By Tobi Ajayi and George Boulton
IORMA – June 2014
A tight grip has been placed on the planet and its name is the World Cup, a month of non-stop soccer fever has begun! The sporting culture of Football is on overdrive every four years with what is perceived as ‘the next coming’ of the greatest sporting spectacle. Each continent is hard wired to the event on epic proportions with the opening game of the Brazil World Cup 2014 being watched by just over a billion viewers; 1 ball 22 warriors representing their country.
Of late, the notion of sports and retailing have never really been addressed; although many know that the two go hand in hand, many tend to see sports as just being sports, especially in the realm of football. But with the introduction of key notions such as franchise players and arguably the most prolific introduction in the form of wealthy Sheiks from the Middle East becoming increasingly interested and invested both personally and financially in the sport of football. Football teams, to quite some degree are no different from our local retailers such as Marks & Spencers, John Lewis, the only difference being the heavy affiliation to the game of Football.
Notably, this past summer, club chairman Florentino Perez of Real Madrid negotiated the marquee signing of Gareth Bale from Tottenham Hotspur for £85m – which was followed by a surge of shirt sales. What does this mean? In 2009 when Real Madrid purchased Cristiano Ronaldo for a club record fee of £80m; The club announced just a year later that they had made £90 million, predominantly on the back of shirt sales of the Portuguese forward’s No. 9 jersey and other memorabilia. That included 1.2 million shirt sales in Madrid alone. This example epitomizes the exponential financial opportunities presented to the football retail champions of world football.
In regards to the generation of cash flow within football franchises, the buying and selling of players is not the only form used in order to make clubs wealthier; merchandising, sales and even sponsorships are of equal importance. In the five years to 2014 sports goods sales increased by 18.1%, outperforming the total retail market – highlighting its resilience and growth opportunities for retailers. The 2014 World Cup will boost sales in Q1 and Q2, with consumers starting to feel more confident about spending on discretionary items and wanting buy into team kits or replicas.
Also the technological advances on a global scale has highly impacted the general direction of retailing; the power to purchase has been given to the individual, and we as the point of sale can buy when we want, where we want and how we want all from the comfort of our own homes. The rise of online specialists, click & collect and better range availability are satisfying increasing demands for convenience, so sporting retailers in form of football clubs must continue to invest in this area. Leading sportswear players have seen a decline in loyalty for quality, allowing sector specialists (the football team and clubs themselves) to emphasize their expertise in design, innovation and fabric technology.
Evidently certain clubs are wealthier than others; varying reasons as to why this occurs range from the successes of the actual football club on the pitch, winning tournament and competitions often yield a high return in the form of prize money; sponsorships from sporting brands or companies is often another a lead generation, seen particularly in the case of Arsenal and their relationship with Emirates Airlines, the deal with the Emirates stadium provides year on year profits for both parties.
But, as the diagram to the right depicts (figures adapted from the footballing season of 12-13) all 5 of the wealthiest clubs in world see the largest majority of their wealth come through retailing and sales. Notably 4 of 5 see the largest percentage share of their wealth being attributed to sales of products in the form of kits, footballs and other footballing merchandise. This particular notion is what can be deemed as the similarity to retailing giants, especially companies that can be deemed as department stores e.g. Selfridges, John Lewis etc.
An interesting positive correlation is also the relationships between revenue generation in the form of retail for football clubs and the impact television has in the form of promotion and marketing. England has six clubs in the top 20 at present; however this is likely to change over this current season due to the new Premier League television contract. These new conditions are borne out of the emergence of BT Sport. BT Sport has won the rights to show 38 Premier League games a season and paid $1500m to win the TV rights of the Champions League – the biggest competition in club football. This of course, in turn, boosts retail opportunities of those European football soccer giants who qualify for the last 16 of the Champions League.
Soccer Retailing Champions
With nine new teams joining the Major League Soccer League (MLS) in the US since 2007 – the most recent of which will begin to play in 2015 – Soccer is beginning to reach attendance figures up with the National Hockey League and the National Basketball Association. TV ratings continue to grow and the Columbus Crew (an American Soccer club) sold for more than $60 million – a market record in American soccer history.
