Li Ning's heavy bet on basketball marketing achieves annual sales of 10 billion yuan

On October 12, Li Ning announced that the company’s CFO Zhong Hao resigned, but like the original CEO Zhang Zhiyong who resigned in July, Zhong Hao maintained the role of corporate consultant. For the management team led by Li Ning and TPG partner and managing director Jin-Goon Kim, rebuilding Li Ning’s core competitiveness as soon as possible is the biggest issue that needs to be faced.

Compared with Zhang Zhiyong's late-stage marketing priorities, under the leadership of Li Ning and TPG, basketball has become the core of Li Ning's future marketing.

In addition to the rumors of signing a 5-year crown sponsorship for the CBA with a price of 2 billion yuan, on October 10, Li Ning announced the signing of an NBA favorite star Wade. According to the data disclosed by ESPN, the 30-year-old Wade not only signed with Li Ning for 10 years, but also received an annual endorsement fee of 10 million US dollars, and may be part of the shares of Li Ning.

According to the usual practice, the sponsorship fee of 400 million yuan each year by Li Ning to the CBA may well include sports equipment. Therefore, the amount of real money that this part of the sponsorship needs to produce may be less than 300 million yuan per year. For Wade, with an annual calculation of US$10 million, Li Ning’s real money, which needs only two sponsorships, still needs about 350 million yuan each year.

According to the proportion of sponsorship and marketing fees from 1:3 to 1:4, Li Ning's marketing budget for basketball alone is as high as 1.3 billion yuan per year. According to Li Ning's previous annual marketing budget, which accounted for 13% to 14% of total sales, it was pushed back. Li Ning needs at least 10 billion yuan in sales each year to achieve the aforementioned goal.

Li Ning proposed three focuses this year to focus on core brands, focus on core businesses, and focus on core markets. Basketball has a large scale of business in China, and basketball category is also one of Li Ning's most important business categories, signing CBA, The signing of Wade is to consider that there must be sufficient resources to support the development of its business. Li Ning’s accumulation of sports resources in the basketball field will also be consistent with the company’s long-term strategy.

"Anyway, betting basketball is definitely a good strategy, but it's only a bit late. But even this is more appropriate than the company's dispersal of funds to signing Lin Zhiling and other resources that are not related to sports," said an informed source.