Strategic Digital Transformation in Soccer Understanding industry’s business and history to shape its digital future.

1. Strategic Digital
Transformation in Soccer
Understanding industry’s business
and history to shape its digital future
Francisco Hernández-Marcos
Cambridge (MA)
March 24th, 2015
This document has been produced by 11 Goals & Associates. It is not complete unless
supported by the underlying detailed analyses and oral presentation.

2. About me SHAMELESS
SELF-PROMOTION
Education: Universidad Politécnica de Madrid, UNED,
London Business School, University of Chicago – Fundaciò
“laCaixa” & Fundación Rafael del Pino scholarships.
Firms worked for: Abengoa, McKinsey&Co, ABN AMRO,
Real Madrid C.F.
Entrepreneurship: Crisalia
Social Media & Internet consulting: 11goals.com
Lectures & Speaker in 4 continents: The Wall Street Journal, UP Madrid, London
Business School, Cornell, Politecnico Milano, CEIBS (Shanghai), Kungliga Tekniska
högskolan, The Business Factory, Fulbright Spain, ESCP Europe, UIMP, Harvard,
Moscow SU, and several private companies.
Full profile: linkedin.com/in/franciscohm

3. 22
Views are our own. All information and
insights contained in this presentation are
either public or common knowledge
Disclaimer

4. Agenda
 Soccer as a business
 Is the current model exhausted?
 Key Qs for Digital Transformation

5. 44
About Soccer
Source: Wikipedia; FanPageList; UEFA; Reuters; IBT
 First played in England in 1863, Soccer had had its roots in
several ball games played in different parts of Europe for
centuries.
 World’s most popular sport: 250 mill. players in 200
countries.
 FIFA has more member countries than the United Nations.
 Some players are among the most respected celebrities in
their countries, and Worldwide.
‐ Didier Drogba is credited with brokering a Cease-Fire in
Ivory Coast that ended a 5-year civil war.
‐ Cristiano Ronaldo is the most followed person in Social
Media (141 mill. in FB+TW).
 Global TV audience (mill. people):
‐ European Champions League final: 380
‐ “El Clásico” (Real Madrid-Barcelona): 200~400
‐ Super Bowl: 160

6. 55
Soccer lifts the spirit…
Source: Soccernomics
World Cup -> Less suicides not only
in June, but for the whole year
…and saves lives!

7. 66
Revenue ranking by sport leagues
Source: Wikipedia
6.600
5.867
3.667
3.200
2.971
2.000
1.900
1.700
1.300
980
919
896
551
National Football League
Major League Baseball
National Basketball Association
Premier League
National Hockey League
Bundesliga
La Liga
Serie A
Ligue 1
Nippon Professional Baseball
Campeonato Brasileiro Série A
Russian Premier League
Süper Lig
Revenue
EUR mill.
Combined, soccer is
probably the highest
revenue-generating
professional sport in
the World
206,3
195,6
122,2
160,0
99
111,1
95
85
65
81,7
45,9
56
30,6
Soccer leagues
Revenue per team

8. 77
Most valuable sport clubs
Source: The World's 50 Most Valuable Sports Teams 2014 (Forbes)
3,44
3,20
2,81
2,50
2,30
2,00
1,85
1,80
1,70
1,55
1,50
1,45
1,40
1,38
1,35
1,33
1,31
1,25
1,23
1,22
1,20
1,20
Real Madrid
FC Barcelona
Manchester United
New York Yankees
Dallas Cowboys
Los Angeles Dodgers
Bayern Munich
New England Patriots
Washington Redskins
New York Giants
Boston Red Sox
Houston Texans
New York Knicks
New York Jets
Los Angeles Lakers
Arsenal
Philadelphia Eagles
Chicago Bears
Baltimore Ravens
San Francisco 49ers
Chicago Cubs
Ferrari F1
Team value
USD bill.
4,2%
Soccer clubs
1-Year growth
23,1%
-11,2%
8,7%
9,5%
23,8%
41,3%
10,1%
6,3%
5,6%
14,3%
27,3%
11,1%
7,5%
35,0%
0,3%
4,0%
5,0%
6,3%
3,8%
20,0%
4,3%

9. 88
Soccer clubs revenue ranking
Source: Deloitte Football Money League (2015); UEFA (2012)
550
518
488
485
474
414
388
359
306
279
262
250
216
214
170
165
164
162
155
144
Real Madrid
Manchester United
Bayern Munich
FC Barcelona
Paris Saint-Germain
Manchester City
Chelsea
Arsenal
Liverpool
Juventus
Borussia Dortmund
AC Milan
Tottenham Hotspur
Schalke 04
Atlético de Madrid
Napoli
Internazionale
Galatasaray
Newcastle United
Everton
Revenue (13/14)
EUR mill.
First
56%
Second
21%
Third
8%
Other
15%
Revenue matters. Securing a significant amount
of recurring revenue is very likely the most
important factor for succeeding in the pitch
Finishing position of highest-
spending club in players wages
(UEFA domestic leagues)

10. 99
Some research shows that league position is strongly
correlated (R2=89%) with wage expenditure
Source: Soccernomics
BACK-UP
…but same research tells us that correlation with transfer spending is low (R2=16%)
Are wealthier clubs profiting
from the non-existence of
superior options for over-
performing players?