LA Galaxy is the most decorated team in the MLS and has been the most prolific advocates for ‘Soccer’ in the USA. LA Galaxy’s pseudonym is ‘The Galaticos’ hoping to mirror the tradition and retail success of Real Madrid, the most valuable footballing club on the planet.
LA Galaxy’s acquisition of brand David Beckham before his stint in Milan and Paris carved the path for a new style of retailing opportunities for LA Galaxy. David Beckham is notably one of the most prolific franchise players to have entered the sport of football; he in himself is brand that is worth in and around $300m, and better still, he is English! The acquisition of players of Beckham’s international profile is essential to lure fans to watch the MLS from markets outside of the US in order to maximize retail opportunities and generate the big profits.
So the blueprint is to first bring figureheads and bastions of the sport to the league and from that point on use the player profile to generate retailing opportunities in the form of ticket sales, player memorabilia and even meet and greets. There are notably some huge stars playing their football in the US, of the old generation, players such as Thierry Henry and Landon Donavon have been persuaded to play in the MLS not only for their footballing prowess, but also their huge potential in regards to drawing retailing revenue streams.
International football clubs are seen more as being retailing titans as opposed to giants; many international teams have also been a point of interest for many parties due to their retailing capacity, specifically kit sponsors. Earlier in the year PUMA unveiled their exclusive kits for eight sponsored teams- Italy, Switzerland, Algeria, Cameroon, Ghana, Ivory Coast, Chile and Uruguay – who are all strong contenders in Brazil this summer. The home and away kit for each team is now available in select PUMA stores in the country. To add further to the excitement, PUMA store windows will be themed and decorated around the World Cup exclusive Italia jersey.
Kit sponsors closely monitor this international exposure that only come once every four years; the international football club will market and effectively sell merchandise for their sponsors in their respective countries of representation. The exploitation of patriotism around this period is ruthless; a notable clash between football clubs and consumers was seen this year in the UK. The England team retailing divisions were heavily criticized as the prices for a replica England jersey were priced as high as £90; questioning the ethics behind the price will consumers pay for their patriotism.
The players within football club also contribute highly to the propensity in which the club is deemed as a retailing mechanism, as seen in the case of David Beckham and the LA Galaxy. Sponsors often latch onto individual players as they would the football club, again seen in the case of Puma and their tactics before the World Cup. A global version of the evoPOWER boot called the ‘Tricks’ shoe has been unveiled exclusively for the World Cup. Players such as Mario Balotelli, Cesc Fabregas, Sergio Aguero, Marco Reus, Radamel Falcao, Olivier Giroud, Gianluigi Buffon, Yaya Toure and many more will be spotted on the field in these funky football studs. The right boot is pink, the left boot is blue. PUMA revealed Tricks, a new colourful interpretation of its evoPOWER and evoSPEED football boots, made for the unbelievable at the 2014 FIFA World Cup in Brazil.
This relationship between the football clubs, the players employed to play for the club and the sponsorship deals make for an extremely stimulated sales atmosphere for consumers and is reason to why many football clubs are being deemed as retailing giants.
It is safe to safe that the footballing industry is worth billions of pounds and that although for many, on first glance is deemed solely as a sporting occasion, there are numerous retailing opportunities for the clubs involved. This in turns benefits both the football clubs and players financially, assists in creating a well-known brand and ultimately provides a point of connection for the fans and consumers. Similarly for the fans and consumers, they are given the chance to relate to the football club and its players by purchasing particular items that their favourite players use or wear themselves.
The appreciation of football clubs being retailers is slowly becoming a notion that is shared globally; increased globalization has allowed for the movement and sales of goods and services to improve world markets, including that of the sports realm. Teams can now open up revenue streams to different areas in which was not as possible before or did not even exist, seen in the case of Manchester United having most of their retail products being bought in China due to the ever increasing use of the internet.