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SBD Global/June 6, 2014/FinancePrint All
E-commerce group Alibaba has agreed to buy 50% of Chinese Super League club Guangzhou Evergrande, the "latest in a string of acquisitions by the Chinese ecommerce giant" ahead of a "blockbuster" U.S. listing later this year, according to Charles Clover of the FINANCIAL TIMES. Alibaba has spent more than $6B over the past 12 months as it "shifts its focus from ecommerce to more diverse areas with deals aimed at bolstering its appeal ahead of its keenly anticipated initial public offering." Alibaba Chair Jack Ma said that the company will pay $192M for the stake in Evergrande. It is "unclear whether the stake is meant to complement Alibab's core business, which increasingly focuses on entertainment, or whether the football club is simply a trophy asset" (FT, 6/5). In N.Y., Paul Mozur reported Ma said "coming from outside" of football gives him a "different perspective and might embolden him to break rules, which could help improve the club." Ma: "I think not understanding soccer doesn't matter. I also didn't understand retail, e-commerce or the Internet, but that didn't stop me from doing it anyway" (WALL STREET JOURNAL, 6/5). The BBC reported earlier this year, Alibaba "bought a stake in Chinese online video company Youku Tudou and has started offering videogames on its mobile applications." Ma: "We're not investing in football, we're investing in entertainment. Alibaba's future strategies are health and entertainment" (BBC, 6/5).
ANALYSTS NOT CONVINCED: REUTERS' Paul Carsten reported "analysts weren't convinced." Beijing-based Forrester Research VP Bryan Wang said, "Fifty percent seems like a big stake to get a deal on content" (REUTERS, 6/5). BLOOMBERG reported the deal was "struck over drinks" between Ma and "fellow billionaire Hui Ka Yan." Ma and Hui "agreed on the terms with a 15-minute phone call" on Wednesday after "first discussing it over drinks in Hong Kong the night before." Ma: "I went back to the company, people at the company were having a meeting, I broke them off and said just give me five minutes, I said I hope we can make investments happily. China's soccer industry needs somebody to help stir up things" (BLOOMBERG, 6/5). The WSJ reported Alibaba's investment in China's top football team, "currently owned by a real estate tycoon, could say something about the poor state of the country's real estate industry." It is Alibaba's first move "into a realm that's traditionally been dominated by real estate developers." Other Chinese teams "backed by real estate money include Guangzhou R&F, Guizhou Renhe and Hangzhou Greentown." On the other hand, the Chinese real estate sector has been "plagued by nothing but bad news in recent months, amid growing fears that the property market is due for a correction." A "high-profile real estate developer has likened the situation to the Titanic headed for an iceberg." Investors "certainly took comfort from the sale of Evergrande Group's stake," with shares in Evergrande Real Estate Group Ltd. "jumping 3.3% on the news in Hong Kong" (WSJ, 6/5).
Financial institute Deutsche Bank and Bundesliga side Borussia Dortmund "are reportedly in talks about a 10% stake in the club" for €23.5M ($32M), according to BILD. Dortmund Managing Dir Hans-Joachim Watzke, Deutsche Bank VP Jürgen Fitschen and Chair Rainer Neske "have held preliminary talks." The publicly traded club "is currently valued" at €235M ($320M). During the previous fiscal year, Dortmund generated €305M in revenue and had a profit of €51.2M. The financial institution "could enter the club through an increase in capital." Dortmund "has been interested for months to find one or several strategic partners to compete with league rival Bayern Munich." Bayern "generated millions through investments from Allianz, Audi and adidas," which all hold a 8.33% stake in the club, and used the money to buy players like Franck Ribery, Arjen Robben and Mario Götze (BILD, 6/5).
Real Madrid earned €519M ($707M) this season before it clinched the Champions League, which "may have boosted the team's income for the year" to more than €533M ($726M), according to José Félix Díaz of EL CONFIDENCIAL. No "other team earns as much -- not in the NBA nor any of the major North American leagues." The Champions League "officially left" Real Madrid with €57M ($78M). The "athletic reward" for Real was €36M ($49M), while the club received €21M ($29M) "from commercial and broadcast rights." The club "always budgets making the quarterfinals of the Champions League," so the championship meant a bonus of €15M ($20.4M) more than the club expected. The club's revenue in the '12-13 season was €518.9M, which was 1.2% more than it earned the previous year (EL CONFIDENCIAL, 6/5).