Global Developments and Trends – 2012
January 2, 2013
By Colin Robinson
iSportconnect is a global platform and as such strives to keep you informed of the latest international developments and trends from all around the world…
Africa
Olympics In Africa?
Perhaps the most exciting sports business news to come out of Africa this year came in August when Kenya’s Prime Minister Raila Odinga announced the nation’s capital, Nairobi, would bid to become the first ever African host of the Olympic Games in 2024. Following the success of the 2010 FIFA World Cup in South Africa, it seems only a matter of time before the Games takes place in Africa.
CSA CEO Turfed Out
2012 was not quite such a positive year for sport in South Africa as Cricket South Africa CEO, Gerald Majola was suspended in March and dismissed in October. Majola found guilty on nine charges, including accepting bonuses, not declaring them to the board and wrongdoing around travel claims and concealing bonus payments made to himself and staff. He had been one of the longest serving CEOs in international cricket, having held the position since 2001.
SAFA CEO Suspended
South African sports administration recently suffered another blow as Kirsten Nematandani, CEO of South Africa Football Association, is currently suspended for alleged while allegations of match fixing in the lead up to the 2010 World Cup are investigated.
Canal + Deal- Positive News for African Soccer
African domestic football received a boost as Canal + bought almost all African football media rights for France through 2016, The broadcaster paid US$7M for the 2013 and 2015 editions of the Africa Cup of Nations. Canal+ was also awarded the rights to all official competitions organised by the Confederation of African Football for an additional US$3.9M.
Asia
Big Trouble in East China Sea
One of the biggest issues in Asian sports business during the second half of the year has been the ongoing dispute between China and Japan over the Diaoyu/Senkaku islands in the East China Sea.
To date, the territorial dispute has affected several sports events. The Beijing International Marathon, for example, was, unlike several previous editions, not sponsored by any Japanese brands. And all Chinese players were withdrawn from competing in the Japan Open Badminton tournament.
The dispute is yet to be resolved. It will be interesting to see whether it will continue to affect sporting relations. Japan’s territorial disputes with China and other nations including Russia and South Korea could damage Tokyo’s chances when the IOC votes to elect the host city of the 2020 Olympics.
Cash Splashed in Chinese Super League
2012 was a big year for the Chinese Super League as big businessmen vied for glory and or attention by bringing high profile players and staff and recorded big losses in the process.
Teams in the CSL regularly change names, locations and identities so it was no great surprise that Aerbin Group owners of Dalian Aerbin bought neighbouring club Dalian Shide for more than US$50million with Shide’s sponsors, Shide Group, facing vast debts.
Relying too much on one sponsor is a common problem in the CSL and too many clubs do little to build their own brands. Its estimated that 84% of CSL club revenues between ’08 and ’12 was from advertising and sponsorship, 12% from ticket sales and next to nothing from broadcast revenues.
The club currently known as Beijing Guoan and formerly known as Beijing Hyundai may soon be known by a different name after recently deciding to sell its naming rights, presumably Japanese sponsors need not apply.
Chinese Basketball League Still Top Dog
Despite the attempts of the CSL and various other sports trying to gain a market presence in China, basketball still reigns supreme in China’s sports business world and the Chinese Basketball Association (CBA) secured a few spectacular money-spinning deals with Tsingtao Brewery, CCTV and Li-Ning.
Li Ning, which also agreed big money deals with Dwayne Wade and Miami Heat, signed a five-year deal with the CBA for a reported US$321 million,
Infront renewed its partnership with the CBA for a further 5 years for a reported cost of US$270 million
It’s not hard to see why the league is valued so highly– at the end of last season, a cumulative TV audience of over 700 million had been reached and the CBA All Star Games now attract around 100million viewers.
CCTV Dominates Chinese Sports Media
Government owned China Central Television (CCTV) is the dominant force in Chinese sports media.
