The Magic Touch: How soccer club with financial obstacle is rescued by fans?

Eibar players celebrating their first victory in La Liga.

With midfielder Javi Lara’s brilliant free kick, Eibar secured a 1-0 win against Real Sociedad in their first fixture of the 2014-15 La Liga season. While many soccer fans were amazed by the performance of Eibar on the pitch in their first ever La Liga appearance, few people realize that the squad accomplish a far more amazing miracle off the pitch.

Located in the north of Spain, Eibar is a small city with a population of 27,000, and the only stadium in the town, Ipurua Municipal Stadium, has just 5,250 seats. By comparison, Bernabeu Stadium, the home of Real Madrid, can hold the entire population of Eibar and still have 58,454 seats remaining. To everyone’s surprise, the SB Eibar has earned two consecutive promotions. In just two years they have gone from the third tier of Spanish football to La Liga this season.

However, at the end of last season, the club realized it had a huge hurdle laid in front of them as they were being promoted to La Liga. According to certain Spanish financial regulations, every La Liga club should have the cash on hand to pay 25% of the average expenditure of all sides in the second tier (excluding the two clubs with highest spending and two lowest spending clubs). The rule was designed to ensure all clubs can attend to its debts. If the teams fails to do so, it will not be allowed to play in La Liga, and even worse, it will be relegated to the third tier. At the moment of their promotion, SB Eibar had just 420,000 euros (544,020 US dollars) in its account. In order to fulfill the requirement, it had to raise 1.72 million euros (2,227,892 US dollars) to reach 2.1 million euros (2,720,101 US dollars), the registered money threshold for this season based on the amount of money spent in the Spanish second tier. Although it may seem quite easy for a top club to raise 2 million euros, it an uphill battle for a tiny club like Eibar. However, the world loves a good underdog story, and Eibar accomplished this miracle.

After failures in seeking individual investors, the board turned to another way of financing - launching a stockholder share plan. Initially, the franchise sold its shares, 50 euros per share, solely to the Spanish public. However, after realizing the capital raised was far from the threshold, it resorted to international fans, an obviously much larger population. During this round of international financing, Chinese soccer fans played a crucial role.

After learning of the financials struggles of Eibar through the media, a large number of fans across China gathered on QQ, the most popular instant messaging software in China, to try and help the club. They discussed different aspects of the plan, they researched for and learned Spanish laws regarding purchasing shares of a company, and then completed the corresponding transactions. During that period, fans had to surmount various difficulties, such as the language barrier, their unfamiliarity with the law, and the inconvenience of international transactions. Eventually, with the support of fans around the globe, Eibar raised the sufficient funds three weeks before the deadline. According to the New York Times, more than eight thousand people from 48 different countries purchased a share of SB Eibar.

Actually, to a certain extent, Eibar followed the history of a number of clubs that did the same thing to save themselves while on the brink of collapse. Currently in England, Wales, and Scotland, there are almost 150 supporter trusts. This method to save a team by selling shares to the public can be traced back to 1992 in England, when Northampton Town was the first club to be taken over by fans. During that season, the club experienced a huge plunge in their standing, and even worse, the debt amounted to 1,600,000 pounds (2,610,000 US dollars). While failing to pay player wages from the last two months, Northamtpton Town released ten senior players and called up several youth players with lower wages, but the results did not improve. In January 1992, the Northampton Town Supporters' Trust was formed with the purpose of raising money to save the club, and becoming involved in the operation of the team. The trust helped the club escape the crisis and the Northampton Town Supporters' Trust is still helping to run the team today.

In terms of fans rescuing their beloved soccer clubs, the cases of Eibar and Northampton Town are just the tip of iceberg, as there are many more passionate and responsible fans who helped saved their teams. From donating to the sports club, organizing fan movement, and even taking over the club, fans have constantly found ways to help their teams in any way possible. 

The Magic Touch: Chinese Soccer Club Going Public?

June 5th, 2014 was a landmark day for Chinese soccer. Jack Ma, the founder of China's largest e-commerce business, Alibaba Group, bought a 50% stake in Guangzhou Evergrande Soccer Club. Ma purchased the top Chinese club for 1.2 billion yuan ($192 million), and aimed to lead the club to new heights. Meanwhile, Jack Ma and Jiayin Xu, the chairman of Evergrande Real Estate Group, announced together that they would take the club public to raise capital by 40% and seek another 20 investors, each holding 2% share .

