By Pablo Garcia Manitz, bewolfish CEO and professor of the MBA in Sports Management and in Sports Marketing masters in Real Madrid Graduate School – Universidad Europea.
Real Madrid was proclaimed last Saturday winner of the UEFA Champions League for the third time in a row, fourth in five years, fifth under Florentino Pérez management and thirteenth in the history of the club. The sporting success is undeniable, but what business model sustains this feat? And, what is more, what role does footballers’ personal brand play in the success of a club?
In mid-2013, I worked in a study, together with the researchers Álvaro Fernández-Luna and Merve Altun, in which we analyzed the business model of Real Madrid CF and the effects on its marketing strategies, an analysis that we presented at the V Iberoamerican Congress of Sports Economy.
As a reference, we took, among other studies, the one developed by Kimio Kase, Ignacio Urrutia, Carlos Martí and Magandalena Opazo, members of the Center for Sports Business Management (IESE Business School). In the article, they concluded that Real Madrid, under the first mandate of Florentino Pérez, used the Proto-Image of the Firm (PIF) strategy. In less technical words, it consisted in signing renowned players, the so-called Galácticos, in order to increase the value of the club’s brand.
“Did they only want the best
on the field or were they
also selected by other criteria?
The marketing strategy went far beyond the new incorporations, it was about creating a solid, identifiable brand with an unequivocal message: Real Madrid is the club that fights to the end to win all possible titles. They defined values that governed all the actions of the club and promoted from all its departments (sponsorship, communication, institutional relations, etc.).
It was a very risky strategy since the Chamartín club made significant investments to incorporate the most sought-after players such as Figo, Zidane, Ronaldo or David Beckham, breaking all records in terms of the operations’ cost. These signings were not only affected at the sports level but also from the brand point of view, as they sent the message that the best players on the planet were at Real Madrid. But did they only want the best on the field or were they also selected by other criteria?
In the case of David Beckham, it seems clear that they were also looking for his brand potential. Beckham was undoubtedly the first great exponent of a mediatic footballer, a mass phenomenon idolized by the youngest and trend generator. His clothing style and his hairstyles were, and I would dare to say that they still are, imitated by many men and young people. But, how can a player boost his personal brand to this level?
Surely there is no magic formula to create phenomena like Beckham since an important part is the charisma of the character. But there are many elements that must be taken into account to maximize the personal brand: define the unique brand of the player (values, personality …), carry out a communication that has consistency with this brand, never lose authenticity and, among other recommendations, be natural and close to be credible, but always measuring the degree of public exposure that one is willing to sacrifice.
Returning to the case of Real Madrid, the strategy led by Florentino was to take advantage of the impact of new players by promoting the Real Madrid brand around the world. They toured Asia and North America to conquer new markets and expand the fan base in territories with much more population than Europe, such as China or India, which at that time were dominated by the club with the highest income, Manchester United.
The model was much discussed at the time, as there were many doubts about the economic and sporting viability. At an economic level, the results did not take too long in coming since Real Madrid significantly increased the income from sponsorship or television rights. At sports level, the triumphs arrived initially, but with the appearance of the Barça of Ronaldinho, that took the leadership of Spanish and European soccer, Florentino ended up leaving and it finalized its first stage characterized by the astronomical signings. As an anecdote, we can remember a cover of the newspaper Marca in which it said: “Barça Champion. Football wins, marketing loses”. Time has shown that they were probably wrong.
“Real Madrid had managed to
position its brand as the
most valuable in football “
The strategy of Florentino Pérez continued to be successful even with the new president when the politics of signings changed and stratospheric players stopped coming. Real Madrid had managed to position its brand as the most valuable in football and as one of the most prestigious in the sports industry (Forbes). Even during the six years in which Real Madrid failed to pass eighth in the Champions League, nor signed the most coveted players, continued to be the highest income club (Deloitte). This fact reinforces the idea that the construction of a sufficiently solid brand allows you to obtain a leadership status even when the successes do not arrive.
In 2009, Florentino Pérez began his second term and repeated the model. Although many of the greatest players of the moment were playing at Barça and could not sign them, they took the top stars of teams such as Milan (Kaká, 65 million) and Manchester United (Cristiano Ronaldo, 96 million). A millionaire investment of 264 million euros. The sporting results took longer to arrive and in the first years, the great dominator continued being FC Barcelona. However, the value of the Real Madrid brand continued to increase and they exceeded the record of revenue year after year. The reason is that, in spite of not conquering the main titles, the idea that the best players were in Real Madrid and that the club was always a candidate to win the most important titles was still in the minds of the fans.
“His great notoriety has allowed
him to sign a millionaire and life
contract with the sports brand Nike”
The business model proposed by Florentino Pérez in its first stage took more relevance than ever in the second due to the globalization of football and new channels such as social networks. Not only those of the club but were especially relevant the profiles of players like Cristiano Ronaldo who became true icons (127M followers on Instagram) and main ambassadors of the Real Madrid brand with a great capacity for influence among young people.
The case of Cristiano is a clear example of this influence since his great notoriety has allowed him to sign a millionaire and life contract with the sports brand Nike. For this reason, clubs not only value their players for their sporting achievements, but also for the impact they have as they are great assets to negotiate the sponsorship agreements of the club.
With three Champions in a row, it remains to be seen to what extent Real Madrid will know how to obtain a competitive advantage with respect to its rivals at the brand value and business generation levels. With the season finished, the club is working on the preparation of 2018-19 and some questions arise. Will Cristiano continue? Will Neymar arrive? Who will replace Zidane? The only sure thing is that in addition to the sporting criteria, one of the variables that will be considered when signing new players will be the brand potential of each of these players.
For this reason, from bewolfish we believe that young athletes who want to succeed in the world of football have to focus their efforts to perform at their best, but also to enhance their personal brand and, especially, to take care of the image they transmit through their social networks.