China still open to 'sensible, diverse investment' in sport
By Jonathan Rest
Billions of Chinese yuan are ready to be spent on sports properties overseas, despite the government’s much-publicised clampdown on outbound investment, according to Li Haojie.
Li (pictured) is the chairman of Tian Rong Sports, the Chinese sports promoter that has invested £3 million ($4 million) to bring F1H20 UIM World Championship, a Formula 1 powerboating race, to London next month.
It will mark the first time that a Chinese company has promoted and underwritten a sporting event outside of China, Li claimed.
In an exclusive interview with Sportcal, Li said his company, a division of Shenzhen Tianrong Investment, a petroleum equipment manufacturer with a 50-per-cent market share in China, is in the process of a new round of fundraising, the proceeds of which will be spent on sports projects worldwide.
Reports of China’s exit from the global sports landscape are, Li argued, premature.
Regulators clamped down on overseas investments mid-way through last year to combat the surge in capital outflows from China in 2016 that placed downward pressure on the yuan and China's foreign exchange reserves.
In August the government formalised a framework that encouraged deals that fit the country’s strategic priorities. Deals in sport, as well as entertainment and luxury real estate, are now considered ‘restricted,’ meaning special approval is needed from Beijing.
Li explained: “The Chinese government has not said you strictly cannot invest outside of China. It’s just that some companies were not using the investment in the correct way, it was outside of the boundaries the government set. But if you do it in the right areas, the government supports that. There is appetite.
“We have just started a new round of fundraising in the last few days and we want to invest in new projects outside of China. This is our long-term goal and direction. There is no problem [with the government].”
Of particular concern to the Chinese government, it is understood, was the value of certain deals, particular for European soccer clubs.
Li said: “The price of some sporting events and some clubs is so high that it exceeds a normal commercial value and is not a particularly reasonable business practice. Therefore, it is appropriate to have some restrictions on them, but that is not to say they are absolutely not allowed. It needs to be a sensible investment.”
In addition, the Chinese government is keen for companies to diversify their investment in sport, rather than focusing on just one sector, which has tended to be soccer.
Hence Tian Rong Sports getting the green light to invest in powerboating outside China, having already promoted some of the sport’s events on the mainland.
The London round of the F1H20 UIM World Championship will take place on a course at the Royal Victoria Docks in the east of the city on 16 and 17 June.
London last staged Formula 1 powerboat racing in 1984, and this year’s event forms part of London Tech Week 2018, the UK’s largest festival of technology and innovation.
The IMG agency distributes international media rights to the F1H20 UIM World Championship, with deals in place in around 120 territories. Sky, the pay-TV broadcaster, will show the race in the UK, with CCTV, the state broadcaster, holding rights in China.
Li continued: “This is a high-speed, high-tech and fashionable event. It has a strong media value but it also has a story to tell about future technology. This event is the right opportunity for us.
“We want to use the experience of promoting an event in London to expand F1 powerboating into Australia, USA and many other countries in the next year.”
Li also cited “kickboxing and eSports” as properties that Tian Rong Sports will look to invest in, in the near future.
The company has established a sports industry fund with Yao Ming Capital, the private equity firm founded by former NBA superstar Yao Ming, with around 20 investments made in China to date, the most well-known of which was in Xianyu Game, one of the leading mobile game developers in the country.