Beijing time11month20Today, the opening ceremony of the Qatar World Cup officially kicked off. As the most expensive World Cup in history, Qatar has invested approximately2,290billions, five times the total of the previous seven World Cups. Data also shows that Chinese companies have become the largest sponsors of the Qatar World Cup, with a cumulative sponsorship amount reaching13.95billion dollars.
Why is Qatar willing? Is it really worth spending so much money to host the World Cup? What is the profit model of international large-scale events such as the World Cup and the Olympics? Why do Chinese companies have such a high sponsorship intention? What benefits can sponsoring the World Cup bring to enterprises? Frost & SullivanFrost & SullivanFrost & Sullivan consulting analyst Wang Zilun, referred to below as 'Frost & Sullivan', was a guest on the Titanium Media's 'Weekly Capital Market Observation' program to discuss the aforementioned topics.
Titan Media
Q1 quarter
What is the profit model of international large-scale events such as the World Cup and the Olympics? Can the huge expenses incurred by Qatar in hosting the World Cup be recouped?
Wang Zilun, a consulting analyst at Frost & Sullivan, introduced that first, we need to understand how such large-scale international events generate revenue. Major revenues from international events such as the World Cup and the Olympics come from two sectors:1) event copyright operation and (2event operation and marketing. Among them, the operation of event copyrights includes television/Internet broadcasting rights, advertising sponsors, tournament tickets,IP addressAuthorize the sale of branded peripheral products and related derivative services; event operations mainly include naming rights fees, competition registration and entry fees, and on-site catering services.
Of course, the above-mentioned income is direct revenue during the event period, but the benefits behind hosting large-scale events go far beyond that. Generally speaking, hosting an international large-scale event begins long before the start of the competition season with corresponding planning and layout for the city, increasing job opportunities and stimulating local economic growth. Moreover, such large-scale events can have long-term impacts on the city and country involved, such as promoting urban construction, tourism, catering, and retail development, increasing trade between the country and other countries around the world, and having a profound impact on the development of the host location.
Wang Zilun said that the cost of this Qatar World Cup is about2,290billions of dollars, mainly spent on the construction of stadiums and infrastructure. This expenditure is five times the total cost of the previous seven World Cups, for example2018The cost of the Russia World Cup in116billion US dollars2014The cost of the 2014 FIFA World Cup Brazil was about150billion US dollars2010The cost of the South Africa World Cup in36billions of dollars, etc., it can be seen that Qatar has made a great investment in hosting this World Cup. One reason is because2021per capita in Qatar inGDPGahaba6.1One hundred million dollars, higher than that of many European developed countries. Qatar has relied on its rich oil and natural gas resources to achieve rapid economic development in recent years, which is why it has the financial means to invest in the World Cup.
However, when it comes to the profitability of hosting the World Cup, Wang Zilun believes that it is very difficult to solely rely on World Cup matches and related revenues for cost recovery. Of course, Qatar's expenditure on the World Cup is not just for serving the event itself. A large portion of its funds is used to enhance urban infrastructure, such as360Yibu built the city subway to facilitate visitors during the World Cup and in the future,100Several tourist hotels, and a value of about160Yi'an Xinzhou International Airport, as well as the leasing of many cruise ships/container/Tents, etc., have also created multiple job opportunities.
In addition, Qatar is preparing to transform a small eastern city called Lusail into Qatar's second-largest city. Before the World Cup kicks off, Lusail has successfully hosted theF1Major sports events such as the Grand Prix generate revenues that cannot be simply calculated based on profitability. Qatar can also promote its country by hosting large-scale events such as the World Cup, strengthening its international image, and potentially reducing its excessive dependence on energy sources like oil and natural gas. This series of infrastructure projects will continue to provide a source of momentum for Qatar's economy in the future.
Second Quarter
The final stadium of this World Cup was constructed by China Railway Construction Group. Moreover, enterprises such as China State Construction Engineering Corporation and China Communications Construction Company have also participated. What is the competitiveness of Chinese construction enterprises in overseas markets?
