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Strategic Digital Transformation in Soccer Understanding industry’s business and history to shape its digital future
Francisco Hernández-Marcos Cambridge (MA) March 24th, 2015
This document has been produced by 11 Goals & Associates. It is not complete unless supported by the underlying detailed analyses and oral presentation.
About me SHAMELESS SELF-PROMOTION
Education: Universidad Politécnica de Madrid, UNED,
London Business School, University of Chicago – Fundaciò
“laCaixa” & Fundación Rafael del Pino scholarships.
Firms worked for: Abengoa, McKinsey&Co, ABN AMRO,
Real Madrid C.F.
Entrepreneurship: Crisalia
Social Media & Internet consulting: 11goals.com
Lectures & Speaker in 4 continents: The Wall Street Journal, UP Madrid, London
Business School, Cornell, Politecnico Milano, CEIBS (Shanghai), Kungliga Tekniska
högskolan, The Business Factory, Fulbright Spain, ESCP Europe, UIMP, Harvard,
Moscow SU, and several private companies.
Full profile: linkedin.com/in/franciscohm
2 2
Views are our own. All information and insights contained in this presentation are
either public or common knowledge
Disclaimer
4 4
About Soccer
Source: Wikipedia; FanPageList; UEFA; Reuters; IBT
First played in England in 1863, Soccer had had its roots in several ball games played in different parts of Europe for centuries.
World’s most popular sport: 250 mill. players in 200 countries.
FIFA has more member countries than the United Nations.
Some players are among the most respected celebrities in their countries, and Worldwide.
‐ Didier Drogba is credited with brokering a Cease-Fire in Ivory Coast that ended a 5-year civil war.
‐ Cristiano Ronaldo is the most followed person in Social Media (141 mill. in FB+TW).
Global TV audience (mill. people):
‐ European Champions League final: 380
‐ “El Clásico” (Real Madrid-Barcelona): 200~400
‐ Super Bowl: 160
5 5
Soccer lifts the spirit…
Source: Soccernomics
World Cup -> Less suicides not only in June, but for the whole year
…and saves lives!
6 6
Revenue ranking by sport leagues
Source: Wikipedia
6.600
5.867
3.667
3.200
2.971
2.000
1.900
1.700
1.300
980
919
896
551
National Football League
Major League Baseball
National Basketball Association
Premier League
National Hockey League
Bundesliga
La Liga
Serie A
Ligue 1
Nippon Professional Baseball
Campeonato Brasileiro Série A
Russian Premier League
Süper Lig
Revenue EUR mill.
Combined, soccer is probably the highest revenue-generating professional sport in
the World
206,3
195,6
122,2
160,0
99
111,1
95
85
65
81,7
45,9
56
30,6
Soccer leagues
Revenue per team
7 7
Most valuable sport clubs
Source: The World's 50 Most Valuable Sports Teams 2014 (Forbes)
3,44
3,20
2,81
2,50
2,30
2,00
1,85
1,80
1,70
1,55
1,50
1,45
1,40
1,38
1,35
1,33
1,31
1,25
1,23
1,22
1,20
1,20
Real Madrid
FC Barcelona
Manchester United
New York Yankees
Dallas Cowboys
Los Angeles Dodgers
Bayern Munich
New England Patriots
Washington Redskins
New York Giants
Boston Red Sox
Houston Texans
New York Knicks
New York Jets
Los Angeles Lakers
Arsenal
Philadelphia Eagles
Chicago Bears
Baltimore Ravens
San Francisco 49ers
Chicago Cubs
Ferrari F1
Team value USD bill.
4,2%
Soccer clubs
1-Year growth
23,1%
-11,2%
8,7%
9,5%
23,8%
41,3%
10,1%
6,3%
5,6%
14,3%
27,3%
11,1%
7,5%
35,0%
0,3%
4,0%
5,0%
6,3%
3,8%
20,0%
4,3%
8 8
Soccer clubs revenue ranking
Source: Deloitte Football Money League (2015); UEFA (2012)
550
518
488
485
474
414
388
359
306
279
262
250
216
214
170
165
164
162
155
144
Real Madrid
Manchester United
Bayern Munich
FC Barcelona
Paris Saint-Germain
Manchester City
Chelsea
Arsenal
Liverpool
Juventus
Borussia Dortmund
AC Milan
Tottenham Hotspur
Schalke 04
Atlético de Madrid
Napoli
Internazionale
Galatasaray
Newcastle United
Everton
Revenue (13/14) EUR mill.