A Chinese soccer club preparing to go public? It's hard to imagine, given of the depressing state of Chinese soccer at the beginning of 21th century. Guangzhou Evergrande, however, has ascended with a stunning pace, winning all three domestic titles since 2011 and becoming the first Chinese club to take home the Asian club championship this past season.  For Guangzhou Evergrande, floating on the stock market now maybe seem plausible and tangible. Although this is perhaps the first time that a Chinese soccer club prepares to go public, in Europe, it is far less rare. Before making the final decision, Guangzhou Evergrande could learn a lot from the stories of other clubs: both the benefits, and the risks.

Jack Ma (right) and Jiayin Xu (left)

The first soccer club to float on the stock market was Tottenham Hotspur in 1983. In 1982, Irving Scholar, a property tycoon purchased the club. However, he found that the club was operated extremely inefficiently, with more than one million pounds debt left by his predecessor. Soon he figured out that there was only one way to solve this pressing problem. He established a holding company, with the soccer club as a subsidiary, and then floated the holding company on the London Stock Exchange (LSE). The initial public offering raised £3.3 million, which helped the club successfully tackle the debt problem.

Following Tottenham’s successful experiment in raising money through such a new way, (along with the rapid commercialization of the soccer industry) an increasing number of soccer clubs started to go public. By 2000, there were 22 English clubs listed on the London Stock Exchange, the Off-Exchange (OFEX), and the Alternative Investment Market. These offerings raised a total of £167 million , most of which was used to strengthen squads, renovate stadiums, improve liquidity to existing shareholders, and develop commercial operations.

Nevertheless, enthusiasm for investing in soccer clubs faded shortly. After the temporary success, most clubs delisted due to enormous fall of share prices. For instance, Sunderland soccer club originally went public in 1996, with an initial price of 585 pence. Astonishingly, when the club delisted in 2004, its share price had substantially plummeted to 31.4 pence, an epitome of the failure of soccer clubs to float on the stock market.

When it comes to the reasons why soccer clubs could hardly sustain a long term success on the stock market, we need to focus on the nature of soccer clubs: unpredictability.

First and foremost, in soccer industry, the performance of a club fluctuates greatly through a season and always cannot meet expectations from fans and investors. Therefore in many cases, the return is not proportional to the investment, and it is almost impossible for investors to guarantee the return of investing on soccer clubs.

For example, the let's discuss London-based club Queens Park Rangers (QPR). During the 2012-13 Premier League campaign, QPR spent more than £41 million on transfer fees, landing more than ten high-profile players, and saw their wage bill increase by almost £17 million to £68 million. However, rather than obtaining a substantial income based on its huge investment, at the end of the season, the club announced it made a loss of over £65 million and did not escape from relegation. Companies in non-soccer fields such as manufacturing enterprises, investors can precisely calculate the rate of return, gaining sufficient information to decide whether to invest it with little risk.

Secondly, even if a large amount of investment could improve the performance of a soccer club in a season, it is unlikely to ensure that the soccer club could sustain good form for a decade. It is possible that a franchise which was a favorite to the championship last year has to fight to avoid relegation this season. From investors’ perspective, stable and sustainable performance is preferred.

Additionally, some investors of a club’s stock are die-hard fans, who are eager to support the club. A club may find it difficult to attract investors who are not its supporters. Thus, the stock market of soccer clubs is a thin market, with few bid and ask offers, leaving more volatile stock prices.

So if Guangzhou Evergrande is steadfast in its belief to go public, it definitely needs to tackle these issues with its professional management team. If it is to reduce unpredictability of its stock price, it must develop steadily, and to make the investment-return ratio more measurable. Guangzhou Evergrande needs to emulate Manchester United, not only a survivor, but a victor in the cruel stock market.

With a strong base of fans around the globe, the most outstanding strategy Manchester United has been applying is business diversification. Man U significantly expanded its business fields, such as derivative products and new media, in a global context and therefore diversified its commercial operations. Thus even if the club cannot radically get rid of the unpredictability on the pitch, the performance off the pitch has become a relatively larger fragment of the overall operation. With many other stable and measurable channels beefing up the development in a long term, the Red Devils have diversified risk leading to better risk management.

