Present
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Prepared & Presented by:
“Galactico” by Oxford Dictionary noun (plural galacticos) - ɡəˈlæktɪˌkəʊ •
Informal - an exceptionally exceptionally skilled and
celebrated soccer player. Origin: •
early 21st century: Spanish galáctico, literally 'galactic person' person' (i.e. bigger big ger than a ‘star ‘star’) ’)
Prepared & Presented by:
Prominent Quotes “In Spain, it is easier to change SPOUSES,
POLITICAL PARTY or RELIGION that it is to change SOCCER CLUB. In soccer, a fan is a FAN
FOR LIFE ”
– Real Madrid Manager
Prepared & Presented by:
Case Synopsis • • • • •
•
Form in 1902 as Madrid Foot Ball Club In 1920, King granted the title “Real” (Royal) 1947, Build Bern Bernebea ebeau u Stad Stadium ium By 1970, the team had won 6 European Cup By 2003, under Perez’s Management bought Beckham
Half of all Spaniards considered themselves soccer fans (60% follower RM, 30% women spectator )
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Emulate success of Manchester Manchester United and Lion King for RM globalization & commercialization strategy
Soccer Business
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1904, FIFA founded in Paris –
•
•
Set of rules regulating 204-member organizations
Open-league system 1990s, transitioned to strategy of maximizing merchandising, TV revenue, stock values
Soccer Industry Analysis Porter 5 Forces Threat of new Entrants LOW & Attractive Depend on new investors
Supplier Power LOW & Attractive Licensing & various of sponsorships Low switching cost Players iconic sponsor (50% image rights)cost rights) cost
Rivalry Competition LOW & Attractive Regional Big Clubs (Manchester United, Juventus)
Threat of Substitutes
Buyer Power LOW & Attractive Broadcast & Pay TV Stock Values Die-hard fans (seasonal & match day ticket, merchandise) Fans in Asia (world tour visit) 6 million tourist visit Madrid
LOW & Attractive Other Men`s sports during off season (Basketbal (Bask etball, l, NFL, Rugby, Rugby, Basebal Baseball) l)
“Attr Attractive active market but the revenue is i s dynamic” dy namic”
Transforming the Real
Prepared & Presented by:
“To transform Real Madrid we went partly againts what experts were used to” -SanchezVision Mission
“To be the best soccer club in the world” “To nurture and project p roject the Real Madrid brand worldwide”
Goals flexibility lity to acquire talent and expand its brand reach 1. Give Give Re Real al Madrid Madrid the financial flexibi 2. Assemble a team of top
players
3. Leverage Real Madrid brand and content across a variety of channels
Brand Value 1. Size of audience 2. Frequency audience engage with the brand 3. Sociodemographics characteristic characteristic of the th e audience 4. Bridges to link the brand and the audience
Transforming the Real 3 simple truths; 1. Th The e best pla layyers pay for themselves 2. Real Madrid is is a brand 3. Th The e pr prod oduc uctt (t (th he pla layyer erss an and d the games) is the content
Arenas Worldwide Young Male & women Firm Asian & USA market Strategy Rivalry
Staging
Vehicle Economic Logic
Various discounts Firm to Real Madrid fan car holders Strategy Strategy (ticket, restaurants, theme Rivalry Rivalry Park, cinemas, merchandise)
Worldwide retail Firm network.
