Читать книгу The Real Madrid Way - Steven G. Mandis - Страница 11
ОглавлениеREAL MADRID’S ON- AND OFF-FIELD DOMINANCE
AT THE CENTER of the Real Madrid way for success are the values of their community and resulting culture. Real Madrid management believes the culture has translated into continued success on the field thus creating a profitable and sustainable enterprise that people can identify with and turn to, embracing it as a meaningful and steadfast cornerstone of their own personal value and identity. Before examining the Real Madrid way, it is worth understanding its results, beyond its record 107 official competition trophies in its 114 year history.
When I ask US sports fans, “What is the most valuable sports team in the world?” the most common answers are “the New York Yankees” or “the Dallas Cowboys.” When I tell them the answer is Real Madrid, most people are completely shocked. American-centric sports fans will be absolutely astonished by the data below.
Real Madrid is worth $3.44 billion according to Forbes’ World’s 50 Most Valuable Sports Teams in July 2015.13 They rank it the most valuable sports team, which surprises many Americans, but if one thinks about it, soccer is the most popular sport in the entire world. Soccer has 3.5 billion fans globally, while baseball, basketball, and American football’s fans combined do not equal the number of soccer enthusiasts.14 The 2012 Deloitte Football Money League reported that in 2010–11, European professional soccer teams generated a combined €17.5 billion ($23.7 billion) in revenues. In an article about ranking sports’ popularity in September 2011, the Economist reported that “This compares with the NFL’s $9 billion, MLB’s $7.2 billion, and the NBA’s $4.1 billion in 2011.”15
Regardless of the rankings of Forbes and others, recent sports industry transactions may suggest that Real Madrid is actually the most valuable team. MLB’s Los Angeles Dodgers was acquired for $2 billion, more than eight times its revenues in 2012. NBA’s Los Angeles Clippers was acquired for $2 billion, fifteen times revenues in 2014 (Forbes valued the team at $430 million the previous year). Real Madrid has larger revenues and profits than either team, a more differentiated global brand, and a larger global fan base in the world’s most popular sport. Real Madrid would also have a much wider potential buyer universe than an American sports team.16 Just using the Dodgers’ eight times revenues transaction multiple, Real Madrid would be worth over $5.7 billion. Of course, the value of the team in a sale transaction is very theoretical because Real Madrid is a not-for-profit organization with approximately 92,000 club members that “own” the club (this will be discussed in detail later).
The chart below from Forbes values Real Madrid at five times revenues (the same multiple of revenues as the sale of NBA’s Milwaukee Bucks in 2014, which really does not compare to Real Madrid).
Table 1.1: Ten Most Valuable Sports Teams 2015 by Forbes
Real Madrid has the most revenues, $675 million in 2014, of any sports team in the world according to Forbes.17 Great sports teams in major markets like the MLB’s Dodgers and NFL’s New York Giants don’t even make the top ten. NBA’s Los Angeles Lakers 2014 revenues were $293 million, less than half of Real Madrid’s. Real Madrid has been at the top of the Deloitte Football Money League for eleven straight years, including the 2014–15 season.
Table 1.2: Ten Highest Sports Teams Revenues 2014 by Forbes
The power of the Real Madrid brand goes well beyond soccer, Madrid, or Spain. Experts estimate that Real Madrid has approximately 450 million fans around the world—more than American football has in total. Perhaps the best evidence of the power of the brand and identity lies in the club’s social media following. In 2015, Real Madrid had a total of 200 million followers across all global social media platforms, including those in China. A truly global presence, Real Madrid had approximately 100 million Facebook fans and Twitter followers on social media in 2015. To put this into context, the American sports team with the highest social media following was the Los Angeles Lakers at around 25 million, which also reflects the global appeal of basketball. In contrast, the New York Yankees had about 10 million fans on social media, which did not make the top fifteen of the chart below.
Table 1.3: Fifteen Most Popular Sports Teams on Social Media 2015
According to BBDO Consulting, Real Madrid has the highest brand value among European soccer teams. As of 2007 this value of 1.063 billion ($1.45 billion) was based on current and future income and expert opinion. The ranking is based on research that determines brand value using current and future income flow and expert opinion. BBDO Consulting states that its approach went beyond depicting only financial performance—it also analyzed scientific behavioral values such as brand popularity, image, sympathy, and loyalty. Income was examined in great depth, right up to the levels of sponsor contracts, merchandising, and revenue from season tickets, etc. The behavioral scientific side of the valuation comes from a survey of around 400 international experts.
Table 1.4: Five Most Valuable Soccer Brands 2007 by BBDO Consulting
According to PR Marketing, Real Madrid has the highest average jersey sales per year in soccer from 2009–10 to 2013–14. This demonstrates the passion, loyalty, and number of Real Madrid fans around the world. Adidas is the uniform manufacturer for Real Madrid. Sponsorship is provided by the Dubai-based Emirates Airlines. Many people believe that Real Madrid’s jersey sales are driven by individual star players only. While it is undeniable that players’ fans drive a lot of jersey sales, I will present some evidence later that the club’s community values may have more to do with jersey sales than people expect.
