Govt paves way to profit for sports investors

Athletes pull fake camels, ridden by teammates, in a race on Sept 2, 2014 during the second Chinese Desert Sports Games in the city of Zhongwei, Northwest China's Ningxia Hui autonomous region. The games will run through Sept 5.[WANG HUAZHONG/CHINA DAILY]

China will open up the million-dollar market of organizing commercial and mass sporting events, a move that will scrap the two-decades-old rule requiring government approval for such events and encourage more private investors in the State-dominated industry.

The decision, made at the State Council's executive meeting on Tuesday, is expected to "unburden enterprises to the utmost and give vitality to all kinds of sporting resources", according to a statement released on Wednesday.

Currently, all sporting events are subject to the approval of China's General Administration of Sport and its local bureaus. These sports watchdogs charge fees based on an event's importance and ability to attract advertisers.

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The meeting also called for opening the broadcasting of sporting events to more media companies. Broadcasts now are dominated by the State-run China Central Television.

Zhang Qing, founder of the Key-Sports, a consulting and research agency, said the changes, if fully implemented, could alter the status quo in the sports industry, but the measures will be difficult to carry out because vested interests will oppose them.

Zhang said the requirement for government approval has brought a lot of uncertainty to investors of commercial sporting events, and the central and local sports watchdogs "automatically" become the chief organizers of events－an unwritten practice in the field－so that real investors were unlikely to benefit from the brand value of holding these events.

"If you purchase real estate but you don't have the property rights, that can greatly dampen the enthusiasm of investors," Zhang said.

Zhang said the sole investor of the Chinese Basketball Association, which pays $1.5 million annually as an approval fee, started to show a profit only last year.

But Zhang predicted that change will take place gradually since it intends to take back the biggest income source of sports watchdogs.

"Calls to scrap the approvals have been around for a while, but nothing has changed so far. It may move a bit forward as the central government has become serious about it," Zhang said.

Fiscal management

Local governments were also asked on Tuesday to "tightly grab the reins" of their debts to conform to the recently revised Budget Law, which provides for tougher supervision on government income and spending.

Local governments can issue bonds according to the stipulations, and they should also "properly handle existing debts, while ensuring the funding of ongoing projects", according to the statement released on Wednesday.

They were also asked for a complete and open budget to include all kinds of revenue, which is in reality divided into budgetary and non-budgetary income, to eliminate the opportunity for misuse.

All the departments funded by revenues should open their budgets except in certain confidentiality cases.

Secretly owned coffers in publicly funded organs will be cleaned up, and misappropriation and misuse of revenues will be punished, the statement said.

In 2014, China's fiscal revenue is budgeted at 13.9 trillion yuan ($2.26 trillion), and government spending was to be more than 15 trillion yuan. Revenues are expanding at nearly twice the rate of GDP growth.

China's local government debts amounted to about 12 trillion yuan by the middle of last year, according to official estimates.