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Fifa will need more than eager investors to make new club competition work

(Francois Nel/Getty Images)

  • IMG, Infront and Dentsu will be involved in Fifa process but face challenges
  • Experts say competition won’t work without Chinese investment and political backing   
  • Fifa is open to all commercial models, including private equity partners

Sports marketing companies and private equity houses bidding to become the vehicle for the delivery of Fifa’s new China-hosted club competition in 2021 will face the same challenge: the competition is only likely to be successful if a Chinese company is involved and if that company has government backing.

On December 7, Fifa set a deadline of 3pm Central European Time today (Thursday) for “investment proposals” for “the completely new club world cup tournament”.

The use of lower case in the competition name is not arbitrary or a stylistic nuance. The rights to deliver and commercialise the existing ‘Fifa Club World Cup’, in the guise of Executive Event Producer, are held by Japanese advertising company Dentsu until 2022. Fifa has an escape clause which would apply in the case of it launching a competition with a completely new format and brand identity.

The new competition will feature 24 teams from across all six continents, including eight from Europe and six from South America. It will take place between June and July 2021. At present, the competition is planned to take place every four years.

Dentsu, Fifa’s long-term partner for the existing competition, is considered certain to bid, along with the industry’s major sports marketing companies – IMG and Infront, the latter owned by Chinese conglomerate Dalian Wanda. They will be joined by private equity companies, likely to include CVC Capital Partners, the former owner of Formula One motor racing.

There is also strong interest from state-backed Chinese investment vehicles and major Chinese conglomerates. Fifa was approached by several such companies as soon as China was appointed competition host in October 2018.

Simon Chadwick, professor of Sports Enterprise at the Salford Business School in Manchester, and an expert on the Chinese sports industry, told SportBusiness Media that the kind of model likely to work in China was “a strategic collaborative partnership, with the Chinese company prominent and taking a leading role”.

He pointed to the recent $3bn (€2.7bn) joint sponsorship deal agreed with the International Olympic Committee by Chinese dairy company Mengniu and US beverage company Coca-Cola as an example of the emerging commercial model.

He added: “Unless western companies are in this position, or at the very least have existing well-developed business relationships in China, I think most will struggle.”

Local operatives say that despite IMG having long-standing links in China, especially with state broadcaster CCTV, and Infront being owned by a Chinese conglomerate, both are seen in China as foreign companies. The challenge for Dentsu, as a Japanese company, would be even greater, given the difficult relationship between the two countries.

Chadwick said there was bound to be “a significant political dimension” for any interested Chinese companies.

“The state is likely to be encouraging specific companies to bid for a deal, especially if they operate in key growth sectors or represent a specific Chinese government strategic interest. Whoever is involved, one suspects that the Chinese government, together with Chinese culture, will ensure that companies collaborate with one another to ensure that Brand China is appropriately and successfully represented.”

An agency executive with experience of trying to deliver sports events in China agreed: “Fifa will need a local partner, whether that is at the front end of the deal or the back end of the deal. But there is no way they can make this work without one in 14 or 15 months.”

Fifa has made it clear that bidders must have both the “necessary financial and operational capacity” and “experience in managing a football property of this magnitude”. That would rule out virtually all Chinese investment houses and conglomerates on a standalone basis, experts say.

These factors have led many in the industry to expect some new alliances to be forged which involve political access, deep pockets and football tournament know-how. Some believe Fifa could encourage collaborations, as it did in 2005 when analysing competing bids for its media rights in Asia from Infront and Dentsu.

Whoever is appointed will face big challenges, including:

  • delivering a major event with matches across multiple cities with a short lead time. One sports event organiser said Fifa was “already at least six months behind schedule”.
  • winning over fans in Europe, who have traditionally been lukewarm about the competition
  • creating commercial value, especially from media rights, around an uneven competition pitching top teams from Europe against teams of lesser quality from other continents
  • the practical problems of hosting a summer event in China, including extreme heat, poor quality pitches and patchy infrastructure.

Fifa is expecting fully-costed proposals and detailed revenue projections from bidders in the first phase of discussions. Second-stage talks will begin in January, with a partner likely to be in place in late January or February.

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