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Rakuten's $30m soccer player lifts labor costs to new heights

E-commerce company hopes Iniesta's popularity will rub off on its own

Iniesta waves to fans at a welcome event held on May 26 in Kobe. Rakuten hopes his popularity will help it boost earnings. (Photo by Tomoki Mera)

TOKYO -- Rakuten's recent acquisition of Spanish soccer star Andres Iniesta for its football club is aimed at boosting the Japanese e-commerce group's international profile, but the deal is expected to weigh on earnings at least in the short term.

Rakuten said last week that Iniesta, a legend at FC Barcelona, joined Vissel Kobe, its soccer club in Japan's professional football league. His annual salary is estimated at about $30 million. Roughly half of this figure will likely be booked as consolidated operating expenses on Rakuten's books this year. No transfer fee resulted from the deal.

Rakuten has not released its earnings forecast for the year ending December. But the QUICK Consensus, an average of analyst estimates, puts the company's operating profit at 121.9 billion yen ($1.12 billion), an 18% drop from 2017.

The 34-year-old Iniesta will make his J-League debut as soon as July. Rakuten is expected to book his salary, recorded as personnel expenses at the club, in full from 2019 and will face a greater challenge of using his popularity to expand operations and bolster earnings.

Vissel Kobe hopes Iniesta will help the club increase its sales of tickets and merchandise.

About 1,500 new members joined the the team's fan club, whose annual dues are 2,000 yen for adults, in just two days after the announcement last Thursday. The club sold about 7.5 million yen in T-shirts, towels and other merchandise at a welcome event held on Saturday in Kobe.

The group also expects to grow related businesses through its online marketplace and video streaming service.

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