Research from China gSER (gemba Sport and Entertainment Report 2012)shows CCTV’s sports channel, CCTV 5, is the primary way in which sports fans follow the nation’s two dominant sports league’s the China Basketball Association and the Chinese Super League. 72% of CSL and 62% of CBA fans follow the league via the channel 62%
IOA Feels Wrath of IOC
The Indian Olympic Association (IOA) was suspended by the International Olympic Committee (IOC) because of a dispute over a controversial election, which was influenced by the Indian government. The IOA elected Lalit Bhanot as its Secretary General even though he had spent time in jail on corruption charges related to the 2010 Delhi Commonwealth Games. The IOC says the election is not valid.
IPL Still Going Strong
The Indian Premier League is still going strong despite a few troubling issues. Perhaps the most notable example was the “absolute inability” of the Deccan Chargers owners to run the franchise, which led to the Board of Control for Cricket in India (BCCI) terminating the team.
The BCCI hopes south India-based media conglomerate Sun TV, which bought the rights to own and operate a new IPL team in Hyderabad will be more competent. Sun TV agreed a 10-year deal and will pay an annual fee of US$15.81M to operate the team.
Better still, the BCCI announced that PepsiCo will become the new title sponsor of the IPL in a five year deal worth double the inaugural sponsorship with DLF. Pepsi won the rights with a bid of US$72 million for the five seasons. The deal takes affect in 2013.
Korean Baseball Hits Record Highs
While around the world everyone has been enjoying the ‘Gangnam Style’ video, in PSY’s native country of Korea it’s baseball that everyone has been watching.
The Korean baseball league has smashed attendances record and is now set to add a tenth professional team.
The total attendance for the domestic baseball league surpassed 7 million.
Fun and Asian Games in Hanoi
Vietnam’s capital city of Hanoi was awarded hosting of the 2019 Asian Games, beating competition from Surabaya in Indonesia. Hanoi has a fairly impressive recent history for holding sporting events having been the host city of the 2003 Southeast Asian Games and the 2009 Indoor Asian Games.
2020 Games to go to Tokyo?
Tokyo is still in contention to host the 2020 Olympic Games as the city continues its revival following the tragic tsunami in March 2011.
Tokyo can make a strong case for hosting the games. Public support for the bid is increasing and the nation ranked highly in the World Economic Forum’s Global Competitiveness report, receiving praise for its capacity for innovation, which President of the Tokyo Bid Committee, Tsunekazu Takeda, believes could be influential in convincing IOC members to vote in favour of the Japanese capital.
Pacific
Sports Federations Say No To Alcohol Sponsorship
A government-led initiative to restrict alcohol sponsorship was met with approval of 12 major Australian sports federations following its launch in June. The federations signed up to reject alcohol sponsorship for their share of around US$26million.
Many athletes supported the scheme and stated their wish to inspire people to avoid binge drinking. A very commendable programme but alcohol and fast-food companies have provided significant resources to the sports industry over the years. Perhaps encouraging sensible consumption would be more appropriate.
Strong Sports Get Stronger
Australian sport in 2012 was also characterised by a continuation of lucrative broadcasting deals for established sports leagues following the AFL’s huge money spinning contracts in 2011.
A US$1.07 billion deal was agreed for the NRL. Cricket Australia’s broadcasting deals also totaled more than US$1billion.
Australian soccer’s A-League scored a US$166 million dollar broadcasting deal, indicating its improving value.
AIG Backs All Blacks
The biggest story in neighbouring New Zealand was AIG’s sponsorship of the New Zealand Rugby Union (NZRU), which included printing the company’s logo on the sacred All Blacks kit.
Todd Hewitt of Gemba Sports Market Research says that market research shows rugby fans accept commercial sponsorship and the need for ongoing investment with just 4% seeing commercial sponsorship as a bad thing. 72% see it as a good thing and a mere 4% view it negatively.
Gemba research also shows that 34% of rugby fans in New Zealand would be loyal to sponsors when purchasing products and services.
