Handelsblatt: Chinese investors discover the Bundesliga

Recently, Chinese investors have been making a string of acquisitions in European football clubs: following the purchases of Inter Milan and Premier League team West Bromwich Albion, former Italian Prime Minister Silvio Berlusconi has handed over the future of the AC Milan football club he led to Chinese investors. The estimated transaction value of this storied club is 700,000,000 euros, bringing the total value of these three transactions to approximately 1,000,000,000 euros. There is no doubt that the Chinese are on a shopping spree for European professional football clubs. In addition to Italy, the United Kingdom, Spain, and France, these investors are now also focusing their attention on German teams.

According to what we know, some German football clubs have already been in discussions with Chinese investors," said Huanping Zhang, director general of Eurasian Consulting GmbH, an expert in mergers and acquisitions. Although the acquisition of a majority stake in a top German club is currently prohibited by the "50+1 rule," experts are confident that Asian investors will find a way to establish themselves within the rules. "In our view, the '50+1 rule' is not a major obstacle for Chinese investors, as they can achieve their main objectives through minority equity investments," Zhang added. These main objectives include increasing their own visibility and attracting talent for Chinese football. An investment banker from Frankfurt believes that in the long term, the goal of Chinese investors will be to acquire a majority stake in German teams. Just as in the recent acquisition of Kuka in the mechanical engineering sector, Chinese investors have long-term goals in the sports field.

Chinese investors’ strong interest in European football clubs is also related to their industry background. Since 2014, the football industry has received particularly strong government support and is experiencing a boom. "This opens up enormous commercial potential. For example, about 100 million Chinese people watched the final of the last World Cup," said Thilo Ketterer, head of the China business unit at consulting firm Rödl & Partner. Partner Sun Yi of consulting firm EY said that Chinese people have discovered that football is one of the most effective marketing tools for raising the profile of their products or brands in Europe. Therefore, many Chinese companies, including Huawei, have already tried for some time to sponsor major European teams. "It is only a matter of time before Chinese investors enter the Bundesliga," said Victor Wang, head of the China affairs department at Rödl & Partner in Stuttgart. Perhaps it will start with a series of minority equity acquisitions with room for growth, or cooperation with other parties in sponsorship or with football schools. In addition to professional football clubs, Chinese investors will also pay attention to service providers for the teams, such as player agents or sports marketers.

For investment bankers, there is yet another new field to explore. In the traditional German industrial enterprise acquisition market, Chinese investors' total investment had already grown from $526,000,000 in the entire year of 2015 to $10,080,000,000 in just the first six months of 2016. "We look forward to continued strong interest from Chinese investors in the entire European and German sports industry. Whether it is top-tier teams or other successful sports brands, they can all be considered for investment," said David Lomer, Co-Chairman of JP Morgan's European M&A department.