Wang Zilun stated that China has always adhered to the 'Belt and Road' development strategy. Chinese construction enterprises have created many 'super projects' in countries along the route, and Chinese construction companies have already gained a reputation overseas. Qatar, as one of the early cooperative countries joining China's 'Belt and Road', has seen Chinese construction companies become an important part of the construction phase for the Qatar World Cup. For example, the main stadium for the Qatar World Cup, the Lusail Stadium, known as the 'Golden Bowl', was constructed by China Railway Construction International Group. This stadium is the first World Cup sports venue built with Chinese enterprises as the general contractor, which holds profound significance for China's construction industry. The "Golden Bowl" stadium has also set many industry records:1) The world's largest-span double-layer cable-net roof monolithic building2) The world's first World Cup stadium to apply building information model technology3The largest football stadium ever built overseas by Chinese enterprises.
Wang Zilun pointed out that as Chinese construction companies continue to expand their overseas market scale and become more famous, their competitiveness abroad is also increasing. Data shows that Chinese construction companies in the '2022yearTop250Eight out of the top ten global contractors are Chinese construction enterprises, with the first seven being large construction group companies such as 'China Construction Group', 'China Railway Engineering Group', 'China Communications Construction Group', 'China Electric Power Construction Group', 'China Metallurgical Science and Industry Corporation', and 'Shanghai Construction Engineering Group'. This shows that the influence of Chinese construction enterprises in overseas markets is gradually increasing along with the overall development of the Chinese economy. We also look forward to more outstanding buildings in the future.
Q3 quarter
What are the purposes of various countries hosting international sports events? What impact do sports events have on the development of the sports industry in the host country?
Wang Zilun cited recent international competitions, such as2022year2month4The Beijing Winter Olympics, which open on2022year11month21The Qatar World Cup, with its opening match kicking off on the day.
Wang Zilun believes that countries hosting such international events generally aim to rapidly develop their local or even national economies, thereby enhancing their international status. Taking the Beijing Winter Olympics as an example, Beijing and Zhangjiakou City in Hebei Province jointly hosted this Winter Olympics, forming a partnership centered on Beijing/yanqing/With Zhangjiakou as the main battlefield, a relatively concentrated group of venues has been constructed. Compared to some other Olympic venues that were abandoned after the events, Yanqing's ski resort has been continuously upgraded and is expected to be developed into an international ski resort tourism destination, capable of generating more than50Ten thousand skiing tourism visits. Taking advantage of the opportunity of the Beijing Winter Olympics, China's snow sports have also received extensive publicity, developing China's 'mass leisure skiing' market and expanding the scope for the general public to participate in ice and snow sports. At the same time,2022The annual Winter Olympics have actively drivenThe development of the industrial chain in China's ice and snow sports market, such as sports equipment, ski resorts, event hosting, sports training, and related tourism industries.
The hosting of the World Cup in Qatar has also attracted the attention of fans and tourists from around the world. According to data from the Qatar Tourism Authority,2022In the first quarter of the year, the number of inbound tourists reached31.5Ten thousand person-times, and moreover6The number of visitors per month also reached14.5Ten thousand person-times, a year-on-year increase of over several hundred percentage points, has also made people re-acquaint themselves with the newly rising city of Lusail.
Wang Zilun believes that hosting international sports events also has a significant driving force for the development of sports industries in host countries. Hosting international events can not only promote the development of the sports industry but also help the country's sports economy achieve more comprehensive and perfect development. During the preparation and hosting of sports events, potential problems with sports management systems are also discovered. By investing sufficient time and funds to improve these issues, the sports industry of the host country can become more mature.
In addition, from the perspective of promoting competitive sports, large international sports events allow athletes from host countries to access a higher level of competitive sports, providing a platform for thorough learning and exchange. This comprehensively enhances sports management capabilities, professionalism, as well as the abilities of coaches and athletes. With greater influence of various sports in host countries, it optimizes the sports industry. Therefore, hosting large-scale sports events plays a significant role in promoting the development of the national sports industry and enhancing public sports activities on a daily basis.
Q4 2019
After the event, what is the subsequent use of various competition venues like? Can they continue to generate profits?
Wang Zilun introduced that after the event, many venues that have not been demolished can be used as:1Tourism attraction services2) Undertake large-scale event activities3) Holding commercial development activities4By organizing social welfare activities, etc., venues can be transformed into a comprehensive model that integrates visits, competitions, and commerce. If the venue can continue to have practical uses and commercial value, it can still generate revenue.