First 56%
Second 21%
Third 8%
Other 15%
Revenue matters. Securing a significant amount of recurring revenue is very likely the most important factor for succeeding in the pitch
Finishing position of highest-spending club in players wages
(UEFA domestic leagues)
9 9
Some research shows that league position is strongly correlated (R2=89%) with wage expenditure
Source: Soccernomics
BACK-UP
…but same research tells us that correlation with transfer spending is low (R2=16%)
Are wealthier clubs profiting from the non-existence of superior options for over-
performing players?
10 10
Sources of revenues Top 20 teams in 2013/14 season
Source: Deloitte Football Money League; own analysis
Commercial is king: larger and growing faster
Matchday 19,8%
Broadcast 39,1%
Commercial 41,1%
5yr-CAGR: 7,9%
5yr-CAGR: 14,7%
5yr-CAGR: 3,6%
11 11
Revenue breakdown and key drivers
Source: Various
Revenue
Matchday
Broadcast
Commercial
Domestic
International (Champions League,
Europa League)
Drivers • Stadium ownership • Stadium size • Income per capita •VIP facilities •Dynamic pricing (when possible)
Actionable by the club
Drivers • Lobbying & bargaining to the league • Team performance • League salesforce skills
Drivers • Team performance • League salesforce skills
Drivers •Historical Team Performance •Brand positioning • Fan base •Big Ticket contracts bargaining • Long-tail contracts salesforce • Loyalty card • Summer tours
12 12
Matchday revenue drivers BACK-UP
15%
25%
40%
Standard VIP (2015)
Top VIP (2015)
New generation
99.786
85.000
84.412
81.044
80.667
80.093
80.018
80.000
78.838
78.360
76.092
75.731
75.000
60.338
60.234
54.907
47.805
45.276
41.798
Camp Nou (FC Barcelona)
Stade 5 Juillet 1962 (MC Alger)
Azadi Stadium (Esteghlal FC, Persepolis FC)
Santiago Bernabéu (Real Madrid)
Signal Iduna Park (Borussia Dortmund)
Monumental "U" (Universitario de …
San Siro (AC Milan, Internazionale)
Stade des Martyrs (Vita Club)
Maracaná (CR Flamengo, Fluminense FC, …
Luzhniki Stadium
Atatürk (İstanbul Büyükşehir Belediyespor)
Old Trafford (Manchester United)
Allianz Arena (Bayern Munich, TSV 1860 …
…
Emirates Stadium (Arsenal)
Stadio San Paolo (Napoli)
Vicente Calderón (Atlético de Madrid)
City of Manchester (Manchester City)
Anfield (Liverpool)
Stamford Bridge (Chelsea)
Capacity Seats
Source: Wikipedia; Deloitte Football Money League; own analysis
Annual Matchday revenue per seat EUR/seat/yr (13/14)
1.171€
1.404€
695€
311€
1.707€
1.173€
1.985€
347€
592€
1.188€
1.347€
2.031€
235€
VIP Matchday revenue % of total Matchday revenues
No Ownership
Affluent fans
VIP capacity
13 13
Broadcast revenue distribution BACK-UP
La Liga
Source: Roberto Bayón; UEFA; other
Premier League Champions League
140
140
48
42
32
32
32
30
28
25
25
25
22
22
22
18
18
18
18
18
Real Madrid
FC Barcelona
Valencia
Atlético de …
Sevilla FC
Athletic Bilbao
Villarreal
Real Betis
RCD Español
Real Sociedad
Málaga
Getafe
CA Osasuna
RC Celta de …
Levante
Granada CF
Elche CF
Real …
Rayo …
UD Almería
•Negotiated deal. Static over the contract’s term
•Unequal distribution (Gini: 0,365) •Short term win, long term loss?