If Guangzhou Evergrande can eventually go public and survive on the stock market in the future, it will start a new chapter in Chinese soccer industry. It is quite possible to obtain huge financial investment and develop to a better global. More critically, after converting to a joint stock company as a requirement to float on the stock market, the club will be pushed to enhance its management and make it more professional. That could positively influence all other Chinese clubs to pursue professionalism in managing sports, a key to reignite the country’s soccer hope.

The Magic Touch: Contract Controversy in Chinese Soccer

Three sides of this story (Guangzhou Evergrande club, Liu Jian and Qingdao Jonoon club)

During the past several months, a soccer player’s transfer case has been in the spotlight of Chinese soccer circles. This case involves three contracts, which unveil some loopholes of the Chinese soccer league.

The story began on January 3rd, 2014. On the morning of that day, Guangzhou Evergrande soccer club announced on its website that Liu Jian from Qingdao Jonoon soccer club had signed with Guangzhou Evergrande.

However, that night, Qingdao Jonoon stated that Liu Jian’s contract with the club wouldn’t end until 2017, thus, the club did not approve his transfer to Guangzhou Evergrande. As a result, the duration of the contract became an important issue.

All of a sudden, three contracts between Qingdao Jonoon and Liu Jian surfaced, and Liu Jian released details of two of them on his Weibo (the most popular social network similar to Twitter in China).



Guangzhou Evergrande announced the success of Liu Jian’s transfer

The first contract ended on Dec 31st, 2013. The second one expired on Jan 1st, 2014, which meant that Liu Jian would become a free player on that date if no clubs immediately signed him, which made it legal for him to join Guangzhou Evergrande.

Nevertheless, the third contract posted by Qingdao Jonoon shows that Liu Jian will still belong to Qingdao Jonoon until 2017. Therefore, Liu Jian couldn’t be transferred to another other club without permission from Qingdao Jonoon. Another astonishing aspect of the three contracts is that, the annual salaries increase so rapidly, with 800,000 RMB, 2,600,000 RMB and 3,500,000 RMB, respectively.

There is no doubt that one employee just has one official contract with his or her company during a period, so why did Liu Jian sign so many contracts with his club? While this case might seem unbelievable to people who are not familiar with Chinese soccer, this is in fact a common phenomenon in China.

According to a Chinese soccer commentator, there have been 46 similar cases of these multiple contract situations such as Liu Jian’s. Ten years ago, it was found that the salary of the so-called official contract of Shen Si, a former Chinese national soccer team member, was 2,000,000 lower than what his club actually offered. In 2009, several players of Tianjin soccer club collectively terminated training and left the club because of fabricated contracts.

In fact, in order to avoid paying a tax, many soccer clubs around the world sign more than one contract with players. However, Chinese clubs have a different reason for signing two or more contracts with players. The reasoning has to do with several policies that have been enacted by the Chinese soccer association that limits players’ salary and transfer fee. The latest policy even set an upper bound of one million RMB on a player’s annual wage.

All of these policies serve as responses to the strong public outcry that occured approximately a decade ago. Many people argued that soccer players were overpaid, claiming that the overall Chinese soccer players’ level and ability were not worthy of the salaries that they obtained. This group of people pressured the soccer association to limit the salaries of soccer players. As it turned out, the policies that resulted from this debacle went against market rules. The association not only failed to solve the problems, but also triggered a sequence of more complex issues.

Liu Jian’s transfer case is currently processing; we still do not know which one of these contracts is real. Meanwhile, Guangzhou Evergrande has already removed him from its squad list for next season. A panel composed of officials from the Chinese soccer association is still investigating this issue, as people are waiting for a reasonable judgment. If the panel fails to come up with a fair judgment, Liu Jian may not sign with either of these two clubs, and his career may become gloomy.

Although each country has a breadth of unique problems in its sports management system, all sports managers need to bear in mind that all sports policies should be in accordance with disciplines of the market, and perhaps more importantly, should adhere to the principles of the policies to protect players’ benefits.

The Magic Touch: International Expansion and the Bundesliga

In August, after Bayern Munich won the Audi Cup in China, Karl-Heinz Rummenigge, the chairman of the club, announced that the Bayern will set up a Chinese office to handle a wide range of businesses and continue to penetrate the high-potential Chinese market.

