Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Can financial firms run football, baseball clubs?
Hana Financial Group Vice Chairman Ham Young-joo, left, holds a contract with Daejeon Mayor Her Tae-jeong at the Daejeon City Hall, Tuesday, after signing an agreement to invest in Daejeon Citizen Football Club. / Courtesy of Daejeon Metropolitan Government
By Park Jae-hyuk
By Park Jae-hyuk
Questions have arisen in both the financial and sport industries since it was revealed last Tuesday that Hana Financial Group signed an agreement to take over Daejeon Citizen Football Club.
The current laws that prohibit financial services firms from holding stakes in non-financial companies have barred banks and brokerages from owning professional football and baseball clubs, because they are required to stand as independent entities.
Lenders, insurers and savings banks have therefore run basketball and volleyball clubs, which do not need to stand as independent corporations, due to their relatively smaller sizes.
Or, financial firms have carried out sports marketing by sponsoring football and baseball leagues.
KEB Hana Bank sponsoring the Korea Professional Football League (K League) and Shinhan Bank supporting the Korea Baseball Organization League (KBO League) are well-known examples.
Some financial companies have promoted themselves by sponsoring football and baseball clubs without owning them, so the players wear uniforms with logos of those companies.
Kiwoom Securities CEO Lee Hyun delivers a welcome speech during the Kiwoom Heroes Baseball Club's launch ceremony at the Four Seasons Seoul in this Jan. 15 file photo. / Korea Times file
Although Kiwoom Heroes Baseball Club is in the KBO League, Kiwoom Securities holds a five-year naming right only, without ownership of the baseball club.
Due to the strict regulations, Goyang KB Kookmin Bank Football Club, which was officially dissolved in November 2012, was even embroiled in controversy as it cited the financial regulations as the main reason it declined to move up to the professional K League from the National League at amateur level, when it claimed the third championship title in the league in 2006.
In all these regards, Hana's decision to acquire the professional football club from the Daejeon Metropolitan Government was exceptional.
Daejeon Citizen is a corporation which has been run by investments from the city government and Daejeon citizens, so in principle, the financial holding company is not allowed to directly take control of the football club.
A Hana spokesman said his company is considering establishing a foundation to assign the role of running the football club, something the firm's in-house legal advisers proposed as the best way.
Nevertheless, he denied rumors that his company asked the Financial Supervisory Service for an authoritative interpretation or that financial regulators allowed the company to own the football club.
According to the spokesman, Hana and Daejeon have been making efforts to close the deal by the end of 2019 after determining several details, such as the size of investment and requirements for use of facilities.
“KEB Hana Bank has been truly a provincial bank of Daejeon since it took over Chungchong Bank,” Hana Financial Group Vice Chairman Ham Young-joo said last Tuesday during the signing ceremony at Daejeon City Hall.
“As a companion to Korean football and an official sponsor of the K League, we decided to invest in Daejeon Citizen to foster the prestigious club and contribute to the growth of the country's footballing environment.”