•Dynamic. Moderately depends on team’s performance
•Equal distribution (Gini: 0,083) •Ensures regular income to small teams
•Dynamic and aggressively dependant on team’s performance
•Unequal distribution (Gini: 0,274) •Performance bonus. Invest it wisely
EUR Mill.; 2013/14 season
117
116
113
111
108
107
102
93
92
91
89
88
88
87
86
80
79
77
76
74
Liverpool
ManCity
Chelsea
Arsenal
Tottenham
ManUnited
Everton
Newcastle
Southampton
Stoke
Swansea
West Ham
Crystal Palace
Aston Villa
Sunderland
Hull
West …
Norwich
Fulham
Cardiff Total: 755 Total: 1.875 Total: 905
57 54
50 45 45 43 43 42
39 38
35 35
32 27 27 26
24 22 21 21
19 18 17
15 15 15 14 14 13 13 12 11
Real Madrid PSG
Atlético Madrid ManUnited
Bayern Munich Chelsea
Juventus FC Barcelona
Napoli AC Milan ManCity Borussia
O. Marseille Olimpiakos
Arsenal B. Leverkusen
Shalke04 Kovenhaun
Ajax Galatasaray
FC Zenit Celtic
Real Sociedad Benfica
CSKA Moskva Steaua
Porto S. Donetsk
Basel Wien
Anderlecht Viktoria Plzen
7,8x 1,6x 5,2x
14 14
Soccer big-ticket sponsorships
Shirt
Source: Forbes; The Economist; other
Note: Stadium ranking is not exhaustive
BACK-UP
80
45
40
39
31
Manchester United (Chevrolet)
FC Barcelona (Qatar Airways)
Bayern Munich (Deutsche Telekom)
Real Madrid (Fly Emirates)
Liverpool (Standard Chartered)
Kit
41
39
38
38
37 88
Real Madrid (Adidas)
Liverpool (Warrior)
FC Barcelona (Nike)
Bayern Munich (Adidas)
Manchester United (Nike)
Signed Adidas for
USD 88 mill. for 13
seasons beginning
15/16
•Manchester United -and other English teams- are pushing hard by signing very profitable big-ticket contracts. The reason behind why they sell at higher price might be that the English Premier League has more TV eyeballs. •We may infer that RM, FCB and BM must be very good at the rest of the Comercial revenue drivers: long-tail contracts, loyalty
cards, summer tournaments, etc. or that part of the revenues of the players are invoiced through the club. •Stadium’s naming rights deals are a great potential source of new revenues in the future. However clubs are reluctant to hear
offers that are not large and long enough (Real Option framework).
Yokohama just signed with
Chelsea for USD 61 mill.
beginning 15/16
Stadium
8,8
5,5
Emirates (Arsenal)
Etihad (ManCity)
EPIC (Real Madrid)
Allianz (Bayern Munich)
Veltins (Shalke 04)
USD mill./year
Real Madrid signed pre-
deal with IPIC (terms not disclosed)
Joint deal with Shirt
?
?
?
15 15
Stadium Naming Rights in the USA as of 2013
Source: New York Times
BACK-UP
•75% of US clubs have sold stadium naming rights. •Business much more developed than in Europe. Perhaps because sponsors have developed a better ROI framework. •Best deals in recent years. •European Soccer teams can and should be able to reach similar deals for their global audience.
Interactive chart (NYT)
16 16
Top Soccer clubs revenue breakdown 2013/14; EUR mill.