 Rummenigge announces new plans

 With the same purpose of increasing overseas expansion as Bayern Munich, the Stuttgart soccer club just declared that from January 7th train and prepare for the second half of the season in Cape Town, South Africa--ten thousand kilometers away from Germany. Many people may find it surprising that the club has chosen to set the training camp in such a distant location, and athletes will definitely be tired and uncomfortable because of long-distance flights, different time zones, climate and diet. However, this plan makes sense.



This move will not only let players enjoy sunshine of South Africa in January but also will allow the club to obtain an amount of money awarded by the German Football League (known as DFL, Deutsche Fußball Liga). In order to encourage the club to do more outreach in other countries, the DFL will pay Stuttgart €250 thousand for its winter trip. But in order to get this reward, the club will also have to take part in many local activities. According to the schedule offered by manager Fredi Bobic, besides training and matches, the club will travel to Robben Island to climb mountains. All of these activities in South Africa will be broadcast by Supersports TV station.

Robben Island, 6.9 km west of the coast of Cape Town 

People should get used to this type of overseas trip from German clubs, and in the future we will find an increasing number of trips happening around the globe. All of these actions are geared towards keeping up with the pace set by other leagues like the Premier League to expand overseas markets. During the 1990s, Barcelona, Manchester United and AC Milan started to train and play matches in Asia and America, but fans could hardly find Bundesliga clubs outside of Europe.

“Bundesliga is backward drops behind other leagues as for developing overseas market,” Christian Seifert, a member of the DFL board said. In order to change this situation, DFL has launched a program for clubs: DFL will provide financial aid and extra bonuses to clubs that set up overseas training camps, and some clubs can obtain up to €300 thousand for doing so.

 According to Dr. Jan Lehmann, the director of Strategic Marketing & Product Management of the DFL, there are two important rules for this new program. The first is that eighteen clubs are ranked by UEFA Coefficient (which is based on the results of clubs competing in the five previous seasons of the UEFA Champions League and UEFA Europa League).

This rank is then regarded as its corresponding overseas influence. Because of the different rank, each team can obtain a different bonus. Those clubs with a point total higher than 50 will gain €150 thousand; those clubs with a point total between 25 and 50 will get €100 thousand; the rest of the clubs with fewer that 25 points but more than one point will get €50 thousand.

The table of UEFA Coefficients of German clubs

The second rule for financial aid is about the place which clubs choose to do outreach. For this regulation, DFL lists eleven major markets: China, Russia, America (Canada), Poland, Indonesia, Japan, Turkey, India, Thailand, Brazil and Sub-Saharan Africa (including South Africa, Ghana, Nigeria and Kenya). If a club whose UEFA Coefficient is higher than 50 sets the training camp in Europe, it will win 150 thousand Euros; if it sets the camp outside Europe, it will gain another 75 thousand.

China is the biggest target for clubs

For example, because of two rules, if Bayern Munich set its training camp in China next summer, it will get more than 300 thousand Euros from DFL. Although this amount of money is not attractive to such a big-spending club, it will motivate many other middle and small clubs, and the trip of Stuggart exactly demonstrates this point. Besides this new program, in order to expand overseas markets, DFL has also tried to develop broadcasting contracts, which will bring the league to a higher level from a global context.

According to new contracts, the revenue from overseas broadcasting of Bundesliga will be increased to 150 million Euros in 2015. Benefiting from all these actions, fans from different countries will have more chances to get involved in Bundesliga. Moreover, because of these mechanisms, more and more small and medium clubs will have greater opportunities to develop themselves, which will gradually break the monopoly of Bayern Munich and Dortmund which dominate the ranking, so a more competitive league will be presented to fans.

The Magic Touch: The Success of Guangzhou Evergrande (Part II)

This is Part II of a two-part post on Chinese soccer club Guangzhou Evergrande.  To read Part I, click here.

Some people think that the success of big-spending football clubs is beneficial because it can bring immediate prosperity, while others believe that this pattern is not sustainable. However, people may cannot label this phenomenon good or bad since to a certain extent, the occurrence of these new operations in the sports industry is inevitable.
But in China, it is widely acknowledged that the success of Guangzhou Evergrande has brought much more benefits than harm to the stagnant Chinese soccer industry (and even to the nation as a whole). Most importantly, the success of Guangzhou Evergrande has rekindled Chinese belief in soccer. During the past ten years, Chinese soccer teams constantly went downhill and most fans became pessimistic of the future of Chinese soccer. Empty stands were common in matches of the Chinese Super League.

