Wanda's Atlectico stake will help branding in Europe

Investing in a professional soccer team in Spain will help Chinese real estate giant Dalian Wanda Group Co expand its brand and properties into Europe while building interest in the sport on the mainland, according to US sports management observers.

The Beijing-based conglomerate announced Wednesday that it will invest 45 million euros ($52 million) for a 20 percent stake in the Spanish soccer team Club Atletico de Madrid, the first Chinese company to invest in a major European soccer team.

Wanda has been expanding its operations to include online businesses, entertainment and now sports in a bid to maintain profitability amid China's property downturn.

"With this investment stake, Wanda will have the opportunity to create more synergy between all of its brands, thus creating a bigger consumer base to drive revenue," Courtney Brunious, associate director of the Sports Business Institute at the University of Southern California in Los Angeles told China Daily in an e-mail.

Brunious said foreign ownership can be seen in many of the world's top sports teams including the US, citing the Boston Red Sox ownership group's control over Liverpool F.C., the late Malcolm Glazer of the NFL's Tampa Bay Buccaneers' ownership of Manchester United or Russia's Mikhail Prokhorov's ownership of the NBA's Brooklyn Nets.

"For some investors, the ability to enter into new markets not covered by their portfolio is as an enticement. For others, there is prestige attached to an association with a premier sports league. There are a finite number of sports ownership stakes available, so an opportunity to own or invest in a team can act as a vanity play as well. Lastly, ownership in overseas markets also provides the investor with business development opportunities with new companies in that market and opens up that region's consumer base for brand exposure," said Brunious.

"We've seen a steady increase in foreign investment in almost every major sport. Part of it has been driven by seeing undervalued asset buying opportunities. Some of it is driven by the "trophy case" nature of sports team ownership," added Paul Swangard, the Woodard Family Foundation Sports Business Fellow and managing director of the James H. Warsaw Sports Marketing Center at the University of Oregon in Eugene, Oregon.

The purchase was orchestrated by Wanda Chairman Jianlin Wang, China's second-richest man. The investment also includes an agreement that calls for Wanda and Atletico to jointly invest 30 million euros to build a training center for Chinese juniors sent to Spain as part of the company's Future Star youth program with the Chinese Football Association. Atletico will also provide technical support and coaching expertise for Wanda's three soccer academies to be built in China.

"If three to five Chinese players can manage to ply their trade successfully in top European leagues, then we are not burning money," said Wang.

Wang's goal of developing soccer stars in China to play in Europe is similar to the plans laid out by Vincent Tan, who is the owner of the Cardiff City Football Club in Wales, Anthony Evans, senior research fellow at the L. William Seidman Research Institute at the W. P. Carey School of Business at Arizona State University in Tempe, Arizona, said in an e-mail to China Daily.

After purchasing Cardiff City, Tan changed Cardiff's color from blue to red and this has upset the team's fans. He also has set up a development academy in Malaysia with the same goal as envisioned by Wang in China with Atletico of bringing talented players over to Europe.

According to Evans, immigration issues have stalled Tan's plan. "There may be an issue with work permits for the players," said Evans in an interview. "This might also turn into a challenge for the Wanda Group's ambitions as well."

Brian Soebbing, assistant professor of sports management at Louisiana State University in Baton Rouge, Louisiana, said soccer is the ideal sport for a company or group to attain a global marketing and entertainment presence.

"Soccer is the gateway for a group to expand its brand and marketing into another country because it is the world's most popular sport," he told China Daily. "While there is potential for other sports to do this, soccer is right now the only sport with a sizeable global following and audience."

This won't be the first investment in Spain for Wanda Group, which counts US movie-theater chain AMC Entertainment among its holdings. Last year the company bought a 28-story building in Madrid from Spanish bank Banco Santander SA for 265 million euros.