Alibaba Group Holding Ltd: FIFA Deal Depends On Chinese Involvement

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Alibaba’s sports unit said its talks with FIFA on becoming the main sponsor of the World Cup depends on more Chinese involvement in the most-watched sporting event of the world. On Wednesday, Zhang Dazhong, chief executive of Alibaba’s sports unit, confirmed the discussions with FIFA in an interview in Shanghai, according to Bloomberg.

Alibaba wants more Chinese involvement

Zhang said they are discussing the sponsorship issue with FIFA.

“What we hope is that there will be more matches to be held in China and the country can participate more to boost the Chinese football market.”

Chinese businessmen and companies have made many investments in international and national clubs since President Xi Jinping made soccer a national priority, making the country’s desire to host the FIFA World Cup pretty clear, notes Bloomberg. In March, Wanda president Wang Jianlin, the second richest man in China, said that having several China-based sponsors would assist the country’s bid to host the sports event. The earliest the country could host the tournament under FIFA regulations would be 2030.

Alisports would become the second Chinese sponsor of the scandal-plagued football governing body after Dalian Wanda Group Co. if the e-commerce giant makes the multi-million dollar investment. In March, Dalian Wanda Group pledged its support to FIFA until 2030.

Alisports’ competitive advantage is its access to the consumption habits of the 500 million registered buyers on Alibaba’s e-commerce platforms, said Zhang. Even though the sport is not very popular in China, Alibaba’s online buying data suggests an accelerating growth pattern, said Zhang.

Alibaba is already a sponsor of FIFA’s Club World Cup, and it owns a stake in Guangzhou Evergrande, the Chinese football team. This team has splashed out on international footballers such as Jackson and Robinho, notes Bloomberg.

Growing on strong fundamentals

Shares of Alibaba hit a new 52-week high of $99.67 (ultimately closing at $99.25) last week. The stock has returned 55.3% in the past year, while year to date, the stock is up by around 22.1%.

The stock’s appreciation should be attributed to the company’s strong fundamentals, better-than-expected first-quarter fiscal 2017 and solid growth of its cloud business. Since its fiscal first quarter earnings report, its share price has risen about 8%. Alibaba’s first quarter earnings surpassed the consensus estimate, increasing 52.9% from the previous year’s quarter.

On Wednesday, Alibaba shares closed down 1.38% at $102.32. The stock has a 52-week high of $104.30 and a 52-week low of $57.20.

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