However, things have changed as mighty Guangzhou Evergrande reaches new milestones like winning the triple crown of three different cups in a single season. Before the final of AFC Champions League, all 40,000 tickets were sold out in three days. More surprisingly, many eager fans spent 3,000 yuan (nearly $500) buying tickets that were originally sold at 400 yuan (about $65). It was impossible to see these scenarios outside the stadium five years ago, and people believe this desire is the key to further development.

The sold-out Final

Furthermore, because of the enthusiasm and hope of soccer lovers, an increasing number of parents would like their children to play soccer and to become professional players. From a well-known Chinese reporter’s words, Ma Dexin, there are only 42 professional players in the U-15 Chinese national team now. But in the next several years, with the profound change in people’s attitudes, the talents pool and growing youth teams could solve the problem of insufficient numbers of young players.

 More importantly, in light of the success of Guangzhou Evergrande, an increasing amount of people and companies will be encouraged to invest in soccer industry because of its relative profitability. The effect of advertisement and the possibility of replicating Evergrande’s success could drive numerous firms and individuals into the space. Because of the professional-style management group at Evergrande, the club has managed to remain financially healthy despite the massive spending.  Its expected that the club will soon be very profitable.

We also need to strongly point out that because advertisement, the Evergrande group has greatly increased its turnover. Before it purchased the soccer club, its turnover was approximately 30.3 billion yuan (nearly $5 Billion) per year. In contrast, during the last year, the number has been increased to 92.3 billion yuan (over $15 Billion). In view of the bright and prosperous future of Chinese soccer industry, numerous companies may want to enter the market.

This is Part II of a two-part post on Chinese soccer club Guangzhou Evergrande.  To read Part I, click here.

The Magic Touch: The Success of Guangzhou Evergrande (Part I)

Guangzhou celebrating their Champions League Title

This is Part I of a two-part post on Chinese soccer club Guangzhou Evergrande.  To read Part II, click here.

On the night of November 9th , Guangzhou Evergrande of China won the AFC(Asian Football Confederation) Champions League by beating Seoul FC from Korea. This was the first time a Chinese soccer club won the continental tournament. My grandfather, a long-time soccer fan, described the moment as one of the greatest of his entire life.
Guangzhou Evergrande was originally founded in 1954. In 2010, after the Evergrande Real Estate Group purchased the club, this team won the championship of China's second division and was promoted to the Chinese Super League. A year later, the club claimed the league title in its first season in top flight (the same feat German club FC Kaiserslautern performed in 1998). Then during the next two years, the club furthered its success and the Guangzhou Evergrande era began.

Evergrande Real Estate Group deserves much of the credit for these achievements. Their transactions include signing  Dario Conca, MVP of the Brazilian Soccer League and Brazil national team player Elkeson, along with renowned manager Marcello Lippi. All told, Evergrande has spent more than three billion yuan (nearly $500 MM) during the past several years.

Magic with star player Dario Conca

The success of Guangzhou Evergrande is one example of a big-spending teams winning titles around the world. Ever since Russian magnate Roman Abramovich entered Stanford Bridge (home ground of English club Chelsea), operational patterns of professional soccer clubs have been changed. By pumping significant funds into the team and recruiting top-notch players and coaches, clubs can obtain excellent results almost immediately.

Russian Magnate and Chelsea owner Roman Abramovich 

Currently, Chelsea FC, Manchester City and Paris Saint-Germain lead this contingent of clubs built on wealth rather than proper management. The soccer world order was upset by new money and rule changes, leaving many traditional powers fragile. The most significant changes occurred as a result of the Bosman Ruling. The Bosman Ruling banned domestic league limits on the amount  foreign players a club could employ (as long as they were citizens of a European Union member nation). This opened up a rash of transfer spending and opened the door for big-pocket owners to flood the world's soccer scene.

This is Part I of a two-part post on Chinese soccer club Guangzhou Evergrande.  To read Part II, click here.

The Magic Touch: The Chinese Basketball Association vs. The NBA

Because of the success of the NBA, many leagues in different countries are driven to offer better and better products.  The result is a high-level of competition in leagues around the world.

