China Basketball Summit 2015 has been held in Shanghai Marriott Hotel Luwan from December 10 to December 11. The summit has been attended by members of media, executives of sports companies and representatives from NGOs. As a co-organizer of the summit, Yutang Sports was able to interview Eric Cuthbertson, Vice President of Operation, AEG Management (Shanghai) Co., Ltd. Eric has shared his insights about venue operation in China.

Interviewer: Yutang Sports (Y)

Interviewee: Eric Cuthbertson (E)

Y: How do you feel about the current operation of Mercedes-Benz Arena.

E: Mercedes-Benz Arena is the most successful venue in terms of number of events in China and very competitive, it’s one of the best venues in Asia. We’re very happy where we are with our current level. We have great partnerships Mercedes-Benz and other partners that do business in this building. On the business side, we’re very happy, in terms of utilization rate, we’re busy every weekend. We’re now trying to expand use of weekdays; events producers here in China do not traditionally do concerts during weekdays. So we’re trying to expand our use days by doing concerts, doing sporting events and doing other events during the week. We’re very happy that we’re continuing to grow up.

Y:  We’ve learned a lot from your speech, so what services will be provided there?

E: We now in China really provide a management service partnership, so we have our expertise in managing firstly designing facilities, managing, operating, training staff, but in addition to that, the other two core businesses, our models on content, concerts, sporting events, and monetizing the commercial properties at AEG venues. Mercedes-Benz and MasterCard, naming rights sponsorships and founding partners help finance in the operation, so it’s very important. That’s really our model. It starts from the design. 

The second phase is management training in day to day operations. If you have these two core values established, attracting content, then attracting partners and sponsors is easier, but those are the things you need to do, to have those core businesses recognized and work together. 

Y: As you mentioned before, the sponsorship is the main source of revenue?

E: Yes, it is, it absolutely is. When you look at our calendar, then you will find that we do a hundred events. There difference between an event sponsor and a venue sponsor. An event sponsor targets at a specific audience associated with the particular event. For the NBA, you are targeting at a specific audience that watch NBA. For a venue sponsor, you have access to that audience, you have access to the audience that come to see Korean shows, they come to see Jolin Tsai, Jackey Chueng, they come to see Zhang Xueyou, Wang Fei. That’s what makes the venue sponsorship opportunity very appealing. Because it’s very broad base, it’s something different and appeals to all of your different customers, all of your demographic bases.

Y: How many events every year?

E: Right now in Shanghai, this year we have a hundred events in the main arena, and we do 144 events in the smaller facilities, in the mixing room.

Y: As a foreign venture, have you met any difficulty caused by cultural differences? If so, does it affect your business? How do you overcome the difficulties?

E: Absolutely yes, every company does. The solution or the way to solve that issue is to have the patience to stay consistent with the business goals and to figure out how to take out the best international standards and incorporate local customers and cultures. That’s a lot of what I do in day-to-day operations at facilities and trying to take what I’ve learned in terms of working in China for the past six years, understanding the culture, understanding the traditional business practices and trying to incorporate the best international practices, finding a balance in a mixture of those best practices with local cultures and local traditions. 

Y: How do you solve the problem of lack of personnel in Chinese venue operation. How about AEG’s talents selection and training system?

E: It’s been a lot of same techniques, same sort of methods, of trying to bring international best practices, understanding what local cultures are, understanding what local traditions are and then adjusting those training methods, so that you talk to people so they not only understand, but commit to and invest the idea of a new management style. 

Again, it’s something that has taken time. I’ve learned so much about how to work with people. I’ve always been sort of in training and managing in the various positions that I have in North America. But I’ve learned so much more about working abroad here in China, how to better work with people, how to try to exploit their best talent and teach them new ways of doing things in facility businesses that are consistent with international practices.

Y: How do you think about the Wukesong Arena in Beijing? Like the arena in Shanghai, there is a MasterCard Center in Beijing, also known as Wukesong Arena. Earlier this year, CBA champion Beijing Duck began to play there, and made a great ticket revenue. We know that the two arenas have something in common, then how do you think about the MasterCard Center? Can you compare the two centers?

E: Well, it starts from AEG facilities, so we’re very proud of it. Right nowbasketball with the CBA team is very very popular. People like to go, to see basketball games. That has allowed MasterCard Center to be very successful and fill up their calendar, do Tuesday events that we normally wouldn’t do, because now they have a franchise. That has increased the utilization of their calendar.

So both venues are doing very well. Both venues have challenges in terms of accommodating all of the requests for event dates. Currently and for 2016 there is not weekend in either the MasterCard Center or the Mercedes-Benz Arena without an event scheduled. The challenges are how do you expand the calendars, how do you get events to go in the non-traditional weekday periods. So the challenges are the same. They are similar. Our success has also been similar.

Y: Any differences between Beijing market and Shanghai market?

E: Yes, I think they are not exactly the same. Beijing has a very well-established basketball culture.  Shanghai has a great basketball culture. But in terms of following CBA teams, the fan base isn’t that strong. I think that’s a big difference, that’s the reason why you see the success of the Beijing Duck playing in the MasterCard Center, because the team has done well and there’s a lot of concentration for not just watching the sport, but really organized participation in the sport. So I think that’s one of the big differences.

Y: What events?

E: Primarily basketball. There’s real focus on organizing basketball in Beijing. . So I think that’s the difference. I think organized basketball in Shanghai, football and other sports, the fact that MasterCard Center have a primary tenant- (Beijing Ducks) and Mercedes-Benz Arena does not.  . I think that’s the biggest difference between the two venues. 

Y: Any other plan in other cities of China?

E: Absolutely. We believe China is in the early stages of development for the venue management industry, we have advised a lot of cities on different venue projects, we have advised on theaters, we have advised on stadiums and we have advised on arenas. We’re going to continue to see more of these types of venues been built in the future. We feel that AEG has a value to bring to these different venues as an experienced international venue manager, but what we’ve learned from our experiences in China, this knowledge will be very valuable to the owners of new and planned facilities. 

Y: In your opinion, if China wants to make a world leading country in venue operations, what efforts should be made? Could you share us with any cases?

E: I think what we’re seen is that in more and more cities are demonstrating that they want to continue to build venues, but they want to build venues that can be used for more than just a single event or competition. They want the venues to be able to host entertainment events, they want to be able to host sporting events and they want to be able to generate the opportunity to work with local businesses. 

The governments and the developers recognize the changing nature of the venue business and they want to go that direction. Everyone we are speaking with recognizes that if they invest that much money in the venues that the venue needs to be multi-purpose and have various capabilities. And they want to do more than just sports, more than just concerts. They really want to have a very wide range of customers attracted by the venues they build. 

Note: This article is confirmed by Eric Cuthbertson.