0 €
100 €
200 €
300 €
400 €
500 €
600 €
Commercial Broadcast Matchday
Source: Deloitte Football Money League, 11 Goals & Associates
Arsenal stadium (Emirates) is considered as the most VIP facility,
with high Matchday revenue
~50% of home broadcast revenues in Spain go to Real
Madrid and FC Barcelona
Being UEFA CL finalist made Atlético to increase Broadcast
revenue by 86% in 1 year
PL’s large broadcast contract, and its flat distribution, secure smaller teams with
enough income
RM’s and ManU’s international focus
and strong salesforce pays-off
Milan teams do not own the stadium
PSG huge commercial inflow
since Qatar Investments Office
took over
Income per capita drives Matchday revenue. Chelsea Vs Napoli
Bayern Munich big-ticket sponsors are strong, and
shareholders of the club…
17 17
Cost drivers
Source: own analysis based on Annual Statements (2013/14); UEFA (2012)
ILLUSTRATIVE EXAMPLES
Ratios to revenue
44% 48%
74% 69% 69% 69% 61% 51%
65%
17% 12%
Real Madrid
FC Barcelona
Average Turkey
Average Italy
Average England
Average Russia
Average Spain
Average Germany
Average UEFA
Other Amortization Wages
•Team wages account for the most part of an average club costs •There are significant differences in cost management among clubs (e.g. wage steps) •57% of UEFA member clubs are loss-making •Cost is the main driver of a Club’s profitability. Most Clubs are loss-making because they are not enough diligent on the cost base •UEFA is concern about these issues and is implementing “Financial Fair Game” policies
0% -8% -11% 2% -8%
Net profit to revenue ratio
EBITDA: 164 M.€
EBITDA: 134 M.€
-9% -22%
18 18
Source: Transfer Markt; own analysis
Note: Some transfers data are estimations
Player transfers of selected clubs
-200
-100
0
100
200
300
Profile 1: Super-Investors Ronaldo;
Kaká; Alonso;
Benzema
Departures income (GBP mill.)
Arrivals expenditure (GBP mill.)
Net income (GBP mill.)
Real Madrid CF
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 Season
473
998
-525
-200
-100
0
100
200
300
FC Barcelona
281
640
-359
Total 05/06 to 13/14
Ramos; Robinho
Diarra; Gago
Robben; Pepe;
Sneijder Huntelar
DiMAría; Özil;
Khedira
Coentrão
Modric
Bale; Isco James;
Kroos
Suárez
14/15
Henry; Milito
Alves
Ronaldinho Ibrahimovic
Villa; Masch.
Fábregas; Sánchez
Neymar
19 19
Source: Transfer Markt; own analysis
Note: Some transfers data are estimations
-50
0
50
100
150
Profile 2: Net investors profiting from opportunistic sales
Departures income (GBP mill.)
Arrivals expenditure (GBP mill.)
Net income (GBP mill.)
Atlético Madrid
Season
336 426
-90
-50
0
50
100
150
Valencia CF
280 291
-11
Total 05/06 to 13/14 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
Agüero
Forlán; Simão
Torres Falcao
Costa
Villa
Joaquín
Albiol
Mata
Soldado
Mathieu
Player transfers of selected clubs
20 20
Source: Transfer Markt; own analysis
Note: Some transfers data are estimations
-20
-10
0
10
20
30
40
Profile 3: Capital generators (concentrated in few players)
Departures income (GBP mill.)
Arrivals expenditure (GBP mill.)
Net income (GBP mill.)
Real Sociedad
Season
77
46
31
-20
-10
0
10
20
30
40
Athletic Bilbao
84
49
35
Total 05/06 to 13/14 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
Griezmann; Bravo
Illarramendi
Del Horno
Aduritz
Martínez Herrera
Player transfers of selected clubs
21 21
Soccer business models
• Large, well-established teams with a long track record on the pitch and a large fanbase all over the world.
• Revenues, large and stable, finance the team. • Key to profitability is being able to restrain the payroll cost
of the players. • Usually have successful junior academies, but it is difficult
for a player to walk all the steps onto the first team.
Description
• Real Madrid • Manchester United • Bayern Munich • FC Barcelona • Manchester City • Paris Saint-Germain • Chelsea
Examples
• Mid-sized teams with strong junior academies or a key long-term investor, working to build a Commercial stream and an international brand.
• Transfer fees come not only from the junior academy, but from trading players who become stars in 2-3 years.
• From time to time succeed in Europe and get significant revenues. Money buys time to build-up Commercial.
• Revenues are volatile and cash must be watched.
• Atlético de Madrid • Shalke 04 • Valencia CF • Fiorentina • Ajax • Monaco
• Small local teams with little chances to build-up a Comercial revenue stream.
• Best source of revenue are transfer fees from players coming from their junior school.
• Teams that do not succeed in developing talent are usually money-losing clubs.
