By Pei Li and Adam Jourdan
BEIJING/SHANGHAI (Reuters) - In the high-stakes race to control soccer TV rights in China, with a potential market of hundreds of millions of fans, an electronics retailer is betting up to $2 billion that could give it a near monopoly on broadcasting the sport at home.
Suning Commerce Group, a retail conglomerate with annual revenue of around $22 billion, owns Italian soccer club Inter Milan, and is fast securing the rights to air matches from Europe's top leagues in China.
It already owns rights to Spain's La Liga and the Chinese Super League, has bought future seasons of top-flight German and English soccer, and is looking to secure Italy's Serie A and Asian soccer, three people familiar with its plans said.
Suning's rise to prominence is all part of China's power-grab in world soccer, with Chinese clubs paying top dollar for star players and Chinese tycoons buying clubs across Europe.
Backed by Beijing, China's domestic sporting market - from soccer to basketball and beyond - could be worth 5 trillion yuan ($740 billion) by 2025.
Key to a share of that profit is the right to show matches from major leagues, and Suning's PPTV video streaming website is sweeping most rivals out of the way. Competition from Sina Sports and technology giant Tencent, though, means it's costly to stay out in front.
"Historically in China, there was good interest from fans but not a lot of competition between media rights buyers," said Jamie Reigle, Hong Kong-based Asia Pacific managing director for Manchester United, the world's wealthiest soccer club.
"Now you have the digital platforms that have come in and want to build an audience. That's what has changed the dynamic."
PPTV paid 250 million euros ($291.4 million) in 2015 for a 5-year La Liga deal, and this year agreed to pay $700 million for three years of English Premier League (EPL) rights from 2019, and $250 million for five years of Germany's Bundesliga, a company source said.
The Italian league hopes to generate around 80 million euros per season from selling the China rights, suggesting a price tag of 240 million euros for a typical 3-year deal.
The sums paid for local and overseas rights by Chinese firms have ballooned by as much as ten-fold over the last few years.
PPTV also took over the remainder of a 2-year rights deal to show Chinese Super League matches from sports media firm LeSports, which defaulted on payments due to debt problems at its parent company.
It's now also in talks to buy an up to 56 percent stake in China Sports Media (CSM) from majority shareholder China Media Capital (CMC), said a CSM official, who asked not to be named. CSM is the primary rights holder for Chinese and Asian soccer.
CMC President Clark Xu confirmed the firm was in talks with Suning, and other parties, to sell some of its CSM stake. The chief executive of CSM, which is valued at around 5 billion yuan, acknowledged the ongoing talks.
Suning and PPTV declined to comment for this article.
At a time when Beijing has been openly critical of "irrational" overseas investments, the stakes are high for buyers paying above the odds. A state television program last week on firms making risky overseas acquisitions named Suning's Inter Milan buy as an example.
Its deals do stand out.
PPTV's $700 million deal for future EPL China rights was far above rival offers. Current rights holder Super Sports bid $400 million, a person at the firm said, reckoning anything above $500 million would mean a loss. Super Sports declined comment.
And there's no guarantee that winning exclusive rights means immediate profits.
"Even if companies snatch exclusive content rights, in order to maintain influence and brand those companies will still have to repackage to TV stations at low prices or even for free," Beijing Baofeng, the Chinese owner of Italian sports media rights group MP & Silva, said in a statement to Reuters.
And in China, getting fans to watch more matches, and getting them to pay, are quite different.
Challenges include rampant piracy and the late-day airing of many overseas games. Also, the introduction of strict rules on player transfers in China's domestic league is hindering star signings - a key allure for paying fans.
Ding Li, 21, a recent graduate in Beijing, said he only pays for occasional high-profile games and "when I really can't find free or pirated" streams. Last year, he paid about 10 yuan ($1.48) to watch Manchester United vs Arsenal on Super Sports.
"I've no plans to buy a subscription. I like flexibility and most games can be found on pirate stream websites," Ding, who supports England's Arsenal and Germany's Borussia Dortmund, told Reuters.
It's a commonly shared attitude.
Wuhan DDMC Culture Co Ltd, which acquired Super Sports this month in a $500 million deal, said in a filing that 80 percent of Super Sports' user base paid for one-off games or single club "die-hard" membership - not full subscriptions. That means it can be a slow process to recoup the large price tags, even if Super Sports' revenues are roughly doubling each year.
A single match costs around 10 yuan, while a "die-hard" fan membership - giving access to one club's games for the season - is 98 yuan. Full membership for an EPL season is 298 yuan ($44) - near what it costs for just a single month in Britain.
Richard Young, Managing Director of NFL China, which promotes American football in the country, said real profits would come if platforms could dominate major sports, helping them bring in the fans and push up prices.
"The dust hasn't settled yet, but if there is consolidation it changes things massively," he said. "If someone really does corner the market, then you'll see that."
(Reporting by Pei Li in BEIJING and Adam Jourdan in SHANGHAI; Editing by Clara Ferreira Marques and Ian Geoghegan)