Lining'S Love For CBA Sponsorship And CBA League Growth

The Li Ning Co Ltd, which is incorporated in the Cayman Islands, said in a recent report on its operations and financial position that "the Group signed a memorandum of understanding on the equipment sponsor of the Chinese men's basketball professional league (CBA), covering an agreement covering 2012-2013 to 2016-2017 years and 5 seasons".

8 years ago, the CBA League, which has just stepped out of the pace of professional reform, has thrown an olive branch to the Li Ning Co, offering a price of only 10 million yuan a year, but it failed.

8 years later, Lining was in charge of the CBA League, but the cost was 30-40 times that of the original.

Is this belated "love" a timely redemption or impulsive gamble for Li Ning Co, whose performance is declining?

While You Were Sleeping

Before the 2004-2005 season, the CBA League launched a series of major reform measures such as lifting the lifting level and dividing the north and South regions.

According to Li Yuanwei, former director of the basketball management center of the State Sports General Administration and CBA promoter of the League reform, at that time, he hoped that the big brands such as Nike, Adidas and Lining could become the league's partners.

To this end, the basketball association has sent special personnel to Adidas and Lining headquarters to communicate, but the other side's response is "no interest."

In the end, at that time, both Anta and Anta were actively involved in the business performance or brand influence. They reached the agreement with the basketball association to become the CBA's only sports equipment sponsor, and then upgraded to a strategic partner. The two sides worked together until the 2011-2012 season.

With the growth of the CBA League, Anta has gradually become China's top sports brand compared with Lining.

Li Yuanwei said he didn't know why Lining gave up CBA until now.

"At that time, we had doubts about the reform of CBA, which is understandable.

However, for the domestic professional league situation and the future development trend, (Li Ning Co) may not do enough homework, and anticipate insufficient.

"At that time, Lining was relatively smooth and in the business growth cycle.

Maybe there are some problems in the company's strategy. "

But in fact, Lining soon regretted it.

According to Li Yuanwei recalls, in early 2005, the 2004-2005 season was almost over. Lining himself and company CEO Zhang Zhiyong invited him to dinner, and asked whether there was another chance to intervene in CBA.

However, the answer is obvious.

Missed this opportunity, this wait is seven or eight years.

In the 2011-2012 season ended, CBA has been unprecedentedly unparalleled. Both the stadium attendance and the broadcasting ratings have reached a record high, and the sponsors have reached more than 20 unprecedented numbers.

With the increasing attention and influence of the CBA League, sponsorship prices have also risen.

According to previous media reports and industry analysis, Li Ning Co is likely to pay a high price of 300 million or even 400 million yuan a year in the new cooperation cycle.

"We were in direct contact with Anta at that time, so the intermediary was also avoided, so Anta only gave 8 million 500 thousand yuan in the first year, plus all the equipment of the team." when it comes to today's sponsorship "sky high price," Li Yuanwei is very sad.

Redemption or gamble?

Thirty years Hedong, thirty years Hexi.

When the CBA sponsorship threshold was low, Lining did not sell.

Now, when the sponsorship threshold suddenly rises and the performance falls, it chooses "high price to pick up the plate". Is this a self redemption or a desperate gamble to adjust the course?

On the night of announcing the signing of the CBA equipment sponsors cooperation memorandum, Lining issued a performance warning notice.

The announcement said that the fourth quarter of this year to the third quarter of 2017, the brand marketing and promotion fees will increase substantially, plus the impairment of intangible assets of the Lotto franchise business, and the interest on convertible bond interest, and so on.

In addition, the company expects year-round orders to have a high number of units decline, the annual sales revenue negative growth.

Li Ning Co's share price fell for two consecutive days, and fell to 5.09 yuan (HK $, the same below) on the 13 day, the lowest in 6 and a half years.

JP Morgan lowered the target price of Lining from 7 yuan to 4.5 yuan, rating "reduction".

According to the analysis of some overseas investment banks, 2/3 of the sponsorship fees that Lining is going to invest in CBA will be achieved by ending other sponsorship projects and reducing marketing activities, and the other 1/3 is by compressing the cost of labor and store rental.

In other words, Li Ning Co can make such a high price, rather than "not bad money", but quite a bit "tighten the belt" to do great things.

