It is surprising to think that FC Barcelona, current holder of the 2010 La Liga title in Spain and world famous football club and former Champion’s League winner is a club in debt. Yes, in debt – to the tune of 400M Euros (or $530M US). It just goes to prove, that having a successful name, reputation and brand does not guarantee business success and profits. FC Barcelona is one of the wealthiest football clubs in the world with annual revenues of more than 800m Euros. Their recent Nov 2010 clash vs. Real Madrid generated viewing figures of over 400m people worldwide and associated TV revenues, merchandising and ticketing for the event demonstrate the power of the club’s brand and football’s popularity. However, the business of football is very much a commercial balancing act off of the pitch. Clubs around the world must balance their costs (player and staff salaries, transfer fees, stadium upkeep and youth training) with their income (TV viewing/broadcast rights, ticketing and merchandising). The role of the brand to attract followers to buy their merchandise, watch or attend their matches and to support their players is an intangible asset which depends on both the ability to win matches, and to provide exciting football. In the era of mass-marketing football which exploded from 2000 to today, many clubs also spiralled into debt. In the UK – Manchester United expanded its global brand ‘footprint’ yet the ownership and management team purchased the brand via debt financing. Chelsea FC and Man City were recipients of ‘golden backers’ in the form of Football mad tycoons who saw a chance to purchase excellent football clubs and turn them into brands with global appeal and long term revenue opportunities. The allure and rise of the East in the form of Chinese, Korean and Vietnamese football enthusiasm (and betting!) has seen TV audiences increase dramatically and created opportunities for merchandising and ‘off season’ tours which help to generate revenue for clubs and advocacy. It is to the brand as an asset which many Football Club Boards are now turning to leverage further and future income streams. Witness the decision by FB Barcelona to agree their first shirt sponsorship deal with the Qatar Foundation worth $198M US. A very interesting and timely decision given Qatar’s brand ambition to be a world class destination for trade, investment, education and tourism which was subsequently recognised when FIFA awarded Qatar the 2022 World Cup. There is no doubt that the interplay of club brands, sponsorship, player celebrity ‘brands’ and media/marketing hype are driving the business of sport today. As football has developed into the world’s most popular and populist sport, there is no doubt that it is also now a major business which requires the brands to be as competitive in the Board Room as on the pitch. Interestingly, in the United States football (or Soccer) has failed to ignite the same level of fan or business interest despite the progress and coverage of the US world cup team and presence of Brand Beckham playing in Los Angeles for the LA Galaxy.
So, I return to the subject of Brand Football – and, the role that a club’s name, image and t-shirt sales play in shaping future business success. As Christmas approaches and I was out holiday shopping on the UK ‘high street’ I noticed in several sporting shops and general tourist shops the prominent display of branded Christmas merchandise bearing the logos, team strip and colours and player names of the ‘usual suspects’ (Chelsea, Man Utd, Arsenal with a smattering of West Ham, Tottenham and Fulham thrown in – I was shopping in West London after all!), however what was even more interesting were the club brands from outside of the UK Premiership with Barcelona, AC Milan, InterMilan and Real Madrid being the most obvious and prominent merchandise on display. In fact, they were the ONLY non-UK club brands on display. More interestingly, when comparing the sponsor names and logos it was astounding to see how the ‘t-shirt’ asset is really just an international advertisement for global corporate brands, which clearly the Qatar Foundation values as a means of promoting the brand Qatar. The t-shirt ‘test’ is still the best means of determining a brand’s business appeal and future success. You only buy what you want to wear, and what a ‘t-shirt’ says on it projects popularity. So, if Barcelona is to be the ‘Five-Star’ Football club brand worldwide (a reference to Qatar Airways description of themselves as the World’s ‘Five Star’ airline) with the name of the Qatar Foundation emblazoned on its shirt merchandise they will have to make sure that they put as much emphasis on traditional business management practices for the future as they do to winning on the pitch. The management claim that the sponsorship deal is a means of generating income without “selling the assets that have made the club a world-beater on and off the field” (FT, December 13th 2010) – yet, I would argue that the Brand name and club strip IS an asset which has been duly ‘sold’ OR at least leveraged as part of the Brand’s equity. As new rules and restrictions emerge to prohibit clubs from going into debt due to player salaries and fees, a new business model begins to emerge which explains why Barcelona is looking to leverage their brand, and their t-shirt asset base.
At the end of the day, what still matters is that Brands have to perform and when Barcelona drubbed Mourinho and the ‘galacticos’ of Real Madrid (Barcelona 5 – Real Madrid 0) it did more for ensuring the FC Barcelona Brand was in ‘credit’ than in ‘debit’. The future of Football is less about the UK premiership as well, and as global super teams emerge so too will new entrants from cities, clubs and countries who are investing in both clubs, infrastructure and players to catapult Football into the 21st century as a modern sport and business. I forecast that in 20 years time a new World Champion’s League will be driving t-shirt sales, and on-screen sponsorship revenues. Cities and clubs from around the world will have the same popularity, fame and cachet as Barcelona have today – and, it won’t be dominated by UK Premiership clubs or TV revenues. New brands and business models will emerge – and, that is good business.
And, congratulations to Russia and Qatar for the world cup in 2018 and 2022, respectively. It guarantees one thing – Football and Branding are sure to be ‘in the news’ for the next 20 years and provide lucrative business opportunities for clubs, players and countries! The future of Football is the future of ‘T-shirt’ sales…and that is why branding is important!Social tagging: brandmark > football > sport