Wanda acquires Swiss sports marketing firm

Majority stake in Infront expected to help company in entertainment industry

Dalian Wanda Group Co, which controls China's largest cinema chain and leading real estate developer, on Tuesday announced an acquisition of a majority stake in Swiss sports rights agency Infront Sports & Media AG, in hopes of furthering its presence in the culture and entertainment industry.

A Wanda-led consortium including three other unidentified institutions won an auction for Infront, owned by London-based private equity company Bridgepoint Capital since 2011, for a price of 1.05 billion euros ($1.19 billion), according to a statement obtained by the Global Times on Tuesday by e-mail.

Upon the completion of the transaction, Wanda said in the statement that it would hold a 68.2 percent stake in Infront. The information about other shareholders was not revealed.

Wanda believed that the significance of the Infront purchase cannot be simply measured by profit and the acquisition will drive "the development of the Chinese sports industry and its interest around the globe," Wanda Chairman Wang Jianlin was quoted in the statement as saying.

Infront's experience in winter sports marketing will boost the underdeveloped state of Chinese ice hockey and act as a positive factor in China's bid for the 2022 Winter Olympic Games, said Wang.

According to information from the Infront website, the company, which claimed to be the world's largest sports content distributor, delivered nearly 4,000 event days including 18 World Championship events in 2014 such as the IIHF ice hockey world championship tournament, generating revenues of over 800 million euros.

Infront, which is led by Philippe Blatter, the nephew of FIFA president Sepp Blatter, may also facilitate China's possible bid for hosting the FIFA World Cup in the future, Ji Ning, a sports marketing expert and CEO of Beijing-based Vning Cultural Media Co, told the Global Times Tuesday.

"As for Wanda itself, the takeover of Infront will not only bring it fame and reputation around the world, but also help it tap the fast-growing sports industry at home and abroad," said Ji.

China is paying increasing attention to the development of the sports industry in recent years, expecting the sector to be worth 5 trillion yuan ($799.5 billion) in 2025, compared to the figure of 1.1 trillion yuan in 2013, according to a statement posted on the General Administration of Sport's website in late December 2014. US market consultancy Statista Inc said the global sports market had a value of $146.47 billion, up from 2013's $130.16 billion.

Infront runs over 25 offices across 13 countries and regions including China, according to the press release.

Infront's presence in the Chinese market was likely another reason that it had attracted interest from Wanda, as the Swiss company has been an exclusive commercial partner for the Chinese Basketball Association league worldwide since 2005.

Following Wanda's acquisition of a 20 percent stake in Spanish top-level soccer club Atletico Madrid in late January, the Infront deal marks the Chinese realtor's latest expansion beyond real estate, a reflection of Wang's ambitious determination in pumping up efforts in the leisure and entertainment sector.

Song Ding, director of the tourism and real estate center of Shenzhen-based China Development Institute, told the Global Times on Tuesday that China's real estate sector, which is undergoing reformation and restructuring, showed tepid performance in 2014.

Under this backdrop, property developers like Wanda are either trying to figure out new growth potential or revamp the traditional business model to an asset-light one, said Song.

The asset-light business model seems to be popular in the industry recently, as Wanda and its Chinese counterpart Vanke in January reportedly expressed their intention to lessen their reliance on ownership, which means developers are reducing investment in projects, though they may still be involved in construction and operation.

Wanda has mapped out a plan to lower the contribution of the realty business to their total revenue to less than 35 percent by 2020, while raising the contribution made by businesses including culture, tourism, entertainment and financial service to 65 percent or above, according to a press release posted on its official website in January.

In 2014, the commercial property unit was still Wanda's major business, accounting for 75.4 percent of its total revenue of 242.5 billion yuan.

The business diversification will be realized mainly via acquisition, Wang said at a press conference held in Beijing on Tuesday, noting that the Infront purchase will give his company a leading role in the global sports market.

Ji, however, noted that although the sports industry is promising, Wanda's ambition may be thwarted by the uneasy management integration.

"Localization is always an issue that is hard to master for international enterprises," said Ji.