Gold rush for China sports venue industry?

Image: MJR Group Ltd./Coliseum

A potentially game-changing development for China’s live sports and entertainment industry was announced in December 2021.

The ‘General Administration of Sports in China and ‘The Daimani Journal’ stated that the General Administration of Sports released a standard contract for the third-party leasing of sports venues, including stadiums and arenas.
 

OK. So what’s the big deal?

Until now, an estimated 90 percent of China’s sports venues have been under the direct management of the Government or Government-run companies.

As a result, the venues are generally limited to supporting the specific priorities of Government with little to no development of their commercial potential.

The ‘General Administration of Sports in China and ‘The Daimani Journal’ further stated that China’s most historic venue – the 65,094-capacity Beijing Workers’ Stadium in Beijing, China – is in the process of being redeveloped for the opening match of the Asian Cup 2023 in 18 months’ time. The stadium has hosted some of the most important moments in China’s Live Event history including French composer Jean-Michel Jarre’s groundbreaking 1981 concerts.
 

So, how does a standard contract fix that?

Since at least 2019, the Central Government has identified the lack of commercial development of venues as one of the most limiting factors in the overall development of the sports industry.

Numerous policies have been developed instructing the local Governments to start exploring different third party management models to help release the potential and maximize the value of the Government- invested venues.

However, various factors have limited the implementation of this initiative. A major underlying issue in many places is that the local Governments just aren’t sure how to proceed so would rather do nothing than risk issues with the leasing of the major State- owned assets under their management.

Now with the new standard contract issued by the General Administration of Sport, the local officials now have the template (and political cover) they need to proceed.
 

What comes next?

Obviously, a scramble is expected to secure locations by the leading Chinese venue management companies who are already established.

Also, a number of newly invested companies are expected to be established in short order to try and take advantage of the big opportunities managing these venues offers.

And, there will be adaptation of international practices and some innovations in management priorities that will be uniquely Chinese.

Things are going to move fast. All we have to do is look at the development of cinemas over the past decade for a sign of what should be to come.

 

What remains to be seen? Some initial big picture questions include:

Will international operators be able to move fast enough to join the gold rush? Can they adapt enough to local conditions to secure venues and make them successful?

Can local officials release enough to accept third-party management? There are a lot of local interests invested into these venues that will need to accept new realities.

Also of course, the General Administration of Sport isn’t the only voice in this discussion. Will the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and provincial finance bureaus be on board? Will the standard contract be applicable to venues not under the management of local sports bureaus? Loads of Government-related questions to be answered.

However, this is an important inflection point in the development of China’s live sports and entertainment industry.

Let the gold rush begin!
 

General Administration of Sport in China

The General Administration of Sport is the Government agency responsible for sports in mainland China. It is subordinate to the State Council of the People’s Republic of China. It also administers the All-China Sports Federation and Chinese Olympic Committee.

The All-China Sports Federation is a national non-Governmental, non-profit sports organization in China. It oversees a wide array of sports associations in the country. It is responsible to the State General Administration of Sports and the Ministry of Civil Affairs.

The Chinese Olympic Committee has been the officially designated body of the People’s Republic of China regarding the Olympic Games and other affiliated international sport federations since 1979, when the Nagoya Resolution was adopted by the International Olympic Committee (IOC).

The State (China)-owned Assets Supervision and Administration Commission of the State Council (SASAC) is an institution directly under the management of the State Council. It is an adhoc ministerial-level organization directly subordinated to the State Council.

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