Alibaba Chief Gets Drunk, Buys A Soccer Team

The team in question is Guangzhou Evergrande and it’s owned by Hong Kong property firm  Evergrande Real Estate Group Limited (HKG:3333) Apparently, the deal was made quite quickly between Evergrande Real Estate’s billionaire chairman Xu Jiayin and Mr. Ma. “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 morning.”

Alibaba spate of acquisitions

Alibaba has been on an acquisition streak of late as it readies itself for its coming IPO and should easily surpass Facebook Inc (NASDAQ:FB)’s $16 billion listing two years ago. The company has been pushing into entertainment business of late. The company has made inroads into online video, film production, logistics, and wireless voice calling. Just last month, the company along with private equity firm Yunfeng Capital (which is also controlled by Ma) bought an 18.5% stake in Touku Tudou, an online video company, for $1.2 billion.

Going back to March, the company announced its plans to oversee crowdsourcing for film production and paid $800 million for a stake in Chinavision Media Group Limited (HKG:1060). The company which is listed in Hong Kong invests in film, television, newspapers and multimedia concerns.

Ma is an admitted “soccer agnostic” but seems excited with the prospect of his new purchase.

“We’re not investing in football, we’re investing in entertainment,” Ma said. “Alibaba’s future strategies are health and entertainment.”

Analysts, however, are skeptical about this most recent purchase despite its small price tag when you look at Alibaba’s potential valuation.

Analysts’ reactions

“Fifty percent seems like a big stake to get a deal on content,” said Bryan Wang, Beijing-based vice president at Forrester Research.

That, however, might be missing the point. Teams don’t make money as a rule until they are resold, but many to offer quite a bit to the owners.

“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 Real Estate Group Limited (HKG:3333) is looking for someone to share the misery with them in terms of having to subsidize the team, and the reason Alibaba is doing it is for the local relationships and publicity.”

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About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com

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