Real Madrid score in China, but will fans open their wallets?

Posted on August 11, 2011

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First featured in FT

Real Madrid returned from their pre-season tour of China on Monday with a 100 per cent winning record, 13 goals under their belt and plans to build the largest football academy in Asia.

The world’s most famous football club will partner with Chinese Super League team, Guangzhou Evergrande, to set up the academy that will enrol up to 10,000 12-13 year-olds in Guangdong province, as Real look to expand their presence in the far east.

But can Real beat away their rivals and succeed in turning China into a money spinner?

“Real Madrid will provide Guangzhou with as much support as we can and I believe our cooperation will become deeper and closer in the long run”, said Florentino Perez, Real’s president, to Xinhua news agency.

The two clubs have also signed a letter of intent to work closely on brand promotion and possible player exchanges.

But before Chinese fans get too excited about the prospect of Ronaldo in a Guangzhou shirt, the Portuguese striker will have to repair his relationship with the Chinese media after he was branded “selfish and arrogant” following a fraught press conference.

“His behaviour won’t help his cause in China, nor will it help that of [sponsor] Nike”, said Yan Qiang, vice-president of Titan Media to AFP, after a monosyllabic Ronaldo refused to accept questions about his private life.

In agreeing to establish a football academy, Madrid have seemingly stolen a march on their European club rivals, all of whom are looking for new ways to tap into a market that boasts over a billion potential football fans.

Italy’s two biggest clubs, AC Milan and Internazionale, played a friendly at a sold-out Bird’s Nest stadium on Monday, while Danish company Carlsberg even translated their logo on Liverpool shirts to Chinese in a one-off marketing ploy last year. In May, Chelsea went to the extent of hiring a management agency to market the likes of Fernando Torres to a specifically Chinese market.

But this innovative investment isn’t being matched by hard returns. Yet.

Manchester United, who have been visiting and playing in Asia since 1974 and claims to have 190m of its 300m worldwide fans in the continent, made a mere 2 per cent of their total club turnover from an Asian tour in 2009.

Richard Arnold, United’s commercial director, is right when he says that “Asia is very important for anyone who is a genuine global phenomenon”. But, aside from the marketing opportunities, club revenues are still dominated by gate receipts, commercial sponsorship, and domestic television rights, over emerging markets growth. Premiership broadcasting rights from China also pay far less than other foreign broadcasters – a snip at £33m over three years.

So is China really worth it? Well, Real Madrid are certainly not deterred. The academy is not an overtly money-making venture for Los Blancos but it would give them first dibs on the best of China’s young talent. Whether or not these players can make it in La Liga is another question. China has yet to produce a footballing equivalent of MBA’s Yao Ming or tennis star Li Na; it would probably take such a superstar figure to turn football in China into truly lucrative business.

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