At the Vietnam Sport Economic Forum 2024, held in Hanoi in early October, leaders addressed ways to overcome legal barriers and mobilise private capital for developing a professional sports economy.
Dang Ha Viet, director of the Vietnam Sports Administration (VSA), said the development of the sports sector was poor, and it mainly relies on the state budget. Calling for resources from businesses and sponsors is also rife with difficulties.
“Many local sports facilities built under the public-private partnerships (PPPs) require investment capital from partners, and are facing difficulties with the investment law, especially with planning and expensive land rental costs. Meanwhile, the operating costs of training centres and sports facilities are also significant,” Viet said.
According to the VSA, Vietnam hosts around 2,500 sports tournaments annually, with the central budget only supporting about 170 events. The remaining funding comes from local budgets and sponsorship.
Viet believes that the Vietnam Olympic Committee and sports associations have not been able to organise enough events and create value to attract sponsorship. Most associations only focus on a few small-scale events, and only a few associations have successfully mobilised social capital.
“The sports development strategy for 2030-2045 includes content on sports economy, including the establishment of a legal framework,” he said. “The sports sector has seen significant growth in mass sports and professional sports, but still faces issues related to taxes, business conditions, and leveraging the role of sports teams to develop its economy.”
The sports economy is one of the fastest-growing industries in the world. The global sports market value reached over $512 billion in 2023 and is projected to increase to $623 billion by 2027, with an average annual growth rate of 5.2 per cent, higher than the average global GDP growth rate.
Exploiting commercial value from sports competitions |
Vietnam is considered a developing market in the Asia-Pacific region for the sports economy, with an average annual growth rate of over 6 per cent, according to the Ministry of Culture, Sports, and Tourism (MoCST).
Le Thanh Liem, chief inspector of the MoCST, stated that the value of Vietnam’s sports economy is around $300 million and there are many prospects for future development due to the large population, a high proportion of youth, and nearly 30 per cent of the population regularly participating in sports.
“The current investment law stipulates that culture and sports are in the encouraged investment sector, but it only focuses on investing in infrastructure. Services such as competitions, training, and education have not been included. In the five sectors implementing PPP, there is no culture or sports,” Liem said.
There have been some popular events in Vietnamese sport in recent times. Last year’s Danang International Marathon attracted around 9,000 participants, including 1,800 runners from 60 countries, contributing to enhancing Danang’s reputation as a destination for sports tourism.
In 2022, Vietnam successfully hosted the 31st SEA Games with the participation of 10,000 athletes and approximately 5,000 international visitors, including coaches and sports officials from every Southeast Asian country. The success of the SEA Games also brought about 365,000 tourists to Vietnam, contributing to the economy in localities. Hotel occupancy rates in Hanoi, Quang Ninh, Nam Dinh, Phu Tho, and Haiphong surged during the two-week event.
“Sport is not just a catalyst for tourism and economic growth, but it also plays a crucial role in positioning cities and nations as vibrant destinations for global attention,” said Thomas Bach, president of the International Olympic Committee.
Funding and investment are important financial resources that drive the sustainable development of professional sports organisations. This financial source not only supports basic operational needs such as athlete salaries and facility maintenance but also helps in organising events and enhancing competitive capabilities.
The V-League, Vietnam’s top domestic football league, is one of the few tournaments that is considered to pull in high levels of interest and social investment. The 2023/24 season saw a total of over 1.4 million spectators attending matches.
Tran Anh Tu, vice president of Vietnam Football Federation, stated that before 2018, the television broadcasting rights revenue from the V-League only covered the production costs of the tournament. Since 2021, the broadcasting rights revenue has increased by over $83,000.
“The significant breakthrough only came in 2023 when the value of the tournament broadcasting rights reached $2 million per season. To achieve this result, we need to demonstrate that the V-League is worth the price that the purchasing unit pays for the rights,” Anh Tu said.
According to Dr. Duong Thanh Binh from the University of Sports and Physical Education in Ho Chi Minh City, Vietnam’s weakness in sports economic development lies in marketing. In Vietnam, sponsorship of tournaments is often random or a temporary advertising campaign, while in other nations, it is a planned advertising campaign integrated into the sponsor’s overall advertising strategy.
“The broadcasting of sports events also plays a role in shaping the sports market, but there is no competition in this aspect in Vietnam,” Binh said.