4 wholly owned Merchandising store. Firm Licensing & franchising. Strategy “Disney world of Rivalry Madridismo ” club
training
Differentiator Firm Bring in World class players. Strategy One onRivalry One Relationship: (Internet media, wifi, telephone,etc)
Transforming the Real Revenue Streams Licens Licensing ing & Sponsorship
Broadcasting
Category
Adidas Siemens Mobile
Shirt & Kit, name “on jersey”
Secondary Sponsor
Audi Pepsi, Pepsi, telefon telefonica ica
Bernebau Stadium
Official Providers
Mahou, Unilever, Sanitas, Solan, Kraft, Viceroy, Sanchez Romero
Press conference, website, and publishing
TV
Real Madrid TV TV pay per view Spanish Radio Realmadrid.com
Tickets Reservations
Merchandising “Th e Socieded
Mixta”
Place
Major Sponsor
Radio Internet Gate Receipts
Brand
Accessories (f ( fan card, shirts) Joint Venture, Merger
Value
3 years years (12 mill Euro/year Euro/year)) 30 vehicle for team
2.25 mil Euro/year 3.5 mill Euro/year 2 million people 1 mill Euro/year Stadium, Website Website,, retailer retailer
55% increased since 2000
RM St Stores
4 mill Euro/year
Caja Madrid Madrid Sogecable
Marketing revenue expected to rise: 39 mill Euro (2000-01) 83 mill Euro (2003-04) 142 mill Euro (2005-06) Marketing activities forecast in 2003-04: 36% turnover, 8% competition, 27% match day revenues, 30% TV rights
78.1 78.1 mill mill Euro Euro for for 20% share share 39.05 mill Euro for 10% share All benefit 25% tax rate
Prepared & Presented by:
Santiag San tiago o Ber Bernab nabeu eu St Stadi adium um
Brandirectory.com Best Football Brand in 2010
Prepared & Presented by:
Manchester United glo balization & commercialization model” “Master of the globalization 1. Product segmentation by age Niche Supporters Targeting Product
Children
Teenager
Adults
“Fred The Red”
“The MUFC”
“The Red Devil Devil” ”
(Soccer ball, t-shirts, children accessories)
(backpackers, (backpackers, caps, binders)
(quality shirts & sweaters)
2. Digitization Team`s web site: www.manutd.com unique content library (value at 354.4 mill euro)
3. Sponsorship Nike signed a 13-year
640 mill Euro, Vodafone signed 4-year
51,5 mill Euro
4. Subsidiary Manchester United International International expansion in Asia and USA (preseason tours) International “ Theater of Dreams” A shop & Coffee house & restaurant (Asia & Middle east) Open in Dublin targeting Irish supporters
5. Public Share Offers
Prepared & Presented by:
Problem Identification 1. To make a local
brand with
worldwide awareness to a real global brand with mark marketing eting capabilities
2. To manage the brand and the content from overexposure and commercialization commer cialization along with an element of uncertainty in soccer
Real Madrid Brand Equity Fans (One-oneone relationship)
4. RELATIONSHIPS =
What about you and me?
3. RESPONSE = Los Galacticos
FEELINGS
What about you?
2. MEANING = World Class
Team & Performance Per formance
Ellite, Luxury Luxury (Sport, Celebrities)
Strong Brand Bra nd Awareness Awareness (Strong (Strong Logo Recall & recognition)
What are you?
1. IDENTITY =
Who are you? 15
Prepared & Presented by:
WHAT IS REAL MADRID BUSINESS MODEL? IS IT UNIQUE?
“The movie we are selling is worth more if, say, Tom Cruise is in the lead ” – Sanchez referring to Zidane
Business Model KEY PARTNER
KEY ACTIVITIES
VALUE
RELATIONSHIPS
PROPOSITION
SEGMENTS
KEY RESOURCES
COST STRUCTURE
CUSTOMER
CHANNELS
REVENUE STREAMS
Prepared & Presented by:
Unique Business Model •
•
•
•
Buy the best and famous players, earn profit from merchandise/marketing by using their names. Guarantee Guaran tee big salary salar y Player contracts gives RMFC 50% of image right Beat Barcelona in market, not in field
Prepared & Presented by:
Revenue Stream Match-day •
Ticket
•
VIP Ticket
International Competition •
Champions League
•
League World Cup
•
others
Broadcast and Pay TV
Merchandising •
Jersey, mugs, T-Shirt of stars
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5%-20% from revenues
Sponsored and alliance •
Adidas, Pepsi, Siemens
•
>15% top club revenue
Prepared & Presented by:
Business Model Forecast Foreca st Real Madrid Revenue and Net Profit in 04/05
Match Day
22%
International Internati onal Competition C ompetition Broadcast/TV 10%
47% 21%
Marketing
Prepared & Presented by:
RM Starting 11, before and after Per Perez ez 2000/2001
2003/2004
Prepared & Presented by:
WHO ARE REAL MADRID S CUSTOMERS? HOW IS THE MARKET SEGMENTED? ’
“ The key is to convert real Madrid fans into real Madrid customers wherever wherever they are in i n the world” Val alda dano no
Prepared & Presented by:
Real Madrid Worldwide Popularity Q: “The leading football club” ? Rank
Argentina
Brazil
Latin America
U.S
Japan
England
France
Germany
Spain
Europe
1.