• Real Sociedad • Villareal CF • Elche CF • Stade Rennais • Atalanta B.C. • FC Sochaux-Montbéliard • Many Latam clubs
Factory of players
“Lucky striker” (prizes, trades, or
key investor)
Commercial funds team
(wages & capex)
• Very small and small clubs that live almost exclusively on tickets. Adapt budget to revenues (Cash In=Cash Out).
• Usually no formal business plan Survival mode
Top ~1%
Next ~5%
Next ~20%
Source: 11 Goals & Associates; UEFA (2012)
Most clubs
Organizational development of soccer clubs
22
Sport Stadium Commercial
• Late 19th and early 20th • Late 1940s • 1990s
Years
• English teams • Real Madrid • Manchester United
Pioneer(s)
• Spain’s La Liga1 • Arsenal • Real Madrid
Current leader(s)
•Every time a soccer club adds a new organizational structure there is some degree of conflict, specially with the previously dominant one. •Leadership (new organization) usually comes from the club’s chairperson (examples: Santiago Bernabéu with Real Madrid stadium, Florentino Pérez with commercial department at Real Madrid, etc.). •Broadcast is irrelevant in terms of organization. It’s a contract with few people managing it.
1 IFFHS
Typical organizational chart of a large Soccer Club
23
Chairperson (some executive role)
CEO
BU Sport
BU Operations
(Stadium)
BU Commercial
(incl. Broadcasting)
Board of directors (some executive role)
ILLUSTRATIVE
Staff departments (Comm, Legal, HR, IT, PR,
Finance, etc.)
In real life, line departments work so independently that they rather be considered Business Units (BU), specially in larger clubs.
‐ Transversal communication is small ‐ Some activities are replicated across
BUs (e.g. Marketing) ‐ Difficult to implement horizontal
projects. ‐ Metrics and KPIs pretty much based on
the BU space
• Some clubs formally assign the chairperson, or even the board members, some executive role (e.g. FC Barcelona)
• Anyhow, with rare exceptions, the Chairperson/Board always plays some executive role, like hiring/firing coaches
BU output
BU P&L?
Is the soccer industry about to be disrupted?
25
Today
Source: https://www.techdirt.com/articles/20120916/14454920395/newspaper-ad-revenue-fell-off-quite-cliff-now-par-with-1950-revenue.shtml
Soft change? Hard change like newspapers?
26 26
Is the current model mature enough? Exhausted? YoY growth rate by revenue source; World’s top soccer 20 teams of each year
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Matchday Broadcast Commercial Total
•Revenues growth rates are not only not maturing, but accelerating •Growth is specially driven by Commercial •Matchday is maturing •The marginally decreasing rates until 08/09 are explained by the crisis
23,8%
14,2%
11,6%
3,6%
Source: Deloitte Football Money League; own analysis
27 27
YoY growth rate by revenue source; World’s top 4 teams (RM, MU, BM and FCB)
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Matchday Broadcast Commercial Total
•Taking only the 4 most “advanced” teams we see no pattern of exhaustion •Total revenues grow strong again after the crisis, driven specially by Commercial •Matchday is maturing
-0,7%
9,0%
9,9%
16,4%
Source: Deloitte Football Money League; own analysis
Is the current model mature enough? Exhausted?
28 28
EUR -> GBP exchange rate
Source: Google Finance
GPB depreciated significantly against EUR in 2007-9
BACK-UP
•Currency distortion around 2008 for British teams, especially in regard to local income such as Matchday or domestic Broadcast rights
29 29
Soccer in McKinsey’s Digital Transformation curve
Source: McKinsey&Co (framework); 11 Goals & Associates
•Soccer’s industry is at a point where digital innovations could be done, but not close to the tipping point, thanks to commercial strength and growth •However a club could trigger and accelerate an industry digital transformation, specially if new revenues are generated (impact on sport performance) •Digital newcomers are unlike to appear due to the sports’ nature and historical leverage, but some incumbents are very committed to their digital operations (e.g. ManCity)
CONCEPTUAL
30 30
Wrapping-up
¶ Although Commercial revenue seems to have a bright future ahead, and the industry is resilient to non-digitalization, a digital first-mover could enjoy extra revenues to continue investing on the team and ensuring its success.
