Lining Is Sponsoring Basketball Price 500 Million A Year. Sports Marketing Is A Drag.

Information from the Hongkong stock exchange shows that

The company's stock has been suspended for 2 consecutive days since October 15th.

Last Friday, Zhong Yiqi, executive director and chief financial officer of the company, resigned from office on November 1st.

Some Hong Kong stock analysts said that Lining may publish more personnel changes, more TPG personnel may enter Li Ning Co, and TPG may also increase Lining equity.

In addition, the market also thought that not long ago, Lining announced the signing of the new NBA star Dewayne Wade, and promoted the new brand "Wade's way", trying to rebuild the brand crisis of executives after leaving the office through the basketball star effect.

Rumor has it that Wade will receive dividends from Li Ning Co shares, which will be suspended or related to stock pactions.

500 million the "sky price" sponsorship value is not worth it?

Lining did not disclose details of signing Wade's business secrets.

Us ESPN revealed that Wade signed CONVERSE seven years ago, which costs about $13 million a year.

The signing fee of the Li Ning Co and Wade should not be lower than the CONVERSE renewal cost.

If Wade's annual salary of 10 million dollars is calculated, plus Li Ning Co's sponsorship fee of 400 million yuan per year for the five season of the CBA (Chinese men's Professional Basketball League), the brand sponsorship of Li Ning Co investment basketball will reach nearly 500 million yuan in 2012 alone.

This does not include sponsorship fees for badminton, gymnastics, athletics, tennis and football.

In June 11, 2012, Li Ning Co and CBA signed a five year cooperation agreement on equipment sponsorship, covering five seasons.

The sponsorship contract lasted for 5 years, with a total amount of RMB 2 billion yuan, averaging 400 million yuan per year.

The sponsor of the last CBA was Anta. During the 8 years of sponsorship cooperation, Anta has changed from an unknown shoe dealer in Jinjiang to a 61.4% year listed company with a compound sales growth of 61.4%. The huge commercial value of the basketball effect is amazing.

In addition to CBA and Wade, Lining also sponsored the Spanish men's basketball team and the Argentina men's basketball team, as well as some unknown track and field athletes.

Prior to that, Lining also signed NBA players Damon Jones, Shaque ONeil and Chuck Hayes in 2006.

For the Li Ning Co, in the period when China's sporting goods inventory is high and the industry is entering the adjustment stage, there is a high level of outbursts of high turnover. Lining is still repaying nearly 100 million dollars for the NBA star to create the Wade brand and the 400 million price sponsorship CBA competition.

In 2011, the advertising marketing cost of Li Ning Co was 1 billion 570 million yuan.

Because of the importance of the CBA sponsorship program, Li Ning Co may reduce sponsorship in some competitions, focusing on basketball brand marketing activities, and the advertising and marketing expenses in 2012 will increase substantially over the same period.

In 2011, Lining's annual revenue of 8 billion 929 million yuan was calculated. The total market input is estimated at around 8%, or 714 million yuan, and the sponsorship of basketball brand nearly 500 million a year has increased significantly under the circumstances of Lining's year-round growth.

Executives are running away: brands will be hard to rebuild

In sports

According to expert Zhang Qing, the change of Lining in the middle of this year caused some damage to the local brand.

Choosing basketball as a breakthrough and spending huge sums of money signing CBA and Wade is the most important thing to focus on resources at present.

In October 10th, Li Ning Co and Wade jointly announced the establishment of a brand-new sportswear shoe brand, the Wade brand, as the core of the company's promotion of the global basketball strategy.

The product line is named "the way of Wade", and Wade will wear this basketball shoe in the NBA competition.

According to the US ESPN reporter, the total price of the contract signed by both sides reached $100 million, and Wade will receive $10 million a year for 10 years.

This is higher than the sponsorship fee of NBA star LeBon James, who signed a 7 year 94 million dollar contract.

Rumour

Li Ning Co will also receive a substantial share bonus.

Market speculation that the recent suspension of Li Ning Co may be related to Wade's Wade trading.

The launch of the new brand of Wade's road carries great expectations for Lining.

But judging from the development of Lining's brand in the history, the cultivation of new brands is not a smooth road.

Lotto brand franchise continues to suffer losses for 3 consecutive years, making it a good example.

China Merchants Securities research report pointed out that as of 2009, 2010 and 2011, Lotto brand generated about 45 million one-time impairment of intangible assets, and 50 million yuan of intangible assets and financing costs amortization costs.

No one laughed until the old man went.

No one laughed until the old man went.

Following the previous CEO Zhang Zhiyong, Li Ning Co announced last Friday that chief financial officer Zhong Yiqi resigned. There is no doubt that Zhang Zhiyong, another listed company of Hong Kong stock, announced that Zhang Zhiyong would be an independent non-executive director of the company.

Coupled with the departure of the bell, the market speculated that Lining's suspension may be related to the announcement of a new round of personnel changes.

In June 2010, Li Ning Co entered the brand pformation. At that time, Fang Shiwei, Chief Executive Officer (CMO), Chief Executive Officer (COO) Guo Jianxin, Lotto (Le Tu) general manager Wu Xianyong, vice president and chief product Officer (CPO) Xu Mao Chun, director of the government and public Affairs Department Zhang Xiaoyan resigned.

In recent years, macroeconomic downturn, poor industry performance, resulting in decline in corporate performance, high inventory pressure, brand decline and high-level violent turbulence, are widely criticized by the market.

In 2011, Lining's sales fell by 5.6% to 8 billion 929 million yuan, and net profit dropped by 65.15% to only 386 million yuan.

In the first half of 2012, the income was 3 billion 880 million yuan, a decrease of 9.5% compared with the same period last year. The net profit attributable to shareholders of listed companies was 44 million yuan, a sharp decrease of 84.9% compared to the same period last year.

In order to save costs, Lining has closed 1200 stores in the first half of the year.

In the 2012 China Daily, Li Ning Co said it began a series of reforms in 2011.

In recent months, Lining, the old gymnast, has returned to the mountains to host the London Olympic Games equipment, sign contracts with CBA and Wade, and so on.

In the first half of this year, Li Ning Co has reduced more than 900 stores and its dealers have been cut to 52.

According to the expectation of China Merchants Securities, Lining's advertising and marketing expenses will increase to 50% in 2012, up by 60% over the same period.

Re injection of sports brand marketing is considered to be a life-saving straw for Li Ning Co.

Pressure from all sides has led Lining to embark on a difficult road of brand remodeling.