Vivo’s IPL acquisition: China, changing the face of sports business

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If you have worked long enough in the sports industry, the word China will always catch your attention. Previously, it was because of the premium Chinese athletes who would astonish you with skills beyond belief and normally top the medal tally in most sporting events. Nowadays, the word China makes you twitch a bit in your seat and there’s a sense of eeriness whenever China comes up in a sporting discussion.

The uneasiness started in 2016 when a Columbian football striker named Jackson Martinez made a move to Guangzhou Evergrande for a record breaking fee of €42 million.  Now before you throw the Paul Pogba price tag in the mix, read the next line. A couple of days later, a 26-year-old Brazilian midfielder named Alex Teixeira signed for Jiangsu Suning for €50 million to break all Asian records. Suddenly, the football world sat up and turned its attention to the Far East. Since then, top stars like Hulk, Oscar, Axel Witsel, Graziano Pellè, Demba Ba, Paulinho and Carlos Tevez have crossed into the largest Asian country leaving European football quaking in their cleats.

While football has seen a full blown Chinese invasion over the last five years, cricket has had nothing to worry about. Not until now. Played by a handful of countries, nobody bothered about the game except India and its neighbours. India – amassing massive revenues generated by TV rights and sponsorship – rules the game both on and off-the-field. All seemed fine until Vivo, a Chinese Smartphone company, gazumped the title sponsorship of the Indian Premier League (IPL) paying an astronomical 21.99 billion rupees (267.68 million pounds) for the next five years. Take your time to figure out exactly how many zeroes are there in 21.99 billion rupees.

But what do we know about Vivo? Not much, apart from Ranveer Singh posing for selfies with a phone you didn’t want to buy. For Indians, Vivo still is the stopgap ‘cheap’ mobile phone you get when you’re bored with you old iPhone and is waiting for the new one to launch. Here’s what Vivo is all about. Vivo was founded in 2009 in Dongguan, Guangdong and it launched its first Smartphone in 2012. Next four years saw Vivo break into the top five smartphone manufacturers in the world. In the first quarter of 2016, Vivo shipped 14.3 million units and captured 4.3% of the global market share. According to the International Data Corporation’s Worldwide Quarterly Mobile Phone Tracker report that’s a yearly increase of 123.8%.

That’s serious business and Vivo isn’t fooling around.

The industry though is sceptical. According to experts, Vivo has taken a massive risk by putting all their eggs in the IPL basket. Most experts pointed out how Micromax fizzled out after joining hands with the Board of Cricket Control in India (BCCI). They also were the title sponsor of the Asia Cup T20 tournament but it did nothing for their brand – no recall, no long-term bump in revenue.

But hang in there for a second. Have you recently seen the Indian cricket team play? Did you notice during the recently concluded Champions Trophy, there was a change in shirt sponsorship for the Men in Blue? The Star logo, in front of the shirt, vanished and a four lettered sponsor appeared on the shirt sleeve. Oppo – another Chinese electronics company pouring in the top dollar in Indian cricket. Oppo’s Indian mobile division paid Rs. 1079 crore (approx USD 162 million) to win the Indian team sponsorship rights for a five-year period. Their nearest bidder, Vivo offered Rs. 768 crores.

Is the pattern emerging now? Two of cricket’s biggest properties are now sponsored by Chinese companies. The Indian industry experts are only looking at the money invested. They are calculating the risks and rewards. They are missing the point. They are missing it because, for them, sports is still not an industry yet. They are looking at the figure but their tunnel vision is preventing them from figuring out the grand plan.

During the inception of the Chinese Super League, President Xi Jinping wanted businessmen in the country to raise the profile of the sport by owning clubs in China and around the world. It was a great plan to promote the sport as well as to dominate emerging world of sports business. China needed to change the world’s perception and what better way than investing in football. Now, they are using sport to unlock inaccessible markets to engage with new fans to open up new revenue opportunities. It’s only a matter of time that struggling IPL teams would open themselves up to Chinese ownership.

However, is it only the business that they are interested in? No. They’re interested in the sport as well. For China, sport is a way of life. It’s ingrained in their culture and China is an Olympics giant. But in football, they rank in the 80s and in cricket, well. The Chinese don’t like coming second in anything. They are a superpower and for them, supremacy in sport is an absolute must. It might take time to acquire the skills but if you have enough dough in the bank, you sure can acquire the business. Hence, the Chinese acquiring football clubs have now become the norm. Now, it’s cricket’s turn.

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