Boca Ju Junior
Corinthia ns
Real Madrid
Man Utd
Parma
Man Utd
Real Madrid
Bayern
Real Madrid
Real Madrid
2.
River Plate
Sao Paulo
Corinthians
Real Madrid
Milan
Liverpool
Man utd
Real Madrid
Barca
Man Utd
3.
Man Utd
Flamengo
Barca
DC United
Real Madrid
Real Madrid
Juventus
Man utd
Man Utd
Bayern
4.
Roma
Palmeiras
Sao Paulo
Milan
Roma
Barca
PSG
Barca
Bayern
Juventus
5.
Real Madrid
Inter Milan
Palmeiras
Barca
Juventus
Arsenal
Marseille
Inter
Milan
Barca
Exhibit 3. Leading soccer club as per survey in selected countries
Prepared & Presented by:
Real Madrid Customers •
Soccer player and fans around the world
•
Real Madrid fans
•
Hispanic descendants
•
Loyalty Program: –
Youth soccer academy
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Co-Sponsorship
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Soccer lectures
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Games and merchandising
Prepared & Presented by:
Target Market, by geographic •
Europe and Spain –
Website, Online Shopping Shoppi ng •
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–
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Magazine Real Madrid TV, Pay per View ‘ Socios Socios abo abonad nados os’ ’ Card •
•
•
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Telef elefonica onica serve in 14 countries countries
Discounted seats, magazine Attend UEFA and Cups game Exclusiveness
Asia –
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China: wanted wanted get 10% sports merchandise Japan: Asian As ian Tour Tour,, soccer so ccer academics, academ ics, restaurant café Asian Tour (China, Hong Kong, Thailand, Japan)
Prepared & Presented by:
Target Market, by geographic •
USA – – – –
•
U.S Tour Competitive domestic competition Partner with Disney and Viacom Hiring U.S Born Player
Latin America (exhi. 3) – – – –
Mexico Argentina Brazil Hispanic descendants
Real Madrid’s U.S. Strategy 1. 2. 3. 4.
Take advantage of the club’s increased global brand equity Capit Cap itali alizze on ass asset etss by ge gener nerat ating ing re retur turns ns in in the the US US mark market et Crea Cr eate te a virt virtous ous cyc cycle le in in which which ec econom onomic ic st stren rengt gthen hen the bra brand nd in in US Deploy Dep loy ass assest estss in suc such h a mann manner er tha thatt the the club club est establ ablish ishes es a fo found undat ation ion at the grass-r grass-roots oots level
• • • •
Content development development ( training videos, cartoon series) Fan loyalty (youth soccer organization, co-sponsorship) Development of intangible assets (lectures, soccer academies) Asset deployment (first-team tours, licensing & distribution)
Prepared & Presented by:
WHO HAS MORE POWER, REAL MADRID OR PLAYERS?
“Player who join us know that they are taking a step forward, in prestige and in satisfaction as a soccer player ” – Valdano
Prepared & Presented by:
Who is Powerful; Team or Player? STAR PLAYER is more powerful… •
•
•
increase RM income and merchandising sales bring new customer, increase fan loyalty determine purchasing financial power and commerce
Prepared & Presented by:
Team or Player? Team is more powerful … •
•
RM giv give e high high salar salaryy
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High resume, title chance
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Cristiano Ronaldo
Total earnings: $42.5 million Salary/winnings: $20.5 million Endorsements: $22 million
Player give give up 50% 50 % of income to RM
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Opportunity to play in champs league RM is more powerful in term of management
Prepared & Presented by:
WHAT WHA T RISKS DOES REAL MADRI MADRID D FACE? FACE?
“We are always worried that great players will cease to exist, but then every year we seem to be faced with a miracle!” - Vald aldano ano
Prepared & Presented by:
Risky Business •
Team do not do well in league or cups –
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Crash out of champions league
Star player got injured, age out, or underperformed (Torres) No star player as classy as Figo, Zidane, Ronaldo emerge anymore.
“Stretch “Stre tch the brand too far” far ” (Man Utd) –
Fans are not customer