¶ A successful first-mover could trigger and accelerate the digital transformation of the industry.
¶ Is it possible to significantly create value from digital without a strong Comercial Business Model? What’s the difference between using digital for “business as usual” and creating a digitally-based business model?
32 32
#1 What kind of Digital Transformation?
• Same Business Model, different processes • Incremental innovation • Seeking efficiency, but not always • Low risk, medium return • Suboptimal strategy, but creates value • Ex.: Most large commercial banks such as BBVA or Grupo
Santander
Performance DT
Strategic DT
Soccer clubs have much more to win from Strategic DT , but only if conditions for a good execution are set, specially
Chairperson/Board leadership and commitment
• New Business Model • Disruptive innovation, but it does not have to affect the core
business if execution plan is well shaped • Seeking revenue growth • High risk, high return • Optimal strategy, but not easy to execute • Ex.: Netflix, Coursera (~Stanford), edX (MIT, Harvard)
33 33
Strategic DT on the innovation curve(s) Pe
rfo
rman
ce D
T
#1 BACK-UP
Stra
tegi
c D
T
• Strategic DT requires to invest time and cash in developing a Business model before it becomes a better alternative.
• The Chairman and the CDO (Chief Digital Officer) should negotiate and agree what investment and time seems reasonable before beginning to see business returns.
• E.g.: It took Dick Fosbury 5 years to refine his high jump style until it showed better results that the incumbent style.
Same BM
BM 1
BM 2
34 34
#2 What kind of Digital Business Model?
Factory of players
“Lucky striker” (prizes, trades, or
key investor)
Commercial funds team
(wages & capex)
Survival mode
Digitally-enabled Business Model?
D+Factory of players
D+“Lucky striker” (prizes, trades, or
key investor)
D+Commercial funds team
(wages & capex)
D+Survival mode
The question being, how the new BM would
look like?
Strategic DT
Performance DT
35 35
Pioneering a new business model
• Several top teams working on digital Business Models.
• Creating a fan-centric community to increase fan engagement, ticket and commercial expenditure, and TV audience, seems to be the most interesting model.
• Digital enables fan-disintermediation, opening a wide range of business opportunities directly captured and managed by the clubs.
• Runs away from newcomers to “Commercial funds team” BM, and leverages on existing fanbase.
#2
Factory of players
“Lucky striker” (prizes, trades, or
key investor)
Commercial funds team’s
(wages & capex)
Survival mode
Digitally-enabled Business Model?
36 36
#3 Mission of Digital in a Soccer Club
Mission
To create a technologically-enabled fan-community with superior customer experience in order to close any distance (physical, informational, cultural, emotional, commercial, etc.) between the Club and the fan, whoever he/she is. Open new sources of revenues. Improve current revenues directly (e.g: eCommerce) or indirectly (e.g: increase demand).
ILLUSTRATIVE EXAMPLE
Awareness Familiarity Consideration Purchase Loyalty
Active Evaluation
Post-Purchase Experience
Initial Consideration Purchase
Trigger
Brand touchpoints
Brand touchpoints
Purchasing funnel Customer journey (McKinsey)
37 37
Strategic shift #3
Content and Brand provider
Leading relationship
with fans (customers)
E.g.: Nespresso, Apple, Ferrari USA, Tesla Motors, Zara
“Marketing is dead” Harvard Business Review – 9 Aug 2012
Source: http://blogs.hbr.org/cs/2012/08/marketing_is_dead.html
Traditional marketing — including advertising, public relations, branding and corporate communications — is dead. Many people in traditional marketing roles and organizations may not realize they're operating within a dead paradigm. But they are. The evidence is clear.
Buyers are checking out product and service information in their own way, often through the Internet, and often from sources outside the firm such as word-of-mouth or customer reviews.
Actually, we already know in great detail what the new model of marketing will look like. It's already in place in a number of organizations. Here are its critical pieces: Restore community marketing Find your customer influencers Help them build social capital Get your customer advocates involved in the solution you provide.
