MADRID (Reuters) — At first glance England football captain David Beckham and Simba, the cuddly cub from Disney’s “Lion King,” do not have much in common — but Real Madrid football club disagrees.
Beckham is a cornerstone of Real’s strategy to build a team of soccer stars or “galacticos” with Hollywood glamour and marketing appeal from Shanghai to San Diego. So Real turned to Disney’s billion-dollar animated hit “The Lion King” for tips on exploiting their players’ star appeal.
Disney leveraged the success of the film, which cost $50 million to make, into $766 million in box office sales in its first year. Within 18 months the movie generated $1.5 billion in merchandising sales, founding a long-term entertainment brand.
“The soccer business maps the movie industry closely,” said Jose Luis Nueno, marketing professor at Barcelona’s IESE business school and co-author of a study on Real Madrid.
Real’s management revolutionised soccer, treating the game like media content and marketing it like a film, says the study, sponsored by Harvard Business School.
“The two businesses are very similar,” Nueno said. “In both there is a locking-in of talent under the concept of ‘winner takes all’. In one you have actors, in the other the stars are footballers.”
Just 3 percent of movies make 90 percent of revenues, Nueno noted, pointing to a growing rich-poor divide among Europe’s soccer clubs.
Giants like Real Madrid snatch up stars, buying success on the pitch and leveraging their fame in lucrative merchandising sales, sponsorship deals and TV rights.
Since becoming Real’s president in 2000, property magnate Florentino Perez has spent over 200 million euros ($250 million) on Portuguese winger Luis Figo, French midfielder Zinedine Zidane, Brazilian striker Ronaldo and Beckham.
Perez bankrolled this spree by selling Real’s city-centre training ground to the Madrid local authority for 480 million euros. The deal could set a model for other clubs with real estate assets, Nueno said.
Perez expects Real to make 138 million euros from marketing this year — half of its sales and equivalent to its total income four years ago.
“A couple of years ago Manchester United was the best selling club in the world because of the simple fact that they had a marketing policy that was 10 years ahead of everyone else,” Perez told the Spanish business daily Expansion.
“This is no longer the case because right now there is nothing to match the global impact of the Real Madrid brand. We are the number one not just in football but in all sport.”
SPANISH SOCCER MAD
Soccer is big business in Spain. The country’s four daily soccer papers have a circulation of 5.3 million and more than half of Spaniards say they are football fans — with 60 percent following Real Madrid, according to the study.
“In Spain, it is easier to change spouse, political party or religion than it is to change soccer club,” said Perez.
Despite such devotion, Real was not immune to the financial problems which European clubs faced in recent years, when the cost of transfers and salaries boomed while income from TV rights fell.
“There was no choice but to seek new income streams,” Nueno said. “What were the options? Marketing. The club had to sell more to its current fans or sell something to new customers.”
Hence the team of “galacticos” that would have commercial clout in key regions contested by global soccer rivals: Asia, South America and the United States.
“The big, interesting markets are China, which will have an estimated 80 million fans of foreign teams, and the United States, which is waiting for Beckham to happen for football to become a first-tier sport,” said Nueno.
Beckham’s acquisition last year for up to 35 million euros — described by one Spanish journalist as “one of the most important things to have happened in this country over the last decade” — was a crowning moment of Madrid’s strategy.
“Me David Beckham, you America,” read the front page of July’s edition of Vanity Fair magazine beside a glowering image of the ‘marketing phenomenon’, torso bare.
“Brand it like Beckham” is the headline above an interview with the footballer and his pop star wife Victoria “Posh Spice” Beckham. The couple have yet to crack the U.S. market.
Despite Beckham’s departure, his former employer Manchester United still tops sports brand rankings, according to Consultancy FutureBrand, because Madrid has yet to capitalise on its image outside Europe, particularly in the key Asian market.
But Madrid has some advantages as it fights to win top spot.
With an established stable of stars, Madrid is one of the few teams powerful enough to demand 50 percent of the revenues from its players’ advertising deals, Nueno said.
As always in football, scandal is not far away.
Spain’s sporting press has questioned the solidity of Madrid’s finances, while critics say the big-name signings have resulted in an ageing squad which lacks defensive steel.
Madrid stumbled to fourth place in the Primera Liga last season, ending with the worst run in its 102-year history, five consecutive defeats. Its “galacticos” had a poor Euro 2004 tournament — England captain Beckham missed two penalties, contributing his side’s early exit.
Shrugging off the poor run of form, Real’s members re-elected Perez to a new four-year term in July.
“This business works by winning trophies and signing a ‘galactico’ each season,” Perez said. “I am going to continue the policy of bringing one every year.”
Article published in Sports Illustrated, 2004