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CEO Zhang Qing of key Road Sports Consulting Co., Ltd. said that although many people in the industry believe that Lining's risk of sponsoring CBA is not small, he still feels a very good opportunity for Lining.

"High quality sports resources are highly scarce, such as good resources such as CBA, through the urbanization of CBA and basketball and urban consumers to communicate and establish contact, there is an irreplaceable advantage of traditional sponsorship resources. It is a good thing to be able to get such a high coverage, widely spread, deep communication resources."

In Zhang Qing's view, the sales promotion expenses usually account for about 7% to 8% of the companies that sell tens of billions of annual sales revenue, such as Lining. Therefore, the cost of CBA sponsorship is 3 to 400 million yuan a year, "the problem is not too big."

But he also believes that Li Ning Co needs to "shrink front" in other areas of sponsorship and marketing, focusing more on basketball.

"If we look at the current industry structure and fatigue, we may feel a bit aggressive.

But if you look at it for 3 to 5 years, it won't be irrational, "he said.

But Bao Mingxiao believes that Li Ning Co's "high market entry" is not a very wise choice.

"To say that the price is high, the key depends on what company and what period.

Sporting goods industry has entered the adjustment period after more than a decade of rapid growth. The downward trend of China's economy is also more obvious. The two cycles overlap together. Li Ning Co's involvement in CBA is very risky at this time. At least from this point of time, it is a risky business. "

Li Yuanwei agrees with Bao Mingxiao.

"I think the risks are great.

If this is true, it will set a new benchmark for CBA, and both sides will be under heavy pressure.

It is better not to have more money. This will test the wisdom, enterprising spirit and spirit of cooperation between the two sides. It depends on whether the quality of the next cooperation can achieve a win-win situation.

In Li Yuanwei's view, the CBA sponsorship threshold is improving, and the professionalism of the League must be kept up to provide more returns for sponsors.

"It would be much better if there were 50 rounds (now more than 30 rounds) in the regular season."

Thanks to the sponsorship of CBA over the past few years, Anta's sales revenue and brand influence are almost equal to that of Li Ning Co.

However, Anta did not renew its contract with CBA, and its attitude is worth pondering.

A person close to Anta said: "in terms of sponsorship of sports resources, enterprises will adopt different market strategies at different stages of development.

As a listed company, Anta needs to consider the interests of investors. Input costs and benefits are always the criteria for brand resource assessment.

The confusion of professional sports brand

In the past few years, Li Ning Co has failed to achieve the desired results in terms of product development and brand building.

This huge price sponsorship of CBA is a failure, and remains to be tested by time and market.

Insiders said that these actions of Li Ning Co actually reflected the dilemma that the local sports brand developed in the past by way of channel expansion to a certain stage.

"The marketing mode of Lining and Anta can support the market scale of about 8 billion yuan."

Bao Mingxiao said that these enterprises grew faster than before, mainly by means of channels to expand and open stores. But after a certain amount, the sales situation of single stores did not go, so they had to close and integrate.

Bao Mingxiao believes that Chinese sporting goods enterprises need to reflect on their brand development strategy.

"Lining and Anta are basically copying the development paths of Nike and Adi, including brand strategy and marketing.

Nike and Adi take the professional line, and this path of development is bound to take the most high-end sports resources for brand promotion.

This also determines that Lining and Anta do not have much room for bargaining when they face high priced resources such as CBA and the Chinese Olympic Committee.

"We must take the professional line, the price is higher, we must take it. If we do not take it, we will die faster."

It is difficult to retreat and difficult to retreat.

In Bao Mingxiao's view, the development bottleneck of Chinese sporting goods enterprises such as Lining and Anta is partly because they are still doing sports around the gold medal.

There are two ways to do sports: one is to focus on gold medals, the other is to do lifestyle sports.

Now, Lining and Anta have not found a better way to do lifestyle sports. Instead, they are outdoor brands. They firmly follow the route of outdoor, sports, leisure and lifestyle.

From the perspective of our research, not only is Lining's risk big, but also Anta's risk is great. If the company's strategy does not make a big adjustment, there will be risks in the future.

We can't simply walk the way of Nike and Adi, and feel that we can exceed them in a few years. I don't think it's that easy at all.