CHINA SPORTS MARKETING NEWSLETTER
Vol. 1, No.4 - October 23, 2001
TOPICS THIS ISSUE:
- The Beijing 2008 Olympic Games Sparks Massive Infrastructure and Telecommunications Improvements
- Insurance Premiums Increase For FIFA 2002 World Cup
- International Sports Licensing For Teams and Athletes
- Chinese Football Association Hands Out Punishment To Clubs
- China Launches Betting On European Soccer
The Beijing 2008 Olympic Games Sparks Massive Infrastructure and Telecommunications Improvements
With the announcement that Beijing was awarded the 2008 summer Olympic Games, the City of Beijing and the Beijing Olympic Committee provided additional details to the public concerning its plans to prepare the City for the Games.
The City of Beijing will spend approximately US $20 billion to more then triple the length of its expressway network, to expand and upgrade its public transportation system and to build numerous competition and training venues by 2008.
Such projects will result in the city expressway network being increased from 216 kilometers to more then 700 kilometers by 2008. The construction of the additional ring roads and other expressways will link every town with a population greater then 50,000 in metropolitan Beijing.
To complement the road construction, the city is also expanding its public transportation system by adding 40.85 kilometers to the existing 53.7 kilometers of subway line. The subway and rail system lines will link central Beijing to the new Olympic Park that will be located in the north end of the city.
The bus system will also undergo a "refit" by dramatically increasing and upgrading the number of buses in the city. The city intends to add 50 new bus routes and thousands of new pollution-free buses each year leading up to the Olympics. The city hopes to have 150,000 buses of various types in operation by 2008.
The telecommunications sector is also preparing for the Olympics. China's telecommunications and information technology industry, already growing at the rate of 20% a year, will be further spurred on by Beijing's goal to be the most technologically advanced Olympic games held to date.
The Olympic Committee and the city of Beijing are committed to expanding the fiber optic network to cover all Olympic sites and providing a secure broadband network to deliver the Games coverage to the world, introducing a mobile communications network capable of handling 500,000 calls in the Olympic site area, establishing a digital cable TV network capable of HDTV transmissions for all Olympic venues and installing GPS technology to cover Olympic transportation routes.
It is evident that no effort will be spared to ensure that Beijing is prepared for the 2008 Olympic Games.
(Source:Beijing 2008 Olympic Organizing Committee)
Insurance Premiums Increase For FIFA 2002 World Cup
AXA, the insurers for the 2002 World Cup Soccer Championship, advised FIFA after the September 11, 2001 terrorist attack on New York and Washington that it was canceling it insurance contract with FIFA even though FIFA had already paid a substantial part of the premium to AXA.
Although the cancellation notice was given by AXA to FIFA, the French group's German Unit Axa Colonia, which leads the consortium of international insurers that was to provide coverage for the tournament in South Korea and Japan next year, stated "we expect there will be a new agreement in one form or other. The parameters have changed so this could work through into higher premiums but it is still too early to say."
Based upon news sources close to the negotiations, the insurance premium will most likely be increased by over 300%.
Other sports events and teams are experiencing similar problems with their insurance coverage. The English National Soccer Team has seen its insurance premiums for games to be held outside of England increased tenfold to about 1 million pounds a trip. In addition, it has been reported that the insurers also require that one half of the team members must fly on a different plane to avoid a catastrophic loss.
This situation will have a serious effect on international team events, as many teams will not be able to afford the insurance cost. With China becoming very active in the business of holding large international sporting events, the new levels of insurance cost for teams wishing to come to China for an event may seriously affect the participation level.
Many sporting organizations that hold large sporting events are very concerned that the revenue from such events will not be adequate to cover the normal operating cost when they factor in the new cost of insurance coverage. Professional sporting events are normally not held without proper insurance coverage, as the market value of professional teams and their athletes is much too valuable an investment to risk.
The insurance industry and sporting organizations are trying to work out a premium structure that meets the financial needs of the insurance industry and the coverage levels required by sport teams/organizations.
(Source: The Irish Times; allAfrical.com; Peoples Daily)
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International Sports Licensing For Teams and Athletes
It has been reported that sports as a global business represents more then 3 percent of the world trade and in the European Union more then 1 percent of the GNP. In the European Union more the 2 million new jobs related to sports have been created.