Table 1.5: Soccer Jersey Sales 2009–10 to 2013–14 by PR Marketing
On the field, Real Madrid has won eleven Champions League titles since the tournament of the best teams from each European league was established in 1955. The next closest competitor in terms of wins is AC Milan, which has won the Champions League seven times. Three teams (Barcelona, Bayern Munich, and Liverpool) are tied at five wins each.
Real Madrid has won a record thirty-two Spanish La Liga titles. Barcelona, in second place, has won twenty-four. Whenever Real Madrid plays their archrival Barcelona, it is commonly referred to as El Clásico. Real Madrid leads the head-to-head results in competitive games with ninety-two wins to Barcelona’s ninety. Whenever Real Madrid plays their crosstown rival Atlético Madrid, it is commonly referred to as the El Derbi Madrileño (“The Madrid Derby”).18 Real Madrid leads the head-to-head results in competitive games with 107 wins to Atlético Madrid’s 53.
Table 1.6: European Champions League Titles
In 2015, UEFA released its ranking of the most successful teams in Champions League competition history. These rankings were based on three points for a win, one for a draw, and zero for a loss.
Table 1.7: Top Teams in European Cup History (2015)
Real Madrid was recognized as the FIFA Club of the 20th Century in 2010, winning the award with 42.4 percent of the votes. Manchester United was a distant second with 9.7 percent.
Table 1.8: FIFA Club of the 20th Century Voting (2010)
Differences between MLB, NBA, and European Professional Soccer
With Moneyball being such an imposing force on how we think about sports, it is important to remember that Moneyball is about an MLB team. There are several differences between the MLB, NBA, and European soccer leagues that are worth highlighting because they can have a meaningful impact on strategic decisions both on the field and off the field. The differences will highlight that Real Madrid needs to have a strategy in place regarding teamwork because of the interdependence of the sport (see “Interdependence” sidebar on page 39).
Drafts, Taxes, and Revenue Sharing
In European professional soccer, there are no drafts and no salary caps or luxury taxes. It is an open market. European professional soccer teams can either develop players through their own youth academies or buy the rights to players in the transfer market and pay them whatever they want. In 2011, UEFA enacted financial fair-play rules. Since then, teams that qualify for UEFA competitions essentially have to prove throughout the season that they have paid their bills. Since 2013, teams have also been assessed against break-even financial requirements, meaning that they have to balance their spending with their revenues, which restricts teams from accumulating too much debt. Without a salary cap or luxury tax on players’ salaries, only a limit based on breaking even, teams are economically incentivized to expand their fan bases, cultivate sponsorships, and find other ways to increase revenues to afford better players.
The NBA and MLB, in contrast, have organized annual drafts to select players. Typically, the teams that finished with the worst record the previous season get to select first. This is to help with competitive parity. Therefore, a baseball or basketball team can draft a star player and not have to bid competitively for him. MLB has a “competitive balance tax” or “luxury tax” that is the punishment for large market teams that spend too much money. While MLB does not have a set salary cap, the luxury tax costs teams with high payrolls a considerable amount of money, giving them ample reason to want to keep their payrolls below the threshold level. The NBA utilizes a soft salary cap, meaning that while there is a salary cap, there are a variety of exceptions that allow teams to exceed it. In addition to the soft cap, the NBA utilizes a luxury tax system that is applied if a team’s payroll exceeds a separate threshold that is higher than the salary cap. Historically, around half of the NBA’s teams are over the cap. In both the NBA and MLB, big market teams like MLB’s New York Yankees or the NBA’s New York Knicks can generate revenues with their own sponsors and local television broadcasts and can afford to pay up to the cap or to pay the luxury tax if they go over the cap. Also, billionaire-owners such as the NBA’s Brooklyn Nets owner Mikhail Prokhorov, who was charged a reported $80 million in luxury taxes in 2014, can simply pay the tax. Small-market and other teams like the MLB’s Oakland Athletics in Moneyball may not have the financial resources, sponsorships, or local television broadcasts to pay up to the threshold, or may simply choose not to do so. However, the Athletics receive money from those that pay the luxury tax. In addition, in order to combat the growing revenue disparity among major league teams, MLB first instituted a revenue-sharing program in 1996 that, among many things, requires that every team pay 31 percent of their net local revenue, and then that money is divided up and equally distributed to every team (the NBA and NFL also have revenue sharing). Therefore, the small-market MLB teams have less of an economic incentive than a European soccer team to grow revenues because the latter would have to share the upside. The business conditions for a small-market team in MLB are similar to a “socialist” economic system, while European soccer is much more of a “free-market” economic system. The “socialist” economic system prevalent in North America has the leagues, rather than the teams, playing the dominant role in many marketing functions, especially internationally. A team like the Athletics has some constrictions in revenue growth, such as limits to their market place, sharing a market with a much bigger and wealthier team, and being the only MLB team to share a stadium with an NFL team. The Athletics’ innovation in data analytics was driven, in part, because they have limitations. On the other hand, Real Madrid owns their stadium and benefits more directly from their innovations in broadcasting, marketing, and commercial revenues.
