Financing moves fall in sports industry

The sports-related sector in the nation is undergoing consolidation and witnessing a period of cooling down, judging by the slowdown in financial activities during the first 10 months of the year, experts said on Tuesday.

"During the first 10 months of 2018 there were 131 financing deals in the sports industry, merely one more than in the same period last year," said An Fuxiu, founder of Sportbank, a Beijing-based sports industry consultancy. "Unlike previous years, investors have become more rational, but are still passionate about premium projects."

According to An, investment activities have showed a downtrend in the first three quarters.

"Rather than saying that we hit the rock bottom in sports-related investment, I would prefer saying that we are calming down and becoming more cautious," said Zhang Li, vice-president of the China branch of IDG Capital, a global investment firm. Zhang, however, termed the slowdown in investment activities as winter before the next spring.

According to a report from Yicai, a business news outlet, in 2015 there were 202 financing deals in the sports sector, involving capital to the tune of 12.3 billion yuan ($1.78 billion). The number jumped to 20.2 billion yuan in 2016 with 245 investment deals. However, the figure slumped in 2017 by almost 50 percent, down to 10.5 billion yuan.

Zhang said the biggest opportunities in the country's sports industry were snow sports, sports games and marketing and intelligent equipment wearables.

"Unlike mature markets like the United States, in China most of the sports-related activities are in equipment purchasing and little money is actually spent on watching games. In the US, nearly 20 percent of the total sports consumption is for watching games," she said.

"The sports industry only accounts for less than 1 percent of the country's GDP, lower than the average level of 2 percent, which means there is still a huge potential for growth," she added.

Wang Qi, president of Gehua Zhongao Investing Co Ltd, a subsidiary of Beijing Gehua Cultural Development Group, said it was hard to make profits from the sports business, and the most promising field with a clear profit mode was to combine sports with education, tourism and elderly care.