Europe
London 2012- More Hit Than Miss
The London Games were regarded as a resounding success. More than 7 million tickets were sold and the 9 billion pound games was described as value for money by watchdog Britain National Audit Office. Areas of East London were regenerated and Danny Boyle’s opening ceremony received high praise from the worldwide media.
The downsides were security issues and seemingly unending saga of the fate of the Olympic Stadium and G4S’s security failure.
What will be the legacy be for London, the UK and British sport? Time will tell.
Swiss Opportunities
As the home of the FIFA and the International Olympic, Switzerland has often been regarded as one of the key territories in the sports industry, this view was given further substance this year with the news that around 80% of Swiss businesses are involved in sports sponsorships.
First Ever European Games to be held in Azerbaijan
It was recently announced that Baku will hold the first ever European Games in 2015. This decision may provide some consolation to the Azerbaijani city, which was also hoping to host the 2020 Summer Olympics, but did not make the final three contenders.
Madrid and Istanbul are still competing, along with Tokyo, to win the hosting of the 2020 Games; Madrid 2020 CEO, Victor Sanchez, recently told us that his bid team is “totally optimistic.
Euro 2012 Precludes Major Changes
Euro 2012 in Poland and Ukraine was largely a success. It set a record for highest average (46,481) and aggregate attendances (1,440,896) for the 16-team format that has been in place since 1996.
UEFA is likely to make slightly lower profits from the tournament compared to those made from Austria and Switzerland in 2008.
Tournament Director, Martin Kallen, said UEFA’s profit from Euro 2012 would probably be slightly lower than the US$394 million it made in 2008 because of additional funds UEFA had to spend on helping Poland and Ukraine significantly upgrade their infrastructure to host the tournament.
Kallen said exact figures would be released in 2013.
Infrastructure costs may not be a problem for UEFA in future with the championships to be hosted across the continent from 2020.
The next edition of the tournament 2016 will see another major change with 24 teams competing. The greater number of teams will mean more exposure on television, more ticket sales and greater value of sponsorship.
Premier League Boom Continues
The Premier League has continued to thrive financially having agreed incredibly lucrative broadcasting deals with Sky and BT.
Huge sponsorship deals and kit manufacturing contracts were also been agreed with major clubs including Manchester United’s deal with Chevrolet, Liverpool’s with Warrior Sports and Manchester City’s with Nike.
Barca Sells Shirt Sponsorship to For Profit Company
FC Barcelona’s shirt sponsorship deal was probably the most controversial. The club had never previously sold shirt sponsorship rights to a for profit organisation but that all changed this year when it announced a deal with Qatar Airways.
Champions League Set for Change
Like the European Championships, UEFA’s premier club competition also looks set for a change in format.
The Europa League, which has done well to attract major sponsors SEAT cars and Western Union could benefit from being incorporated into the Champions League.
In restructuring the tournaments, decision makers will have to be mindful of extra games causing player burnout, less excitement and declining interest.
North America
Super Bowl Doesn’t Disappoint
Attracting an attendance of almost 69,000 and a total TV audience of around 166million in the US alone. A 30 second half time ad cost US$3.5million and all were sold out months in advance of the game in February. Nielsen figures showed an estimated average audience of 111.3 million and an estimated total audience of 166.8 million US viewers.
Perhaps adding weight to the desire for an NFL franchise north of the border, the spectacle was also hugely popular in Canada with TSN estimates of 8.1million estimated viewers, a vast share of the nation’s total population of around 17million.
One city that may very well end up with an NFL franchise is London. The St Louis Rams played the New England Patriots in a well-attended and well-received game at Wembley. The Jacksonville Jaguars will be the closest thing London has to a full time franchise in the meantime—the team will play once in England’s capital once a year for the next four years.
World Goes Linsane
Jeremy Lin’s emergence as an international icon has had a considerable impact on Asia businesses partnering with Lin’s former employers the New York Knicks and current club Houston Rockets.
