Real Madrid Marketing Case Study

Topics: Real Madrid C.F., UEFA Champions League, La Liga Pages: 18 (6258 words) Published: September 16, 2012
In Europe, soccer clubs organized into leagues that often negotiated on behalf of their member clubs for marketing rights. The UEFA negotiated such rights for the European Champions League.20 Most clubs were free to independently establish prices, market games, and adopt competitive strategies. Some of the bigger clubs, such as Real Madrid or Manchester United, negotiated marketing rights on their own behalf. Furthermore, European clubs (except the British soccer leagues) did not engage in the revenue sharing typical of U.S. sports. In U.S. soccer, for instance, TV revenues from national broadcasts were shared equally among teams, and gate receipts were split 60:40 between home and visiting teams. In Europe, the home team usually retained 100% of gate receipts.21 -------------------------------------------------

European soccer followed an open-league system: clubs could be promoted or demoted between the premier and secondary national leagues according to performance. Even within premier leagues, clubs often varied greatly in terms of wealth and prestige. Unlike the U.S. sports model generally characterized by some redistribution of economic resources and player talent to maintain competitive balance, European soccer had relatively few regulations to interfere with free market principles. In Europe, the handful of soccer clubs that could afford the star players easily dominated the sport on the playing field, in the media, and in the marketplace (see Exhibit 3). Players with strong scoring power dominated player rankings thanks to greater visibility and name recognition. This carried over to their clubs. In turn, player name recognition depended on clubs getting into the top competitions and winning championships. In 2004, players from Argentina and Brazil topped global player lists, but the most consistently cited player was Real Madrid's Zinedine Zidane, a French national.

In the 1990s, European professional soccer had transitioned from the traditional business model emphasizing gate receipts and local corporate sponsorships to a strategy of maximizing merchandising and television revenues, and in some cases stock values, on an international basis. Manchester United, master of the new globalization and commercialization model with 6 million U.K. supporters and 45 million supporters worldwide, was a club that Pérez openly emulated. Its commercial strategy involved brand recognition among supporter niches, segmented by age, and the development of subbrands and products targeted to each segment. "Fred the Red" (red was the team color) appealed mainly to children on the premise that fans chose team colors during childhood and usually remained loyal to this choice over their lifetime. Products included soccer balls, alarms, crayons, watches, sleepwear, T-shirts, and children's accessories. The "MUFC" brand appealed to teenagers with attributes of rebelliousness, friendship, nerve, and audacity. Products included backpacks, caps, binders, and stopwatches. The "Red Devil" line targeted adults with products that were to be perceived as unique and evoke status, leadership, and winning, such as elegant, quality shirts and sweaters. These brands were featured on the team's Web site, The Web site was part of the club's value, with each unique user in 2000 ascribed an estimated lifetime value of €1,340 by a major bank. On this basis, the value of the brand was estimated at €354.4 million. The value was based on the expectation that the site could create a unique content library that would generate high loyalty and repeated visits to the site. -------------------------------------------------

In 1998, a subsidiary, Manchester United International, was launched to develop business in Asia and the United States. Activities in Asia included preseason tours and a shop and coffeehouse chain in southeastern Asia. It ran restaurants under the brand "Theater of Dreams" in the Middle East. "Theater of Dreams"...
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