Oh Yeong-woo, former Vice Minister of Culture, Sports and Tourism of South Korea, believes that to organise large international events, the prerequisite is determination from the governing body, followed by PPPs between the government and businesses. Currently, Vietnam has prepared the necessary legal mechanisms to organise large cultural and sports events.
“I believe that Vietnam can overcome the current challenges. Sometimes, we need to take risks in investing to drive development. In the future, through sports events, Vietnam can enhance the promotion of the country’s image, people, and unique culture closer to the global mainstream culture,” Yeong-woo said.
Won Kim, director, World Boxing Association Asia Boxing is one of the oldest sports in the world, and professional boxing can bring worldwide popularity and benefits for boxers. Currently, the US, Japan, and the UK are the biggest boxing markets, with Saudi Arabia becoming a new bright spot. Vietnam has a high potential boxing market. To be successful, the local governance body is the key factor in professional boxing due to safety, legality, and international relations. In some areas, unauthorised people try to control the sport, which causes significant damage to the boxers, trainers, and promoters. Accordingly, we are thrilled to align with the Vietnam Boxing Commission along with the Vietnam Boxing Federation (VBF), which are the only legitimate representative professional boxing governance bodies in international relations with the respective international bodies. They have already taken the right steps with ring official seminars and held the WBAASIA Convention 2024, which was the first-ever international boxing conference held in Vietnam. To ensure that boxing is developed and managed in accordance with international practices, the VBF needs to promptly complete regulations on professional boxing management, and build and publicise the tournament system as well as the system for managing the qualifications of athletes, coaches, and referees in Vietnam. We must also call on and gather clubs to become members of the VBF. Nguyen Hoang Tuan, CEO, Techhaus Vietnam JSC Since 2023, some athletic events in Vietnam have experienced significant growth in the number of events and participant scale. According to an independent report from ActiUp in September, Vietnam hosted 125 running events in 2023, attracting 250,000 participants. By the end of 2024, the number of events is expected to increase to 150, with an estimated 280,000 participants. Compared to 2023, this represents an increase of 25 events, roughly a 20 per cent rise. Simultaneously, the number of participants is projected to increase by an additional 30,000, equating to about 12 per cent. However, the report from ActiUp also indicates a decline in consumer spending, particularly on recreational and sporting activities, which has led to a decreasing trend in event registrations in the latter months of the year. Running events play an important role in driving growth across various economic sectors, from retail and technology to healthcare and infrastructure, thus directly and indirectly impacting Vietnam’s GDP. A report by GfK Vietnam in 2022 also indicated that the market for smart wearable devices, such as Garmin, Apple Watch, and Xiaomi, grew by 35 per cent due to the increasing trend of sports participation, with running being a key factor. The market for running event tickets has also seen growth. In 2023, total revenue from event tickets reached $8.75 million, and this figure is expected to rise to $9.5 million by the end of 2024, representing an approximate growth of 14 per cent. Around 40 per cent of participants in running events are aged between 30 and 40, a demographic with stable income residing in major cities such as Hanoi, Ho Chi Minh City, and Lam Dong. Tran Chu Sa, CEO, Vietnam Basketball Association (VBA) As a dynamic entity implementing a modern professional sports model, the VBA has achieved certain successes in attracting sponsors and investors to the tournament over the years. One of the key factors helping the the VBA maintain financial balance among the teams is its revenue-sharing mechanism. We have designed a co-ownership system, whereby each team participating in the league is a shareholder in the VBA company, meaning that teams not only compete on the court but also jointly decide on development strategies and league management. Revenue from various sources such as ticket sales, sponsorship, and media rights is shared equally among teams based on their ownership stake, and is also redistributed to support financially weaker teams. The revenue-sharing extends to direct financial support by distributing a portion of sponsorship revenue from teams in major cities with good business potential to teams in less advantageous localities, ensuring uniform development among teams in the long term. This approach attracts investors with a long-term vision, as investment risks are minimised through equitable financial support. Investors need not worry about financial asymmetry among teams, as all teams have access to resources for development. Sponsors increasingly recognise the significant potential for connecting with young audiences through the VBA, thereby enhancing their brand and sales. Additionally, we strive to improve the fan experience and leverage modern media technology to attract investors. These initiatives create economic value for the league and contribute to elevating the status of Vietnamese basketball globally. |
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