Case Study Analysis Real Madrid Club de Fútbol
The game of soccer.
Soccer is the world’s most popular sport. Nearly every child kicked a soccer ball once in his live. More than 240 million people play at least once a week. 1 It is then necessary to show some real management and marketing skills to target such a large market. In Spain, soccer is not just a game, it’s a passion and if you support a team you support it for a lifetime. Because of these facts soccer is such a big business in Spain.
Real Madrid Club de Fútbol is the most successful club of the World and was voted by FIFA as the best club of the 20 th century, having won a record of 1 Liga titles, 17 Spanish “Copa del Rey” Cups, and a record of 9 UEFA Champions Leagues, 2 UEFA Cups, 1 UEFA super cup, and 3 intercontinental Cups.
Based in Madrid, the Club is trying to find a way to market its product and brand growing its global reach. They are trying to increase their fan base, which would in turn take away from their competitors. The decision to expand the Real Madrid's fan base came from upper management including the club president, Florentino Perez.
“ Our vision is to be the best soccer club in the world. Our mission is to nurture and project the Real Madrid brand worldwide” Florentino Perez
How did they go about it?
Real Madrid Strategies Real Madrid under Perez’s new management understood that the soccer club needed a professional organization based on rationality and not emotional passion. Before the Perez era, the soccer club benefit from competitiveness notoriety but was 1
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in financial turmoil. Perez recognized that the soccer club needed to be managed differently and restructured it based on his experience in politics, running the ACS, a big construction company. Perez and his team identified four brand value drivers that would help reach their goal:
Size of audience
Frequency which the audience engaging with the brand as a measure of commitment
Sociodemographic characteristics of the audience
Bridges that could be built to link the brand and the audience (local fan associations.)
Real’s key strategy was to attract and retain star players to increase the value of the brand. The acquisition of these top players didn’t come cheap, so the team was challenged to give Real some kind of financial flexibility to acquire these talents. So a program was setup: 1) Disposal of the Soccer Club’s old training pitches to private investors for office buildings and to the government for the development of a park and a sport’s pavilion, adding €500 million to the club’s budget in about a year. 2) Buyback of exploration rights where Real refurbished 100 VIP boxes he had bought for €16 million and doubling its capacity to 200 boxes. The income generate from renting these VIP spaces is €16million/year. 3) Set-up of stand-alone legal entity (Sociedad mixta) responsible of managing all of Real’s rights except audiovisual ones paying a percentage of its income to the soccer Club while enjoying a beneficial corporate tax rate of 25% instead of 35%. Shares of Sociedad mixta” were also sold to companies in Spanish media business, which increased their income. 4) Licensing and sponsoring was also promoted by the team who insisted that the club receive 50% of the image rights of every player hired.
These key strategies won Real Madrid the title of a prestigious soccer club which offered them a bunch of opportunities such as specialized publishing, audio visual rights, video games and interactive applications, merchandising and official products, the internet, video, and ticket and stadium development. The team wanted “to convert Re al Madrid fans into Real Madrid customers wherever they are in the world” Martinez de Albornoz
Competitive advantages of Real Madrid. Real Madrid has earned its notoriety throughout the years, which gives it a real advantage compared to its new potential competitors. Players preferred being part of “los Galacticos”, a star-studded team, since “the responsibility is divided amongst multiple players ” versus resting entirely on just one star of the team. Also, knowing that they will be part of a star-studded team incites players to join Real Madrid, as they will be taking a step forward in their careers, and will gain prestige and satisfaction as soccer players. In competing for talents, new potential market participant found Real Madrid prestige as an obstacle, since the players chose to stay instead of transferring to new teams that lacked “historical and institutional foundation of a club such as Real Madrid”.
Potential setbacks for Real Madrid. Real Madrid’s new management has put an emphasis on marketing the soccer club as a brand. A lot of efforts were made to increase revenues by selling branded goods such as soccer jerseys, mugs, caps, watches etc. These revenues became higher as the Club possessed star players. But overexposure and excessive commercialization of a
team can actually hurt any soccer Club by labeling it as an exploiter of the fans, focused on sales and distancing itself from the main essence of the soccer game. Also, the quest of luring the best players to their team, offering them higher and higher paychecks, is increasing club expenses and driving investors away, with owners being interested in league standing more than shareholder value. Furthermore, the Club cannot ignore the fact that an element of uncertainty remains in soccer. Even with having star players in your team, you can have a bad luck stream and lose a championship in the last minutes or even seconds of the game.
Conclusion and recommendation: There will always be a demand for products of the Real Madrid brand as long as the Club stays relevant. The challenge is to keep itself in the top ranks of soccer teams using their very successful strategies mentioned above. But the conflict here is to find the balance between marketing the game of soccer and commercializing the Real Madrid brand. Treating soccer fans like customers and sucking the money out of them in any mean can distract the club from the main reason why they attracted these fans in the first place. In the end, all we want is to see a good old fashion soccer game that brings people together.
