Over the last three years, investment from Asia into US sports franchises has been growing consistently. A study done by Repucom shows the Middle East and Asia are emerging as global giants in sports sponsorship and ownership. The report reveal that observing the investments of sovereign wealth funds, Asian and Middle East state-run investments account for the lion’s share of 76.2% in 2014.
According to the study, “The Asian investment in US sports sponsorship has been dominated by the three biggest Asian exporters (South Korea, Japan and China) and three key industry sectors: automotive, consumer electronics and sports apparel. South Korean investment has come mainly in the shape of Hyundai, Samsung and Kia. Hyundai invested $8 million into the naming rights of the Hyundai Tournament of Champions on the PGA Tour in 2011 and Samsung’s $33.3 million per year deal with the NBA in 2013 has made the electronics company the league’s supplier of mobile device and televisions. As part of the agreement, referees of games in the NBA as well as the WNBA and NBA Development League will use Samsung tablets alongside the basketball court to review plays. Kia chose another route into US sports by targeting one of the most iconic venues in the country. Their $7 million sponsorship deal with Madison Square Garden (MSG) in New York gives the company prominent signage in this famous arena, a custom-built display space at the entrance for its cars, tie-ins with the MSG owned New York Knicks (NBA) and Rangers (NHL) and an expanded presence on the MSG regional sports networks.”
Recent deals such as India’s Tata Consultancy Services’ sponsorship of the New York Marathon ($3.8 million), South Korean automotive brand Kia and their deal with LeBron James ($5 million) and Kumho Tires’ deal with the NBA ($2.6 million), are other examples of investment from South Korea.
MAJOR SPONSORSHIP DEALS RECENTLY SIGNED BY ASIAN COMPANIES IN THE USA (in US$ p.a.)
The report cites the main reasons for this trend in the Middle East and Asia and the key drivers being, improving health, surge of entertainment, growing young population, sports being less controversial in conservative cultures, investment in sports seen as unifying nationally, greater degree of mobility, economic growth and national brand building.
The report concludes on a positive note with a cautionary word: “The relevant economies in the Middle East and Asia remain strong and they have large reserves of wealth. Governments and cities in the Middle East and Asia are becoming more sports-minded and are attracting more major events and competitions, resulting in significant planned investment in facilities and sports-related infrastructure over the next ten years. One area of potential risk to future investment is increased regulation by sports and governing bodies in Europe and the US to negate the perception of “being taken over” by these regions. Whilst this is a legitimate risk, we believe the commercial and business benefits will still carry the day and the growing globalisation of sport will not slow down any time soon.”