Real Madrid Case

Real Madrid under the leadership of Perez saw a radical shift in its business model. While he continued to follow the policy set by his predecessor, Mr. Bernabeu, of acquiring talent that complemented the reputation of the club, Perez sought to transform Real Madrid into a formidable business empire where decisions on club management were made on sound business principles. A considerable shift from how the club was being run. He was quoted saying "In soccer, there is a lot of passion. The biggest challenge is to be dispassionate in managing the organization. Today a modern soccer club needs to have a professional organization that makes decisions with the head, not the heart".

Real Madrid identified four pillars that would drive the brand value of the club:

1. The size of the audience

2. The frequency with which the audience engaged with the brand

3. Socio-demographic characteristics of the audience

4. Bridges that could be built to link the brand and the audience

The management team then set three interrelated goals:

1. To give Real Madrid the financial flexibility to acquire talent and expand its brand reach:

2. Assemble a team of top players

3. Leverage the Real Madrid brand and content across a variety of channels.

The following strategies were adopted to achieve those goals:

1. Sell merchandise to fans. With access to over 70 companies producing over 600 products, Real Madrid as of 2010 were able to increase their fan base turnover, earning them € 12.8 out of each fan compared to € 6.3 from FC Barcelona.

2. Increase their commercial revenues. This was partly achieved by an increase in merchandise sales. Deals with Emirates Airlines and Spanish Bank BBVA have also added to their coffers highlighting the brand value and growth of the club in a challenging economic environment. In addition, Real Madrid extended their kit deal with Adidas that's surely going to increase their revenues as well. A 3 year contract with Siemens added € 12m per year.

3. International growth. Real Madrid tapped

...