“Tanking”
No matter how bad the performance of an MLB or NBA team becomes, the team’s place in their respective “major league,” and their share of the national television contract, is assured. Therefore, in MLB or the NBA, teams can be incentivized to “tank,” or lose on purpose, in order to get a better pick for the draft. In addition, an MLB or NBA team can afford “rebuilding” years in which the team’s performance is bad, because they have the upside of being able to get a high draft pick to start to put together a good team and, in contrast, can’t get kicked out of the league.
European professional soccer teams have a much higher economic incentive to win because of “promotion” and “relegation.” Promotion and relegation are processes where teams are transferred between two divisions (think Major Leagues and AAA or NBA and Development League)19 based on their performance for the completed season. The best-ranked teams in the lower division are promoted to the higher division for the next season, and the worst-ranked team or teams in the higher division are relegated to the lower division for the next season. This would mean the Philadelphia 76ers, for example, would be moved down to the Development League if they finished in last place in the NBA, and the Santa Cruz Warriors or Rio Grande Valley Vipers would move up to the NBA if they finished at the top of the Development League.
In European soccer, being relegated means a team no longer participates in the revenue share of the first division, which can have a significant impact on a team’s finances and value.20 Therefore, even the teams at the bottom of the standings are fighting to win each and every game. The teams that can afford the highest payrolls and better talent might not be as concerned about relegation. However, it is possible for them to miss qualifying for the Champions League. In addition, in the English Premier League, national TV revenues are apportioned by standing, once again encouraging teams to fight for each win to finish in a position in the league standing that at least maintains their share of TV revenues from the previous year. Therefore, it puts pressure on the coaches of the top teams to play their best players more often, which increases tiredness and risk of injury. In contrast, there may be nights that a strong NBA team, for example, can rest their star players and still defeat a team that is “tanking.” In soccer, a team resting their best players risks losing points and standing in the league, which can have a financial impact. This has implications not only on how coaches must use their players but also the risks the organizations are willing to take. For example, in a 2014 interview with Sean Ingle of the Guardian, Billy Beane said it is arguably riskier for a European professional soccer manager to place huge faith in statistical analysis because, unlike in American sports, there is relegation. Beane said, “You don’t have a lot of time to be right in football. So ultimately, before you mark on anything quantitative, you have to make sure you have scrutinized the data and have certainty with what you are doing, because the risk is very high.”
13 In September 2015, Forbes revalued NFL teams. The valuation for the Dallas Cowboys was higher than Real Madrid’s valuation in July 2015. However, at the time, Forbes did not revalue any soccer or baseball teams.
14 “Top 10 List of the Internet World’s Most Popular Sports.” Topend Sports. http://www.topendsports.com/world/lists/popular-sport/fans.htm.
15 “Ranking Sports Popularity: And the silver goes to . . .”. Economist. http://www.economist.com/blogs/gametheory/2011/09/ranking-sports’-popularity.
16 I spoke to a leading sports industry mergers and acquisitions expert who has sold many leading sports franchises. He agreed that theoretically Real Madrid should be the most valuable sport team because of their sustainable economic-sport model, differentiated brand, and large global fan base in the world’s most popular sport. The potential buyers could be larger and more global than those for North American sports teams. A possible list would not only include billionaires who could leverage the sports team and its stars playing friendly games abroad to help their image and companies but also sovereign wealth funds, such as Qatar Investment Authority buying Paris Saint-Germain to help promote a country. In addition, unlike North American sports leagues where other owners must approve a potential buyer (which could restrict interest or those eligible), there are no such restrictions in European soccer. However, he raised the issue that at some point the potential valuation amount is so large that the potential buyers for the entire amount become limited, which could restrict the valuation.
17 The revenues by given years can differ or be inconsistent because of different season ends, different fiscal years, and currency exchange moves. The revenues for Real Madrid’s 2013–14 season were €550 million ($726 million).
18 Games between two rivals of close geographical proximity are usually called a “local derby,” or simply “derby.” In North America, the term “crosstown rivalry” is used.
19 This example is illustrative, but can be a little misleading. It is important to note that teams in the lower divisions in European soccer are not farm teams and are independent. Affiliated teams cannot be in the same division or league.
20 In the English Premier League, for example, there is a “parachute system” of payments for a few years to smooth out the financial impact of relegation.