In the UK, approximately 420,000 people obtain their employment from the sports industry, which generates 12 billion pounds in wages each year.
With the increased popularity of soccer and other sports in China, revenue generated by sports is fast becoming an important economic sector.
With the increase in revenue from sporting enterprises, teams and athletes are looking at ways that they can increase the revenue that ends up in their "pockets". One of the fastest growing sports business areas is that of commercial licensing related to major international sporting events such as the Olympic Games, FIFA World Cup, Super Bowl and International Track Championships. The rights to affix [brand] merchandise with well known sport event logos, symbols, emblems and marks is pursued by many companies and is very valuable. This is also the situation in China with the popularity of soccer and the pending 2008 Olympic games.
The electronic and Internet age has facilitated the sports computer games industry that is a multibillion dollar part of the world wide economy. It has been reported that in several sports, licensed games are now generating more revenue then other sponsorships and are close in amount to the sums paid for sports broadcasting rights.
Teams and athletes are therefore looking to negotiate and finalize licensing agreements that will firstly, secure a steady income stream to them and secondly, protect their trademarks, logos and image marks from being improperly used to their detriment. Properly drafted licensing agreements need to be negotiated considering such things as: due diligence concerning ownership of the intellectual property rights, timing for release of the rights, structuring the license to minimize tax, clearly setting out the payment terms visa vie product sales, currency exchange issues and controls, Force Majeure events impacting on the sale of licensed products, withholding taxes in different countries and set off provisions.
Establishing a well drafted licensing agreement for a team, event or an athlete will not only maximize the financial returns for all parties involved but also protect the licensed right from improper use by third parties.
(Source: Sports and Character licensing)
Chinese Football Association Hands Out Punishment To Clubs
The Chinese Football Association (CFA) on Wednesday handed out a series of tough punishments to five domestic league clubs accused of match fixing.
The penalties imposed by CFA included revoking the licenses of the coaches of the clubs involved for one year and the clubs were banned from fielding new non-foreign players for two years. In addition, all Chinese players who took part in the three suspicious matches involved would be banned for a year and form transferring to a new club for 2 years unless the Association removes this condition.
The teams involved were Changchun Yatai, Sichuan Mianyang, Chengdu Wuniu, Jiangsu, Shuntian and Zhejiang Lucheng. It is not known if there is any appeal process.
The clubs were accused of complicity and passive play thereby allowing scores to be run up in the last two weeks of the second division season from late September, as teams tried to grab promotion spots or avoid relegation.
No pay-offs were reported to have been involved in the scandal.
Among the suspicious games was Chengdu's 11-2 victory over Sichuan on September 29, when Chengdu needed to improve their goal difference to gain promotion to the first division for next years league play.
Changchun also secured promotion after beating Zhejiang 6-0 in an October 6 match.
Accusations of match fixing have plagued China's seven-year-old professional leagues, with previous allegations implicating corrupt officials as well as coaches.
The October 7 qualification of by the Chinese national team for next year's World Cup finals has made it imperative for the Association to ensure that league games be fair and competitive.
(Source: Xinhua News Agency)
China Launches Betting On European Soccer
China is to test a soccer betting competition, allowing people to win more than 100,000 dollars by predicting the results of games in England and Italy.
A trial run of the competition will begin from October 22 in four cities, including Beijing and Shanghai, and eight provinces around the country. Profits from the betting will go towards funding the 2008 Olympic games in Beijing as well as other sports-related matters.
Tickets, which will cost two RMB (24 cents), will let players predict wins, losses and draws in nine matches from Italy's Serie A competition and four from the English Premiership.
The first prize, for those who get all 13 results right, will be RMB 880,000 (USD 106,000), with RMB 680,000 for correctly guessing 12, the newspaper said.
In the past the only legal gambling available has been lotteries in which players pick numbers by chance. These state-controlled lotteries, introduced in the 1980s as a way of indulging traditional passions for gaming while at the same time lining government coffers, have been very popular.
According to the government's center for lottery research, the market for lotteries will reach RMB 84 billion (USD 10 billion) by 2010, a five-fold increase on last year's sales.
Cash raised by the lotteries also goes to fund sports, including the 2008 Olympics, as well as to retirement homes, hospitals, handicapped centers and orphanages.
(Source: Agence France Presse)
Lehman Lee & Xu
China Lawyers, Notaries, Patent, Copyright and Trademark Agents
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