP Sports, is laying off nearly 30 per cent of its staff in a cost-cutting drive and may have restarted joint-venture talks with Alibaba, according to local media reports.
In August, Suning Sports executive vice president Wang Dong admitted the company’s finances were under pressure due to its heavy outlay on sports media rights for its streaming service PP Sports.
The news of the layoffs and restarted Alibaba talks was broken by Chinese sports business news website Lanxiong Sports, which estimates that PP Sports has rights fee commitments of more than RMB3.44bn ($480m) per year.
The platform’s $233m-per-season fee for English Premier League rights in the 2019-20 to 2021-22 cycle is considered by market experts to be particularly onerous. It has several other expensive football rights contracts, including for the German Bundesliga, from 2018-19 to 2022-23, the Uefa Champions League and Europa League, from 2018-19 to 2020-21, and the Chinese Super League.
Lanxiong Sports reports that Suning Sports’ staff count has this year been reduced to 400 from 550, and that there may be further cuts to come. The layoffs so far have come in three rounds, in June, August, and September.
The website quotes “a person close to the top of Suning” as saying that the talks with tech giant Alibaba have restarted. The two companies earlier this year discussed a joint-venture in sports streaming, which would have merged PPTV Sports with Alibaba’s platform Youku Sports. Suning is understood to have wanted the deal in order to share the cost of PP Sports. Alibaba wanted a bigger presence in sports streaming – Youku Sports doesn’t have any major sports rights properties.
The two companies jointly bid for the NBA digital rights that Tencent acquired in July in a record-breaking deal. An NBA rights deal would have cemented the PP Sports-Youku Sports joint-venture. Lanxiong Sports reports that Dai Wei, the chief executive of Alibaba’s sports division Alisports, stood ready to become chief executive of the JV. Instead, the talks between the two companies broke down after the failed NBA bid.
Lanxiong Sports’ source said Suning’s valuation in any renewed talks with Alibaba will be lower than earlier in the year. One interpretation of the recent layoffs at Suning Sports is that the company is preparing the ground for the JV. Youku Sports is also reported to have laid off staff this year.