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The Honolulu Advertiser
Posted on: Sunday, August 31, 2008

Sports-marketing company ready to strike gold in China

By Don Lee
Los Angeles Times

AEG OWNS OR CONTROLS

Venues

  • Staples Center (Los Angeles)

  • Prudential Center (Newark, N.J.)

  • Sprint Center (Kansas City, Mo.)

  • The Rose Garden (Portland, Ore.)

  • WaMu Theatre (Seattle)

  • XL Center (Hartford, Conn.)

  • El Rey Theatre (Los Angeles)

  • Colosseum at Caesars Palace (Las Vegas)

  • Target Center (Minneapolis)

  • Rentschler Field (Hartford, Conn.)

  • Nokia Theatre Times Square (New York)

  • Nokia Theatre at Grand Prairie (Grand Prairie, Texas)

  • Acer Arena (Sydney, Australia)

  • Color Line Arena (Hamburg, Germany)

  • The O2 (London)

    In addition, AEG operates Home Depot Center in Carson, Calif.

    Sports franchises

  • Los Angeles Kings (National Hockey League)

  • Los Angeles Riptide (Major League Lacrosse)

  • Manchester Monarchs (American Hockey League)

  • Reading Royals (ECHL, an AA hockey league)

  • Houston Dynamo and Los Angeles Galaxy (Major League Soccer)

  • Two hockey franchises operated in Europe

  • The Hammarby (Sweden) Futbol Club

    Source: Times research

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    BEIJING — For Tim Leiweke, president of the Los Angeles sports-marketing company AEG, the race for gold in China begins after the Olympics.

    It will start with selling the naming rights for Wukesong arena, site of the Olympic basketball games. Leiweke thinks the rights can fetch at least $100 million. AEG, which owns the Staples Center in Los Angeles, the Home Depot Center in adjacent Carson, Calif., and the Los Angeles Kings hockey franchise, is a partner with the NBA in operating and managing the 18,000-seat indoor stadium in west Beijing.

    But Leiweke, 51, has much bigger plans for Wukesong — and China. He wants to develop and run stadiums throughout the country, filling the venues with sports, concerts and other high-profile events. In Beijing last week, he said AEG planned to spend at least $100 million in China over the next five years.

    "Our highest priority is Asia," he said, sitting in the lounge at JW Marriott Hotel Beijing, his eyes shifting to an Olympic beach volleyball match on television. "We own a piece of that," Leiweke remarked, referring to AEG's stake in the AVP Pro Beach Volleyball Tour. AEG's interests include boxer Oscar De La Hoya's Golden Boy Promotions Inc., the O2 arena in London and the Hamburg Freezers hockey team in Germany.

    Despite the deep pockets of AEG's billionaire owner, Philip Anschutz, and the company's reputation for being host to world-class sports and entertainment events, AEG is a relative newcomer to China and little known in the country.

    AEG made a splash in March when it brought its Los Angeles Galaxy soccer team for an exhibition match in Shanghai. And Leiweke has made frequent trips to other Chinese cities, including Nanjing and Qingdao, to lay the groundwork for possible stadiums there. Even so, AEG has just a dozen staff members in China, one-tenth the number the NBA has.

    The NBA is pursuing its own China dreams and is trying to reach a deal with the Chinese Basketball Association that would extend its reach in the basketball-crazed nation. (The NBA wouldn't divulge details.)

    The NBA and AEG teamed to help the owner of Wukesong create an American-style stadium, replete with restaurants and VIP suites. Since then, there has been widespread speculation that the pair would expand the partnership to develop and operate as many as a dozen stadiums in China.

    Both sides say such talk is premature, not that there isn't interest from Chinese cities for new sports facilities. "We're getting approached," said Heidi Ueberroth, head of the NBA's international business, speaking at the Beijing Great Theater, an elegant restaurant near Wukesong arena that the NBA booked during 10 days of the Olympics — purportedly at a cost of $800,000 — as host of "private hospitality" meals and talks with partners and special guests.

    Leiweke said he and a dozen of his global managers were meeting in Beijing during the Games with government officials, sponsors and Chinese sports federations. Riding on the NBA's popularity — and connections — in China clearly would help AEG in its push into Asia. NBA China is headed by Timothy Chen, the former head of Microsoft's China operations.

    Even then, AEG will have its work cut out for itself.

    China's sports market is growing fast — and it will get a boost from the Olympics — but it's comparatively small and undeveloped. Spending for athletic events and sporting goods accounts for about 3 percent of a typical Western nation's economy, but it's just 0.2 percent to 0.3 percent in China, according to Zhang Qing, chief executive of Key-Solution Sport Consulting Co. in Beijing.

    That means there's a lot of potential in China, Zhang added. He said he had never heard of AEG but suggested that it be prepared for a long slog. One big reason: the lack of professional teams and leagues that operate under market rules, Zhang said. The government's Sports Bureau exercises strong control over professional sports.

    AEG's first critical test in China might be how many events it can book for Wukesong arena. Experts say at least 100 days in a year will be needed for AEG and NBA to secure premium dollars for the stadium's naming rights and to keep the facility in the black. A full season of CBA games would help, as would games that feature top NBA players, who are immensely popular in China. Leiweke sees other sporting events and musical concerts to throw into the mix.

    The harder part will be securing the right events. Anybody, especially foreigners, who serves up cultural fare or entertainment to the masses, can expect heavy scrutiny.

    "In China," said Ren Hai, director of the Center for Olympic Studies at Beijing University, "you will face lots of government interference."