Most read article in Aug 2012 From Brand to Fan
BACK-UP
#3
Soccer is social
0FFLINE (CIRCULATION)
Marca: 177.866 /day Diario As: 155.443/day Real Madrid: ~0
WEB 1.0 (DAILY REACH %)
WEB 2.0 (FANS/FOLLOWERS)
Facebook/Twitter (mill.) Marca: 0,98/1,49 Diario As: 0,34/0,67 Real Madrid: 82,8/15,0
MD: 67.704 /day Sport: 61.981/day FC Barcelona: ~0
Facebook/Twitter (mill.) MD: 0,28/0,64 Sport: 0,29/0,89 FC Barcelona: 83,4/14,3
Web 2.0 allow football clubs –better than ever before- to be in touch directly with their fanbase
39
Sources: OJD (2014), Alexa.com, Facebook Inc. (5-3-15), Twitter Inc. (5-3-15)
BACK-UP #3
40 40
Soccer should be mobile too, real mobile
Source: The Economist; Ofcom
BACK-UP #3
41 41
Frameworks to design a great community strategy
Football fans
Team Supporters
General public
“Pools” “Web” “Hub”
Web 2.0 and Community Marketing (SlideShare)
Fan segmentation Type of Affiliation Gamification
#3
Role in Ecosystem
Copy
Ignore
Minimum presence
Combat
Complement
Commercial Sport
42
Stadium Digital
• N/A Type of Marketing • Experiential MKT • Brand Management • Relational MKT
• Team Core Asset • Stadium • Brand • Tech
• Industry’s, very strong Culture • Club’s, strong • Sales-oriented • Tech savvy
• Qualitative Skills • Mixed • Qualitative
• Negotiation
• Deal-making
• Quantitative
• Team-working
• Product-building
• #Championships
• Tournaments’ classification
KPIs • Ticket sales • License sales • # fans?
• Fan engagement?
• Digital revenue?
• Team
• Flat
Organizational pattern
• Functional
• Hierarchical
• Product/Geography
• Hierarchical
• Project-based
• Flat
• Short-Term Time horizon • Short/Long-Term • Short-Term • Medium-Term
#4 Where to set Digital in the organizational chart?
• Live & TV fans Client • Local fans • Client brands • Global fans
Often, Digital Transformation is all about Digitanization, or how to shape the organization to tackle the digital challenge. The different nature of the Digital business leads to think of the creation of a Digital BU.
Output
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Organizational implementation of DT #4
Chairperson
CEO
BU Sport
BU Operations
BU Commercial
Board
Staff dep.
Digital
Short-Term
•First, a small Digital unit is created to begin understanding the club dynamics, creating links to other departments, and proposing a Digital Strategy. •Unit depends on the Chairperson, to
protect it from “business as usual”, specially when CEO comes from a strong BU. •Priorities: Strategy and Organizational
changes
•Once the club buys the Digital Strategy, the units grows until create a BU and have a seat in the steering committee.
•Still depending from the Chairperson who provides motivation and leadership, and who helps coordinating with other BUs while readapting internally the BM.
•Priorities: Executing strategy, implementing changes.
•When new BM is implemented, BU processes are well established, and an attribution model is in place (see forthcoming chart), the BU changes dependency, to depend from the CEO.
•Under the new model, CEO sets goals and demands performance to the unit.
•Priorities: Revenues, direct or indirect according to what the attribution model measures.
Chairperson
CEO
Medium-Term
Chairperson
CEO
BU Commercial
Long-Term
BU Digital
… …
A) Strategic DT; large club ILLUSTRATIVE
EXAMPLE
BU Commercial
BU Digital
44 44
•Alternatively we might create a Digital Projects Office and focus on each BU’s performance. •Advantages:
‐ Less “turf battles” with BUs over what is digital or not. ‐ BUs do not have to worry about building up digital competences. ‐ Digital gets some “quick wins” that allow it to consolidate within the organization and win the respect of BUs. ‐ Chairperson does not have to play an active role.
•Disadvantages: ‐ The Digital Projects Office is not a true leadership office. Projects optimize each BU goals, but not the global organization. ‐ Continuity between the Digital Projects Office and the BU Digital is hard due to the different nature of the structures and its
people. It’s harder to change we something is grown-up.