The American-Taiwanese point guard shot to fame with a series of outstanding performances for the Knicks before moving to the Houston Rockets. This year Houston Rockets signed deals with Taiwan-based Maxxis Tires, which was also a Knicks sponsor when Lin played in New York, and with Kenda Tires. They have also signed East West Bank and MetroBank, and China-based shoe apparel company Peak. Rockets CEO Brown said team sponsorship revenue is up 20% this season.
The team quickly began selling replicas of Lin’s No.17 jerseys and t-shirts, and traffic for its online store increased more than 3,000% in one week.
Major companies Volvo, Nike and Steiner Sports were quick to capitalise on the hype by signing Lin to endorsement deals.
MLS Continues to Shine
The MLS has flourished in recent years and this year was no exception. In the 2012 season attendances grew by approximately 5.2%. What’s more Chicago Fire and Columbus Crew both gained shirt sponsors having gone without in the 2011 season, Advocare became the first ever shirt sponsor of the San Jose Earthquakes, and new club Montreal Impact sold its shirt sponsorship to the Bank of Montreal.
Brand Beckham has been an important component of the MLS’s growth and with Mr. Beckham’s November announcement that he would be leaving LA Galaxy it remains to be seen how the club and the league would cope without him
Locked Out
Lockouts continued to cause problems in US sports. With NFL match officials failing to agree to a collective bargaining agreement, amateur referees and judges were called in as replacements but received stern and widespread criticism for their performances.
The NHL and the NHLPA also failed to reach a collective bargaining agreement, after the previous one expired in September, leading to the cancellation of more than 500 regular season games.
South America
Will Rio Be Ready?
Much debate has centred on whether Rio’s stadia will be ready to host the 2014 FIFA World Cup, one would certainly hope so given it’s estimated that to date around US$14billion has been spent on stadia.
As FIFA General Secretary, Jérôme Valcke, said bluntly in December: “Rio has no option but to be ready”
This is in an important few years for Rio, Brazil and South America as a whole as the continent stages its first ever FIFA World Cup and Olympic Games in 2014 and 2016 respectively.
The 2013 FIFA Confederations Cup could be a good indicator as to whether Rio is ready.
Will Cali Be Ready?
Rio is not the only South American city under pressure to deliver a major sports event.
In May, Rodrigo Otoya, President of the Cali Local Organising Committee (CLOC) for the 2013 World Games, provided reassurances that the Colombian city of Cali would be fully prepared for next year’s event after member federations of the International World Games Association expressed concerns about construction delays at its GM.
Otoya also said the Games would be a boon to the city’s economy, particularly the hospitality sector.
World Tour Returns to Colombia
The ATP World Tour will return to Colombia for the first time since 2002 after the Association of Tennis Professionals approved the sale of the Los Angeles tournament, a World Tour 250 event, to a Colombian entertainment and sports marketing company.
Argentina Bids for Major Events
Argentina is another South American country that has ambitions of hosting major sporting events in the not too distant future.
Argentine Olympic Committee President Gerardo Werthein said that Buenos Aires would bid for the 2018 Summer Youth Olympics
Argentina is also preparing to bid for either the 2023 or 2027 Rugby World Cup
Furthermore, Argentine President Cristina Fernandez claimed Formula One would return to the country for the first time since 1998. Fernandez said a three-year deal that would take effect from 2013 had been agreed.
HSBC World Sevens Series was another sporting spectacle that Argentina wanted to host. The International Rugby Board Argentina as its10th venue but was dropped from the schedule because of logistical challenges.
Boca and River Share Same Shirt Sponsors
Boca Juniors and River Plate both agreed shirt sponsorship deals with BBVA Frances, a finance, for 2012 to 2014. It was the first time the Buenos Aires rivals have shared a shirt sponsor since Argentine brewery Quilmes held the rights between in 2001. Boca’s deal is worth a reported US$4.5 million per year and River, which had a recent spell in the second tier of Argentine soccer, is believed to be receiving US$3.5 p/a.
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