The Chinese Basketball Association (CBA) is one of these improving leagues.  For example, as the CBA has developed over the past several seasons, many former NBA players have joined the league (i.e Stephon Marbury, Tracy McGrady, Steve Francis, etc.). This infusion of talent has made the CBA much more competitive and prominent than ever before.

However, the NBA and CBA developed in different countries with varying conditions, and there are many fundamental differences between them. Through the observations of both basketball leagues for many years, I have summarized four major differences between them.

1. Competition System

There are 30 clubs in the NBA, but in contrast, there are just 18 clubs in the CBA. Like its American counterpart, the CBA also has pre-season games, playoffs, finals and All-Star games.  Although it emulates the NBA to a certain extent, it is limited by fewer teams and an uneven geographical distribution. Therefore, the CBA only has 306 games during a season, as opposed to approximately 1300 NBA games.

The distribution of CBA teams in 2013

Besides the difference in the quantity of regular season games, the NBA has a much more developed system of pre-season games and Summer Leagues. Because of this, players have abundant opportunities to adapt to the new season and get familiar with new teammates while teams can promote their global images through overseas games. However, since Chinese basketball clubs are not as wealthy as those in America and pre-season games lack chances to make high profit, the CBA does not have a Summer League or enough high-quality pre-season games.

2.The structure of management

In the NBA, the Board of Governors and Commissioner (management), along with the Player's Association (employees) work to grow revenue and increase competitive balance. For instance, these parties set the salary cap to make sure teams have equal opportunities to sign great players and play close contests. They try to make the resources of each team more equitable to guarantee the competitive balance, going so far as sharing broadcasting and ticket revenue. All of these functions show that the management approaches of the NBA are operated with the same principles as a successful business, because these methods are all market-driven and serve to enhance the advertising value of the games.

However, the CBA, is managed by the Basketball Department of the General Administration of Sport in China, which is greatly limited by the government. Even though the department has implemented many market-oriented operations, it cannot be fundamentally be turned into a market-oriented organization because of its inherent centralization.

The Management Structure of CBA

 3. Business Model of Clubs

NBA teams’ revenue sources are diversified. Some of those resources are managed by the league as a whole, like the national and international broadcasting rights (TV and online), derivative products, or sponsorships and media companies (NBA TV, NBA Tape/DVD). Each club controls most revenues from local TV contracts, gate receipts, and in-game retail sales.

In contrast, ticket income accounts for a much more significant percentage of total income for CBA clubs because of the immature nature of broadcasting, advertisement, and derivative products in China's sports industry. Another source of income for CBA teams is to sell the naming rights to other companies, which is common in Asian sports leagues.

Shanghai Maxxis Partnership

 

 

For example, the Shanghai team has sold its naming rights to Maxxis, a tire brand, so its name has become Shanghai Maxxis basketball team. In the 2004-05 season of CBA, the total revenue of selling naming rights reached 27,480,000 yuan, which accounted for 29.13% of the total income. Now, these numbers are skyrocketing. Last season, the Double Star Group spent 20,000,000 yuan to buy the naming rights of the Qingdao basketball team.

4.The way talents entered the league

Since 1947, basketball fans have always been accustomed to watching the annual NBA draft in June, and many players picked from it would become stars the very next season. As we all know, most talents in NBA draft are from NCAA, an effective talent pool for NBA. Because of the high-level matches of NCAA, many outstanding talents are trained to be qualified candidates to NBA teams.

Students from sports schools

However, in China, fans do not have chance to feel the excitement of the draft. The way talents enter the CBA is completely different from that of NBA. In every province in China, each has a sports bureau which is in charge of looking for and organizing sports talents in its sports school. When the talent qualifies for the professional league, he or she will be directly transferred to the CBA team or other professional sports clubs in this province. In Liaoning province, one of the best sports talent breeding-grounds in China, the sports school supplies the Liaoning basketball team in the CBA with many talents every year.

Certainly, most basketball leagues have a lot to learn from the NBA, the best basketball league around the globe, but each of the leagues still need to preserve their unique elements, which result in the heterogeneous prosperity of world basketball.

