Expert: Southampton’s record-setting sponsorship carries hallmarks of Chinese state influence
14 May 2019
It is surprising that the new Southampton main sponsor, who is yet to launch, has been allowed to spend money overseas, says Professor Simon Chadwick.
“It is not just a short-term arrangement involving the placement of a name on a shirt.”
Southampton’s record-breaking shirt sponsor deal with Chinese company, LD Sports, raises the eyebrows of Professor Simon Chadwick.
He describes it as no ordinary deal. When Chinese companies make big investments abroad, these are subject to state approval to avoid capital outflow.
According to Professor Chadwick, this means that this deal will have been approved by the Chinese authorities and that it is aligned with state interests.
“What is particularly surprising is that LD has yet to launch, though still the company is being allowed to spend money overseas on a high profile, expensive sponsorship contract. This implies that the sponsor, possibly the club too, is connected to important state decision makers and has been able to persuade them to consent to this deal,” said Professor Chadwick from Sports Enterprise at Salford University in Manchester.
This could give the Chinese a foothold in the acquisition and distribution of English football content.
He is also co-director of the Centre for Sports Business, in addition to being a senior visiting fellow at the University of Nottingham's China Policy Institute and a founding director of its China Soccer Observatory.
“Football is a means to an end”
The Chinese National Development and Reform Commission divides outbound foreign direct investment into three groups: encouraged, restricted, and prohibited transactions.
That a company that has yet to launch may make a record-setting investment shows that Southampton is much more than a football club to the Chinese, explains Professor Chadwick:
“This deal is the epitome of how China conducts its business - football is a means to an end and not an end in itself. One suspects that the club's owners (and their probable links to Chinese government) always had it in mind that Southampton would form the hub for a network of investments.”
As explained previously by offthepitch.com, Southampton as a city has strategic significance as Britain’s second-largest deep-sea port and the biggest port for trade with countries outside the EU. The city also has strong infrastructure links to the rest of the country.
A bigger Chinese role in English football
With LD Sports being a sports content, marketing and entertainment platform, Professor Chadwick expects the deal to be about more than mere brand building and foresees a bigger Chinese role in the distribution of English football media.
“One reason for this could be that LD may be seen in China as being capable of generating net inward revenue flows that justify whatever expenditure the company is making. This could give the Chinese a foothold in the acquisition and distribution of English football content.
“Indeed, one wonders whether the long-term goal of this sponsorship deal is motivated by China's intention to acquire the Premier League's domestic rights in the UK. This is a deal worth watching in some detail, as I suspect that it is not just a short-term arrangement involving the placement of a name on a shirt,” concluded Professor Chadwick.