Chairperson
CEO
BU Commercial
Short-Term
Digital Projects Office
#4
B) Performance DT; large/mid-sized club Organizational implementation of DT ILLUSTRATIVE
EXAMPLE
Chairperson
CEO
BU Sport
BU Operations
BU Commercial
Board
Staff dep.
Long-Term (if shifts to Strategic DT)
BU Digital
BU Sport
BU Operations
Board
Staff dep.
45 45
Chairperson
CEO
BU Sport
BU Commercial + Operations + Digital
Board
Staff dep.
Short-Term
•For small and medium-sized clubs where stadium and commercial is managed within the same department, there is the opportunity to integrate all those activities with digital into a team with goals aligned and high aspirations.
•Small teams do not need to “overcomplicate” the fit of Digital into the organization. •The fitness of this model depends not so much in the size of the club, but on the dynamics of the organization, although there is
some correlation.
Chairperson
CEO
BU Sport
BU Operations
BU Commercial
Board
Staff dep.
Long-Term (if significant organizational growth)
BU Digital
#4
C) Strategic + Performance DT; mid-sized/small club Organizational implementation of DT ILLUSTRATIVE
EXAMPLE
“It’s good to be young”
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#5 Measuring value creation dependencies between BUs
BU Sport
Cost center
Championships
BU Stadium
Profit/Inv. center
BU Commercial
Revenue/Profit center
BU Digital
Cost center?
Revenue center?
Fan base and engagement
Revenue
Attribution model Titles -> Revenue
Attribution model Fans -> Revenue
Without an attribution model someone could even argue BU sport is not a revenue generating activity…
When externalities among BUs exist, attribution models (Bayesian, Big Data,
etc.) should serve to understand interrelations and to assign transfer
costs and revenues among BUs (BU’s P&L; cost accounting).
Attribution model Titles ->Fans
Attribution model TV ->Commercial
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#6 What’s the right digital culture? ILLUSTRATIVE
¶ The actual culture to implement depends on the strategic goals and specially on the organizational chart we are implementing.
¶ In general each Club BU has its own culture. At least, BU Sport’s is different from Stadium's or Commercial’s. Culture is “fragmented”.
¶ So we would suggest to engine a specific culture for BU Digital, based on the following premises:
‐Flat, decentralized power.
‐Expert authority (instead of managerial authority)
‐Promote some “cultural tension” (not conflict) with the rest of the organization.
‐Openness, informality, individual initiative, express real feelings in a safe environment, tolerance to failure, etc.
‐Passion for testing and analytical research.
‐Constant search of fresh air: interaction with universities, rotation of professionals, workshops, out-of-office training, etc.
¶ But please, do not think this a high-tech start-up.
#7 What to offer Free, Cheap, or Premium
FREEMIUM = FREE + PREMIUM “Attract audience with free versions of the product, introduce them to paying with affordable versions of the product, and monetize them with premium versions of the product”
FREE
CHEAP (Affordable)
PREMIUM
ILUSTRATIVE
Online business models are usually Freemium. It’s an issue to manage in an industry used to charge for everything.
•Strategic consulting services in technology and digital marketing for top executives
•We advise companies on digital transformation
Francisco Hernández
•MBA London Business School. • IEP University of Chicago. •11 years of digital experience. •Ex Director Online Strategy Real
Madrid C.F. •Other companies: ABN Amro,
Abengoa, McKinsey&Company. •Professor at ESCP Europe. • Lecturer in Europe, Latam and
Asia •PWC: 10 e-Business talents in
Spain.
Sonia Fernández
•MBA Stanford. •15 years of digital experience. •Ex CEO Vindico Europe. •Ex CEO Match.com Spain. •Ex CEO MercadoLibre Spain. •Other companies: Fon, Grupo
Prisa, 3i, Lehman Brothers. •Professor at OBS-UB, EOI and MIB • Lecturer at universities and in-
company training •Author of two books on
networking and social networks published in 2004 and 2001
franciscohm
[email protected] | (+34) 605 58 66 55
soniafernandez
[email protected] | (+34) 619 721 781
Thanks very much for your attention and interaction
Francisco Hernández [email protected]
(+34) 605 58 66 55