World Baseball Classic: At the Forefront of MLB's Efforts to Globalize the Game

Israel in the World Baseball Classic

As I sat and watched the Israel vs. Spain final of the World Baseball Classic Qualifier 1 on Sunday evening, I could not help but think about how awesome and underrated an event the World Baseball Classic is.  With every run the Spain team managed late in the game their fans would dance on top of the dugout, while on the opposite side the numerous Israeli fans clung to the flags draped across their backs with every stressful momentum change.  The atmosphere surrounding the game was both exuberant and tense, creating the type of drama only sports can provide.  After winning in thrilling fashion in extra innings, the Spanish team jubilantly ran around the field as if they just won the World Series, displaying emotion rarely exhibited in a professional baseball game and proving that this game truly mattered to the players as much as it did to the fans.

Having Jewish heritage on my father’s side I was quite distraught following Spain's defeat of the Israeli's, however, it began to occur to me that I was not distraught because Israel simply lost and would not be attending the 2013 World Baseball Classic in March. I was distraught because of the lost opportunity for the growth of baseball in Israel, and instead, this opportunity would now deservedly belong to Spain.

While the World Baseball Classic seems to still only have a lackluster following in the U.S., primarily due to many owner’s fear of injury and reluctance to let star player’s participate, the event looks to use its international popularity to increase growth of the sport in other countries in 2013. The newly implemented qualifier system has expanded the field from 16 to 28 countries for this version of the event, allowing countries such as Spain, Israel, Germany, Brazil, Columbia, Chinese Taipei and others to participate for the first time. This expansion of the field reveals Major League Baseball plans to use the World Baseball Classic as far more than just another revenue generator.

The World Baseball Classic serves as a means in which Major League Baseball can promote the sport and slowly start to infiltrate new markets. While baseball’s popularity has spread like wildfire in certain Latin American and Asian countries, the sport has seen limited growth in Europe, South America, and Africa. The World Baseball Classic along with several other initiatives such as the MLB International European Baseball Academy, a multiple week academy designed to grant exposure to ballplayers from Europe, New Zealand, and Africa, hope to change this by sparking increased interest in the sport.

The World Baseball Classic Qualifier 2, which was also held this past weekend, but in Regensburg, Germany, was able to garner crowds greater than 4,000 showing that interest in the sport in Europe does exist. In 2011 Alex Liddi became the first participant of the European Baseball Academy to make his major league debut for the Seattle Mariners, and he is only one of the 63 Europeans to ink contracts with a Major League club since the academy’s inception in 2005. Along with the MLB International European Baseball Academy, there are currently 17 other baseball developmental academies in Europe. Major League Baseball hopes that an increase in European teams involved with the World Baseball Classic will continue the positive growth of baseball on the continent, by placing their National teams at the international epicenter of the game.

While baseball seems to be making steady gains in Europe, it has hit developmental roadblocks elsewhere. In 2009, it was announced that the Rays were going to open up a baseball academy in Marilia, Brazil to develop local talent. However, complications with the Brazilian Baseball and Softball Confederation and the city hall of Marilia have forced that plan to fall through. Yet, the interest of the Rays to build a developmental academy in Brazil is evidence that many feel Brazil has the potential to be a successful market for the sport.  Major League Baseball hopes that Brazil's participation in the World Baseball Classic qualifier will act as a catalyst for future growth of baseball in Brazil as well as possibly the rest of South America.

Baseball has also struggled to penetrate the Chinese market as well. A 2010 article in The Economist describes MLB’s efforts:

“Despite a big promotional budget, MLB has not made much of an impression. It has brought branded clothing to Chinese stores, but not balls or bats. Fields are rare.” 

China, who will participate in its third World Baseball Classic this March, is evidence that in order for baseball to increase in popularity, it must have a grassroots foundation. No matter how much exposure the sport receives through marketing, the media, or an event like the World Baseball Classic, without a strong foundation at the youth level, the growth of the sport will be substantially limited.

Whether or not the World Baseball Classic ever reaches ultra-high popularity levels in the United States, there is no doubt that its impact on the global development of the game is remarkable and will not be fully understand for years to come. Not only does the World Baseball Classic increase revenue for Major League Baseball through ticket and apparel sales, sponsorships, and television rights, but it creates exposure to the sport in formerly undeveloped baseball regions. With the formation of new leagues and academies worldwide the talent base for the league will only increase in the future, creating a better product and an increased fan base not only for the World Baseball Classic, but Major League Baseball as well.