Why clubs are looking East: the attraction and benefits of tapping into the Asian market

30.10.2018

Once commercialization of the brand for European football came to the fore, building, in some cases, a business model that allowed clubs to become proper entertainment companies, the main target market was the United States. Manchester United FC, one of the first clubs trying to leverage a competitive advantage outside of their domestic borders, for example, started to set-up friendly matches in the US at the end of the 1990s, taking advantage of the big, wealthy and football-hungry North American market.

Nevertheless, the recent interest of Asian countries towards football, coupled with significant investments made by Asian owners into European clubs, are training the focus of these clubs upon Asia.

As the appetite of European clubs for the Asian region continues to grow, the KPMG Football Benchmark team set out to provide an analysis of the current situation and find out just how clubs are trying to harness this market.

The main reasons why an increasing number of clubs is interested in expanding to Asia are primarily two:

Brand awareness

Increasing their brand awareness is fundamental in order to create new business opportunities. As mentioned above, a growing number of clubs has already exploited their chances to penetrate into Europe and North America. On the other hand, Asia represents an uncharted market of more than 4 billion people, which is to say almost 60% of the worldwide population.

Mutual development

As a consequence, not only European clubs but also Asian ones can leverage on this strategy. Indeed, many European teams have already developed new academies in Asia, with the aim of finding and nurturing local talents. On the other hand, Asian countries receive the know-how and can learn from the European coaches that ply their trade abroad. By all means, this process might also contribute to elevating the quality of the local game, resulting in a win-win situation.

European teams have adopted different strategies to tap into the Asian market. Many clubs have decided to follow a “traditional” commercial-focused approach, by setting up offices in the region and making partnerships with local sponsors. In addition to that, they have also leveraged on digitalization and the spread of social networks.

Agreements with local sponsors

Many traditional top clubs from the European “Big Five” leagues have struck regional partnerships in Asia in recent years. Regional partnerships, unlike global ones, allow clubs to target a specific market, through a well-known brand in that particular region. German Bundesliga club Borussia Dortmund, for instance, signed a partnership with Ofo, a Chinese non-docking bike-sharing company, in order to collaborate on commercial projects in that country. Domestic peer FC Bayern München can boast many sponsorships in Asia. Among those worth mentioning are the ones with manufacturing and heating businesses Vöhringer and Viessmann, two German companies that will trade opportunities and receive considerable exposure within China. Among English Premier League clubs, Manchester City FC have recently penned a new partnership with PAK Lighting, a Chinese company market leader in lighting products for sporting events, while Liverpool FC have announced a deal with Thai coconut water brand Chaokoh, currently distributing in over 40 countries, which represents the first-ever deal the Reds have signed with a Thai company. In Italy, among others, Juventus FC made a local partnership with Chinese banking giant China Merchants Bank as well as a regional partnership with online betting platform Vwin to use the Bianconeri’s brand across the continent.

Opening stores and franchising

In order to raise international awareness of these clubs' brands in Asia, another strategy is to open “official” shops and to set up commercial offices. This strategy has been adopted, for example, by Paris Saint German FC in Singapore, Atletico de Madrid in China and India and Manchester City FC in Japan. As for the Citizens, a crucial role in the development of their brand has been the multi-ownership model adopted through City Football Group, with football clubs owned in Europe, South and North America, Asia and Oceania. Many clubs have made deals with big online stores in Asia, in order to facilitate distribution and penetration throughout the continent. For instance, Juventus FC and FC Bayern München made an agreement with Tmall, an Alibaba partner with more than 500 million monthly active users in Asia. Borussia Dortmund did the same with EZ Shop and Liverpool FC with JD.com. Another way football clubs have recently been pursuing expansion of their brands is through franchising. For example, Arsenal FC will open sport bars and restaurants in Shanghai and Beijing completely decorated with Gunners’ merchandise and an English menu, while Real Madrid CF will open a theme park in China, including a museum, a club shop and a restaurant across from the “Messi Experience Park” already under construction by rivals’ FC Barcelona.

Social media expansion

Besides the unveiling of stores and set-up of new academies, football clubs are keeping the pace and placing more emphasis upon digital expansion. Social media’s omnipresence in today’s world is undeniable: it has not only changed the way people interact, but also opened up new opportunities for businesses in targeting customers, and in a football context, this means fans.

The presence of European football clubs on social media has continued to grow significantly over the past season. Clubs no longer regard these channels as just communication tools to push out messages, they also realize their underlying commercial value, allowing them to reach new audiences on an unprecedented scale. Increasingly, this audience is being mobilized, as fans can be converted into customers. Considering that in some Asian countries the diffusion of traditional social networks is limited, European clubs have opened new accounts on Weibo, the most popular social network in Asia.

Over the last decade, football has been in the midst of a geographic shift eastwards. Despite the aforementioned opportunities for European clubs to gain a foothold in Asia and the long-term benefits expected, there are also some limits and challenges to cope with. Indeed, the level of football in Asia is still relatively weak, as in the FIFA World Ranking, for instance, there are no Asian national teams among the top 30. Furthermore, wealth distribution is uneven, as not all local fans have the same purchasing power, while some governments operate through peculiar regulatory frameworks which do not always allow for an easy alignment with the clubs’ needs. Time will tell whether such a new wave will bring clear benefits to the clubs and the countries involved.