CBA New Home Dust Settled, Lining Can Eat 400 Million Yuan Per Season.

The biggest sports brand in China

The board disclosed that Li Ning Co has signed a contract with CBA to become the equipment sponsor of the league from the 2012-13 season to the 2016-17 season.

CBA's new main sponsor dispute finally settled.

Although Lining did not disclose the specific amount of sponsorship, it is reported that the sponsorship amount is as high as 2 billion yuan, with an average of 400 million yuan per season.

As early as a month ago, there was news that Lining would sponsor 400 million per year.

But the news was not confirmed by CBA officials and Lining officials. Most media and fans still think Anta will continue to join hands with CBA.

When Lining became a new sponsor of the CBA League, everyone was surprised and surprised that the news came from 2 billion.

Why does Lining have such a big hand to occupy CBA? There is a complicated story in it.

Price increases due to high price contract renewal

This is going to start from last season's CBA tournament.

The 2011-12 season is the seventh season of Anta's sponsorship of CBA and the last season of their contract with CBA.

As the CBA League operator, the surplus company also reached the time to renew the contract with CBA.

Because of the rapid development of the CBA League in recent years, it has become a fat meat in the eyes of major sports brands and sports operation companies. Everyone wants to swallow their own belly.

Therefore, after the 2011-12 season ended, each company's competition for the CBA tournament was officially staged.

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With the agreement signed by Ying Fang company, the company can get the priority renewal right after 7 years of operation of the CBA League, with a duration of 5 years.

At this point, the Shanghai sports group, the chairman of the China Sports Association and the former FIBA President Cheng Wanqi, joined the battle of the CBA League operators.

After a complicated bidding process, Ying Fang company finally extended the CBA tournament for 5 years with an average annual price of 330 million yuan.

Operators' contention not only increased the value of the CBA League by nearly 10 times a night, but also pushed several sports Brand Company that covet CBA League into a price war.

Moreover, the wrestling between sports brands is actually earlier than that of operators.

Beginning of the year

It has been raised to over 100 million yuan.

Shortly after the start of the 2011-12 season, the author learned that the future competition for the main sponsor of the CBA League has begun.

At that time, several companies including Lining, Anta and NIKE joined the battle.

Before the all star game in Guangzhou, there were rumors that Lining wanted to invest CBA 100 million yuan per year.

NIKE went to a higher 150 million every year, but Anta only quoted 80 million yuan at that time.

But by the time of the all star game in Guangzhou, NIKE had already withdrawn from the competition. They found that the annual price of 150 million could not win the CBA League, because the price of the League operators broke through the average annual price of 200 million yuan.

And 150 million is the NIKE ceiling.

As a result, Lining and Anta are the only ones fighting for the main sponsor of the CBA League.

With the increasingly fierce competition between Ying Fang, China Olympic sports and Shanghai Jiya group, the price dispute between Lining and Anta has been suspended for a while.

Either the two who ultimately become sponsors of the League need to be confirmed after the operators are confirmed.

But both of them did not stop their movements.

Lining 400 million to retreat Anta 250 million

According to Li Ning Co, they have put forward a plan: in the case of many sports brands competing for the identity of CBA sponsors, it is possible to subcontract 17 clubs to various sports brands so as to achieve satisfactory results.

If so, the CBA League will return to the situation 7 years ago.

Finally, the proposal was not accepted.

So Lining had to fall into the price war with Anta again.

In late May, Ying Fang company finally won the price war and continued to operate the CBA League.

At this point, the price war between Lining and Anta came from behind the scenes.

In the process of Ying Fang's fight for CBA's operation rights, Anta always maintained close relationship with Ying Fang company, and even once heard the news that it had renewed the contract with the surplus company.

In order to complete the 330 million annual quotation, Ying Fang asked Anta to continue sponsoring the CBA tournament with an average annual price of nearly 250 million.

This price is basically recognized by Anta.

It seems that everything is heading towards Anta's continued sponsorship of CBA.

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But at this point, Lining again reported sky high price: a Anta insider disclosed that Lining carried the price to about 400 million.

Even so, there are still quite a few people who believe that Anta will vigorously develop basketball products in the past 7 years with Lining PK.

