Yao Ming Bought His Former Club Shanghai Sharks

[MOP] July 15 2009 Yao Ming announced through Shanghai media he will buy all of Shanghai basketball club team’s shares, becoming the sole owner of the team. People praised Yao’s courage and sense of responsibility but could not help worry about him becoming the boss – how to put a precarious team back on track in the current non-profitable market. Being the owner definitely has more pressures and challenges than being a player, Yao Ming does not have an easy task in hand.

Yao’s management team and Shanghai Sharks, the name of which had been changed to Shanghai Oriental Basketball Club, signed a framework agreement on share transfer. The general manager of Shanghai Oriental Basketball Club, Zhang Zheng-ming (张争鸣), said: “This framework agreement is very meaningful, officially launched the prelude to the transfer of shares, the Shanghai Club also started the work of restructuring.”

According to the agreement, all the shares will be sold to Yao who will become the sole shareholder of the club.

The share transfer has entered the assessment phase and the club will submit the application of the transfer to the Chinese Basketball Management Center at the end of this month. Then, the club will be going through the CBA entry assessment for the coming new season.

Yao Ming’s net worth about 700,000,000 (RMB)

28 years of age, height 2.26 meters, started playing for the Sharks in 1997 and led the team to the CBA champions in 2002 before he was selected by the Rockets as number one pick in that year’s NBA draft.

List Hurun Report, Yao has a net worth of 700 million yuan. He has 2 main sources of income: 5 years salary Rockets 76 million U. S. dollars (equivalent to RMB 560 million), advertising endorsement income 21 million U. S. dollars (equivalent to RMB 140 million). In the United States, “Sports Illustrated” Africa and the United States issued the world’s top revenue-born athlete, Yao Ming ranks seventh. In addition, Yao invested in restaurants, gyms, music sites. These profits and losses are unpublished.

All options to purchase is about 20 million total. Is this acquisition or repay his debt?

6 pm last night, he made this announcement however, Yao Ming and the Shanghai Media Group has not released the contents of the purchase price, etc… General Manager of Shanghai Oriental Basketball Club Zhang said that the matter involving the transfer of state-owned assets is to be announced after the details of the assessment.

This is not so simple. There has long been rumored that the Yao purchasing Shanghai Men’s Basketball team is really paying off his debt. Prior to 2002 when Yao went to NBA, he and the Shanghai team signed an agreement to pay training fees in order to let him go to U. S. It is said that the total training fee is 3.5 million USD. Yao’s family only paid 250,000 USD the first year and then never after. So, Yao’s family still “owes” Shanghai men’s basketball 3.25 million dollars. The rumor is acquisition is about 2000 million RMB. “In a sense, Yao Ming always feels a sense of belonging to Shanghai team” A close friend of Yao said “Regardless if rumors are true of not, whether the acquisition is to repay debt, now he has the responsibility after all.”

It is learned that the Shanghai Men’s Basketball team is under ongoing assessment and audit. The General Administration of Sport will submit reports at the end of the transfer of and to prepare the report for next season. According to industry disclosed, it is estimated that the final purchase price will be around 20 million, “This is money-losing business, which is really a burden, the burden of course does not worth much” Equity transfer of an estimated two months later, Yao Ming will become the boss.

Prospects: 15 million each year, how long can he last?

1. A CBA team’s yearly normal operation costs about 15 million.

2. The only current CBA team is making a profit is Guangdong Hongyuan and the test of the teams are living beyond their means.

Shanghai Men’s Basketball last 100 million in the last decade.

Although Yao has become the boss, in the eyes of experts Yao Ming of the acquisition is a huge investment risk. In recent years, the attendance, television coverage, sponsors attractive aspects of Shanghai team is the worst in Chinese Basketball Association (CBA) considering a loss of close to ten million in the last decade. A team’s general manager of the South could not help praising Yao have “courage”, after all, a year into the most basic operating expenses of 15 million is not a small sum, “CBA is not in a very mature environment, if the team cannot profit and once Yao Ming’s NBA career ended, he may be the rich man turning into a ‘negative man'” (rich and negative has the same pronunciation in Chinese)

Many issues, difficult to profit

According to CBA released data, amount 18 CBA teams Guangdong Hongyuan is the only profitable team. Their income mainly includes about 5 million for winning championship, eight million ticket sales, advertising revenue and other related products ten million. Other teams are running at a deficit. Experts believe that, “CBA league’s formation may be very healthy, very international, but there are many problems!” Yao is not likely to bear the annual operating costs tens of millions, and his business model would be more inclined to social finance, looking for sponsorship and so on, but the problem is the current CBA there is not profitable. If Shanghai men’s basketball delays on profiting, and the basic operation of each of the team is 15 million, how long can he last? Liu Hong, general manager of Guangdong Hongyuan Club, Jiang said, “Yao Ming coming into the CBA, with his professional team of international operations, it is possible to start a business revolution.”

Yesterday, the Shanghai media through a long-distance telephone interview with Yao Ming. Preparing for a surgery, Yao Ming said, “Players in the NBA, I am not the only one who owns another team. Some also owns a stake in the Italian football team. This dual role is very interesting to me.”

Yao said that as a native of Shanghai, the home team is in a hard time, he should stand up for it. Of course, he is now concentrated in the NBA, to concentrate on nursing the injury. Yao will let the team to take care of things. “Of course, I would devote tremendous attention, not only in the material, but also human resources, creativity and so on.” His ultimate goal is to build Shanghai sharks into a team with a team of international influence, in line with the image of Shanghai “I hope that it will be a piece of Shanghai’s business card!”

It is learned that the Yao Ming’s acquisition started at the beginning of this year. After Sponsors stopped funding the Shanghai team leader of the team was an old friend of Yao’s father Yao Zhiyuan (姚志源), in a telephone chat talked about the Shanghai team in difficult circumstances. Yao told the father that he is willing to do something about it. One month later Yao and his team sat at the negotiation table.
Process has not always been smooth. A U.S. company and a domestic enterprise also participate in the competition. Their starting bit was way higher than Yao’s. However, giving the “golden name” – Yao Ming, no one can resist temptation.

Let’s analyze, if it has to do with “training fee” to settle the issue, Yao’s basketball team and the acquisition of Shanghai has become a necessity. Appears in Shanghai, Yao Ming is the most suitable candidate, he has a huge appeal at home and abroad to attract the attention of sponsors. It is a money making tree, no one would object to Yao to operate in Shanghai to add to Shanghai’s business card. At the same time, two sides can resolve the “training fee” issue, why not?