Football, the most famous sport on this planet. Million & millions of people around the world watch the Real Madrid matches. We, as fans, know details about the coach, assisting team and the players. We know their unique skills, the goals their scored and the way they celebrate after each goal. Moreover, we know the price & the yearly salary of each player. Though, We rarely know the yearly income of the club itself!
We usually focus on the exciting green playground. However, there is a real business behind what is called Football Industry. Beside the football team, an equally important business team works away from the lights to raise the revenues coming to the club. Students in Business schools learn case studies related to football. There is even a specific MBA certificate for the football industry called The Football Industries MBA (FIMBA).
The football Industry
So how it works?
In any business, the business owner sells products & services for money. If he could build a strong brand, he can achieve more revenues.
Concept is the same for Football. The football clubs sells entertainment as its main product. That includes the joy of watching football game & the happiness at each goal. The coach & players are the tools used by the club to generate this product. In return, the club gets money from football fans either through the tickets or through TV channels who broadcast the match.
By providing a good performance, the club starts to build a brand. Then, the club utilizes the brand to negotiate with big sponsors which means more revenues to the club.
To provide a better performance and build a stronger brand, the club has to invest in his tools. That is why the clubs pay millions to hire the best coaches & players.
The big names
Forbes magazine has published a list of the top 20 football clubs for 2016 with some figures about their revenues and income profit.
An interesting note is that all the 20 teams are in Europe. To be more specific, teams are located in only 5 European countries.
Real Madrid & Business
In their 2014/2015 annual report, Real Madrid mentioned revenues of €578 million. Part of that is coming from the traditional tickets & broadcasting. Additionally, Real Madrid had other business ideas and agreements with famous business entities.
Real Madrid has established a VIP area that provides seats with an exclusive service. This is attracting new customer segment that includes VIPs and multinational corporates. In season 2014 & 2015 Real Madrid sold 17,000 tickets that account for 19% of the total Revenues.
Real Madrid has utilized its well known brand to issue a membership card for the fans. The card provides some privileges such as discount on tickets, participation in draws and receiving newsletters. Card members receive birthday messages from Real Madrid through e-mails as well. Currently, the card is sold in 180 countries around the world.
Real Madrid Store:
The club has open stores where club fan can buy several items branded with Real Madrid logo. There is a big variety that includes shirts, mugs, glasses, towels, and many other items. in additional to the physical stores, fans can buy the items online.
As leading club, Real Madrid has deals with several big companies. We can notice that deals includes terms that vary according to the business type of the sponsor. Additionally, Real Madrid utilizes its brand to expand and get sponsors in different world regions especially Middle East. Here are some examples
Fly Emirates: the Shirt sponsor. Recently, the sponsor arranged a friendly match for Real Madrid in Emirates.
Microsoft: a sponsorship deal with Microsoft includes exclusive digital content and virtual experiences delivered to fans through a new digital platform.
National Bank on Abu Dhabi: a sponsorship agreement includes issuing a co-branded credit cards to bank customers and enroll them in the Madridista Card programs. This is in additional to offers to bank customer for match tickets.
Saudi Telecom Company: a sponsorship agreement states that STC will be given 12 minutes of every game played at home to be used for promotional purposes on the stadium.
Moreover, Real Madrid has deals with other big names such as Coca Cola, Audi, Adidas, Samsung and others.
In brief, football industry is about business. If you checked the other clubs such as Barcelona or Manchester United, you will find the same concept as well. Each club implements a business model that allows them to increase the revenues. They utilizes the technology advances to continuously enhance the model and innovate new marketing ideas for a more success. So, next time when you watch your favorite football team, you may remember the other team behind the scene that runs the business.