But things didn't develop in the direction of outside imagination.

In such a price war, Anta decided to let go.

"We don't have to play with this price, let them play."

Anta insiders told the author.

At this time, Lining is still more than half a month away from CBA.

In fact, Lining's aim to raise prices to 400 million is not simply to win the sponsorship of CBA.

"Even if we can't take it, we can get the price to this position, which is enough for Anta."

An insider from Lining said.

Until Anta decided to give up CBA, Li Ning Co still believed Anta would continue to fight with them.

Lining wants to reinvent himself through basketball.

Of course, for Lining, it is the best thing to win the sponsorship of the CBA League, which will help them rebuild their brand status in China's basketball market.

However, the annual average of 400 million yuan is not a small sum for Lining.

In the 2011 earnings report released by Li Ning Co, Lining's net profit last year was only 386 million yuan, which was not enough to give CBA a year's sponsorship fee.

But in order to be able to hold the high quality competition resources in the country, they are willing to bear such tremendous pressure.

Today, Li Ning Co has signed a sponsorship agreement with CBA, with only one signing ceremony.

The new CAB season will start in November, and it will not be enough for Li Ning Co to prepare, but this is not what Li Ning Co is worried about.

"We started preparing these things six months ago," Li Ning Co insiders said.

Six months ago, Lining signed a contract with the Shanghai men's basketball team before the start of the 2011-12 season, and designed their exclusive sports equipment for the Shanghai men's basketball team. According to this view, Lining's action was actually preparing for signing the CBA.

Lining's commitment to bear CBA under such pressure is explained by the official publicity of his company: "the board of directors and management of the group believe that from a long-term perspective, this sponsorship is an important strategic choice for the group.

After obtaining the sponsorship rights of CBA, the group will make full use of CBA's sports marketing platform, extensive exposure and quality resources to further strengthen the business scale of Lining brand basketball category, enhance the overall brand value and promote the overall business development of the group.

In the eyes of the outside world, Lining's investment has considerable risks, which can be seen from the reaction in the financial market.

After Lining officially announced the sponsorship of CBA, its stock price fell for two consecutive days and fell to HK $5.09 on the 13 day, the lowest in 6 and a half years.

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

Lining's adventurous investment may also be a new attempt.

Over the past few years, Lining's sponsorship has been relatively decentralized. He has sponsored Isinbayeva and Powell in track and field. He has been playing with Spanish and Spanish in the field of tennis. O'neal has also sponsored Spain's national team.

Although celebrities have great fame, they are not very effective.

On the other hand, other sports brands in China, some of the top ranking companies, basically rely on basketball as the main market, and also rely on basketball, the most high-quality sports resource in the country, to achieve leaping development.

Therefore, in this analysis, Lining's sponsorship of CBA may be the idea of basketball as the "fist" of the company's marketing, changing the situation of dispersed products and unclear core in the past, so as to promote the further development of the company.

In addition, after the great development in the past few years, the expansion of domestic sports brands also needs to be adjusted or changed in ways of marketing channels and gold medals, so as to seek new development paths.

The big trend may also be an important aspect that prompted Lining to make this important move.

Investment is risky, and Lining's shot is so generous.

According to the 2011 financial annual report, Lining's gross profit is 4 billion 114 million, net profit is only 386 million, which means that Lining's annual profits are not enough to cover sponsorship costs.

In 2006, NBA signed a 11 year contract with Adidas, with a contract value of US $400 million, equivalent to 2 billion 523 million yuan, averaging 230 million yuan per year.

And Lining's sponsorship has exceeded ADI's sponsorship of NBA.

Some analysts have said that Lining may shrink other aspects of sponsorship and marketing, and may reduce the store and other measures to focus on the payment of related sponsorship costs.

There is also a view that Lining's strategic adjustment is worth a try.

After all, the domestic high quality sports resources are scarce. With the help of CBA, Lining can enhance his brand value and commercial value, and complete the upgrading of his own product's technical content.

This is also in line with the current demand for specialization of domestic brands.

Under the controversy, the challenge before Lining is great, whether success or failure, only after 5 years.