(Recasts, adds Alibaba, Evergrande and analyst comment)
By Paul Carsten
BEIJING, June 5 In a speedy deal hatched over a
few drinks, China's biggest e-commerce company Alibaba is buying
half of the country's most successful soccer club Guangzhou
Evergrande for $192 million.
For Jack Ma, Alibaba Group Holding's
billionaire founder and confessed soccer agnostic, it may seem a
fanciful move, the latest in a string of recent acquisitions
beyond Alibaba's traditional e-commerce businesses.
Guangzhou Evergrande is owned by Hong Kong property firm
Evergrande Real Estate Group Ltd, and the team is
coached by World Cup winning manager Italian Marcello Lippi. The
club won the 2013 AFC Champions League, the first Chinese side
to win the region's premier club competition in its current
format, and finished fourth in the World Club Cup.
Alibaba and its affiliates have spent more than $6 billion
this year on assets in finance, entertainment and healthcare,
seeking to dig deeper into customer wallets ahead of a U.S.
stock listing that could be the biggest tech company IPO to
date, and value Alibaba at $152 billion.
Beyond its core online commerce businesses, Hangzhou-based
Alibaba now offers Internet TV, owns 16.5 percent of online
video site Youku Tudou Inc and has set up a film
company in Hong Kong after taking control of ChinaVision Media
"We're not investing in football, we're investing in
entertainment," Ma said. "Alibaba's future strategies are health
But analysts weren't convinced.
"Fifty percent seems like a big stake to get a deal on
content," said Bryan Wang, Beijing-based vice president at
At a news conference on Thursday, Ma and Evergrande Real
Estate's billionaire chairman Xu Jiayin said the deal was
hatched over dinner and drinks, and wrapped up in just a few
The idea of Ma investing in the soccer club - which was
mired in a match-fixing scandal several years ago - was only
raised on Monday, said Xu. "I got Jack drunk in Hong Kong and
afterwards asked him if he'd invest, and he said 'okay'," Xu
said. "The discussions were finished within 15 minutes yesterday
Alibaba's investment could be more about building a national
brand and establishing good relationships than doing good
business, analysts said.
"Most, if not all, professional sports teams lose money, and
anybody who buys into them isn't doing it as a money making
proposition," said Doug Young, a professor at the Fudan
University Journalism School. "Evergrande is looking for someone
to share the misery with them in terms of having to subsidise
the team, and the reason Alibaba is doing it is for the local
relationships and publicity."
The club will issue new shares and invite 20 strategic
investors to each take a 2 percent stake in the enlarged
shareholding, eventually reducing Alibaba's and Evergrande Real
Estate's shareholdings to 30 percent each.
The club will then hold 2.4 billion yuan ($384 million) in
cash, said Xu. "When the conditions are right for the club to go
public, it will," he added.
"We want to use the Internet and technology to help
traditional enterprises transform," said Ma. "Alibaba doesn't do
real estate, but will support real estate companies like
Evergrande Real Estate reported 2013 advertising revenues of
363 million yuan ($58 million) from its soccer and volleyball
clubs, up 23 percent from the previous year.
Evergrande Real Estate shares rose as much as 5 percent to a
7-week high, before closing up 2.78 percent in a slightly easier
Hong Kong market on Thursday.
($1 = 6.2504 Chinese Yuan Renminbi)
(Reporting by Paul Carsten and Beijing Newsroom; Editing by
Michael Perry and Ian Geoghegan)