Spain’s La Liga is stepping up efforts to challenge the English Premier League on the international stage with a joint venture in China aimed at accelerating commercial deals in the country.
As part of a 15-year agreement to be announced on Thursday, La Liga holds a 49 per cent stake in the venture, which will have exclusive rights to sell sponsorship deals for the league in China, with its two partners holding the majority stake.
The Spanish league has teamed up with Super Sports, a subsidiary of DDMC, one of China’s biggest sports and entertainment groups, and Mediapro, the Spanish media company backed by Chinese private equity group Orient Hongtai Capital Management.
China is a huge potential market for European football leagues, which are competing for business partners and audiences outside of their domestic markets, with football-obsessed fans in Asia a prime target.
The clubs in Spain’s top division, including heavyweight teams such as Real Madrid and FC Barcelona, made €3bn in revenues in the 2017-18 season, according to consultancy Deloitte. That trails the English Premier League, the world’s most watched and valuable domestic football competition, which made €5.4bn over the same period.
Sponsorship revenues at La Liga from China have trebled over the past three years and include deals with Dongfeng, the automobile manufacturer, and LD Sports, a Chinese start-up. The goal is to accelerate that to €30m over the next five years through the tie-up.
While small sums compared with overall revenues, Oscar Mayo, director of business, marketing and international development at La Liga, said the goal was to partner with Chinese companies to build the league’s brand in the country and increase the value of more lucrative broadcast rights over time.
Last year, DDMC, which already holds the exclusive rights to screen Spanish league matches in China, agreed to pay €100m a season to screen La Liga in a contract that was extended to 2025.
Mr Mayo conceded that the coronavirus pandemic had complicated negotiations over the joint venture, however.
“The business plan for next year obviously is not going to be the same that we were talking [about] one year ago because the world is different,” he said. “We all understand that this is a midterm project so there has not been a big change in the ambition of the project.”
Spanish clubs have resumed training after coronavirus restrictions were eased and aim to resume play as early as next month.
Javier Tebas, chief executive of La Liga, has said elite Spanish clubs will lose at least €150m due to the crisis. Those losses will rise to €300m if this season’s matches are completed but played in empty stadiums due to social distancing measures, sacrificing ticketing income to satisfy more valuable broadcasting contracts. However, if games cannot be completed, the financial hit would be about €1bn.
The creation of a joint venture in China is similar to La Liga’s approach in North America, where it formed a partnership with Relevent Sports, a football promotion company backed by billionaire Stephen Ross, in August 2018.
Nigel Currie, a sports marketing consultant, said that because of coronavirus “it’s going to be a huge challenge. Anything involving other territories will not be high on people’s priorities.”