Suning Sports, the sports division of Suning Holdings Group, China’s largest omnichannel retailer by sales revenue, has laid off 20% of its employees and restarted negotiations with Alibaba to enter a joint venture.
This is the third spree of layoffs at Suning Sports since the beginning of this year, and it is also the largest. Prior to this, Suning Sports had smaller-scale layoffs in June and August.
As the sports video broadcasting platform that has held the most sports copyright resources in the past two years, Suning Sports now struggles with sizable copyright costs. According to incomplete statistics, Suning Sports spent at least 3.44 billion yuan on purchase rights in one year. In August of this year, Wang Dong, executive vice president of Suning Sports, admitted in the media communication meeting that the cost of copyright put them under a lot of pressure and it is urgent for strong partners to share it.
A person close to the top of Suning revealed that Suning and Alibaba may have restarted negotiations to start a joint venture. However, according to the source’s estimation, Suning’s valuation will at least be 30% lower than in the previous round of negotiations. The specific reasons for the restart are still unknown.
Alibaba, whose core business is e-commerce, has stakes in sports assets including streaming platform Youku Sports and Ali Sports, a company with activities in media rights acquisitions, sponsorship and event operation, among others. Suning’s sports assets include Italian football club Inter Milan, Chinese football club Jiangsu Suning, streaming platform PPTV, and a chain of sports goods shops.
The rumored deal follows an agreement last year whereby the two companies began exploring joint work, particularly in respect to their media operations. The two companies have worked together since at least 2015, Lanxiong reports, when Alibaba invested in Suning, becoming its second-biggest shareholder.