For example, the Beijing Winter Olympics used about14A venue from the Beijing Olympics, like the 'Water Cube' of the Games, has transformed into an 'Ice Cube' at this year's Winter Olympics. This is also the world's first time that intelligent technology has been used to convert a swimming pool into an ice rink for a stadium; the famous building from the Beijing Olympics, 'National Stadium'.-Although the Bird's Nest was not used as a competition venue during the Winter Olympics, both the opening and closing ceremonies were held at the "Bird's Nest," which greatly increased its utilization value.
Wang Zilun pointed out that the utilization rates of the three large comprehensive venues, namely the Bird's Nest, Water Cube, and Wukesong Sports Center, are very high. They have gone beyond their original purpose as sports venues and have become landmarks in Beijing and even northern China. Every year, they attract numerous domestic and international tourists for tourism and visits. In this year's perfectly concluded Beijing Winter Olympics, venues such as the Capital Skating Oval, Capital Gymnasium, Capital Short Track Speed Skating Training Center, and Capital Figure Skating Training Center will be established as ice and snow sports bases integrating sports, culture, leisure, and entertainment. This will vigorously develop the Chinese ice and snow sports market and enable major venues to continue to play their role.
In addition,2012The main stadium for the London Olympics, the 'London Bowl', has also been leased to the Premier League team 'West Ham United' for a long time, ensuring that this Olympic venue continues to shine and contribute to its community.
Wang Zilun also pointed out that some Olympic venues have been abandoned or demolished, such as the main stadiums for the opening and closing ceremonies of the Rio Olympics, the volleyball stadium at the Athens Olympics, and the canoeing venue at the Beijing Olympics. These venues cannot generate sustained profits for the host countries. Wang Zilun concluded that there are still significant differences in the profitability of venues. Only with good planning and arrangements at the outset can the venues be guaranteed for continuous use in the future to the greatest extent possible.
Q5
Data shows that Chinese enterprises have become the largest sponsors of the Qatar World Cup, with a cumulative sponsorship amount reaching13.95billions of dollars, exceeding that of the United States11Billions. Why do Chinese companies have such a high sponsorship intention? What benefits can sponsoring the World Cup bring to enterprises?
Wang Zilun said that although the Chinese team is very disappointed not to have entered this World Cup, Chinese enterprises have appeared frequently at the Qatar World Cup, and Chinese elements have permeated all aspects of the World Cup. The sponsorship amount of Chinese enterprises at the World Cup was about8.35billion USD, up to this year's Qatar World Cup13.95billion US dollars, with growth exceeding65%It can be seen that most Chinese enterprises attach great importance to this World Cup.
In the past few years, many Chinese companies have reaped good returns from their experience in overseas sports marketing. For example, Hisense2016In 2019, it became the first top sponsor from China, appearing multiple times as a sponsor in various overseas sports events, such as2018The FIFA World Cup,2020The Euro 2024 and2022In the annual World Cup, Hisense's overseas revenue increased by more than3times, the proportion of overseas revenue has also doubled, and overall revenue is also showing a rapid growth trend; in addition,2020yearvivoAfter entering overseas markets, sales in the European market have also increased by more than2times.
Therefore, based on past experience, overseas marketing for sports events can indeed bring good returns to enterprises. It is evident that the high sponsorship intentions of Chinese companies for this World Cup are mainly due to: （1By sponsoring, we can establish connections with audiences around the world, enabling more consumers from all over the globe to learn about Chinese brands. The development of Made in China in recent years has also evolved from simple small commodities to more diversified products, such as mobile phones, new energy vehicles, and various consumer goods. Sponsorship of an annual international event can significantly enhance brand awareness. （2Secondly, the number of Chinese World Cup viewers is still very large. Major brands competing for broadcasting rights or investing heavily in sponsorship can directly reach domestic consumers, enhancing brand reputation and expanding brand awareness.
*This article is reprinted from Titanium Media, with the original title being Made in China competes for the Qatar World Cup, a "high-end" World Cup with an "excellent Chinese content," but how can it make a profit? | A Week of Capital Market Observations ">