11. 1010
Sources of revenues
Top 20 teams in 2013/14 season
Source: Deloitte Football Money League; own analysis
Commercial is king:
larger and growing faster
Matchday
19,8%
Broadcast
39,1%
Commercial
41,1%
5yr-CAGR: 7,9%
5yr-CAGR: 14,7%
5yr-CAGR: 3,6%

12. 1111
Revenue breakdown and key drivers
Source: Various
Revenue
Matchday
Broadcast
Commercial
Domestic
International
(ChampionsLeague,
Europa League)
Drivers
• Stadium ownership
• Stadium size
• Income per capita
• VIP facilities
• Dynamic pricing (when possible)
Actionableby the club
Drivers
•Lobbying & bargaining to the league
•Team performance
•League salesforce skills
Drivers
•Team performance
•League salesforce skills
Drivers
• Historical Team Performance
• Brand positioning
• Fan base
• Big Ticket contracts bargaining
• Long-tail contracts salesforce
• Loyalty card
• Summer tours

13. 1212
Matchday revenue drivers
BACK-UP
15%
25%
40%
Standard
VIP (2015)
Top VIP
(2015)
New
generation
99.786
85.000
84.412
81.044
80.667
80.093
80.018
80.000
78.838
78.360
76.092
75.731
75.000
60.338
60.234
54.907
47.805
45.276
41.798
Camp Nou (FC Barcelona)
Stade 5 Juillet 1962 (MC Alger)
Azadi Stadium (EsteghlalFC, PersepolisFC)
Santiago Bernabéu (Real Madrid)
Signal Iduna Park (Borussia Dortmund)
Monumental"U" (Universitariode…
San Siro (AC Milan, Internazionale)
Stade des Martyrs (Vita Club)
Maracaná (CR Flamengo, Fluminense FC,…
LuzhnikiStadium
Atatürk (İstanbulBüyükşehir Belediyespor)
Old Trafford (ManchesterUnited)
AllianzArena (Bayern Munich, TSV 1860…
…
EmiratesStadium (Arsenal)
Stadio San Paolo (Napoli)
VicenteCalderón (Atléticode Madrid)
City of Manchester (ManchesterCity)
Anfield(Liverpool)
Stamford Bridge (Chelsea)
Capacity
Seats
Source: Wikipedia; Deloitte Football Money League; own analysis
AnnualMatchday revenue per seat
EUR/seat/yr (13/14)
1.171€
1.404€
695€
311€
1.707€
1.173€
1.985€
347€
592€
1.188€
1.347€
2.031€
235€
VIP Matchday revenue
% of total Matchday revenues
No Ownership
Affluent fans
VIP capacity

14. 1313
Broadcast revenue distribution
BACK-UP
La Liga
Source: Roberto Bayón; UEFA; other
Premier League Champions League
140
140
48
42
32
32
32
30
28
25
25
25
22
22
22
18
18
18
18
18
Real Madrid
FC Barcelona
Valencia
Atlético de…
Sevilla FC
Athletic Bilbao
Villarreal
Real Betis
RCD Español
Real Sociedad
Málaga
Getafe
CA Osasuna
RC Celta de…
Levante
Granada CF
Elche CF
Real…
Rayo…
UD Almería
•Negotiated deal. Static over the
contract’s term
•Unequal distribution (Gini: 0,365)
•Short term win, long term loss?
•Dynamic. Moderately depends on
team’s performance
•Equal distribution (Gini: 0,083)
•Ensures regular income to small teams
•Dynamic and aggressively dependant
on team’s performance
•Unequal distribution (Gini: 0,274)
•Performance bonus. Invest it wisely
EUR Mill.; 2013/14 season
117
116
113
111
108
107
102
93
92
91
89
88
88
87
86
80
79
77
76
74
Liverpool
ManCity
Chelsea
Arsenal
Tottenham
ManUnited
Everton
Newcastle
Southampton
Stoke
Swansea
West Ham
Crystal Palace
Aston Villa
Sunderland
Hull
West…
Norwich
Fulham
Cardiff
Total: 755 Total: 1.875 Total: 905
57
54
50
45
45
43
43
42
39
38
35
35
32
27
27
26
24
22
21
21
19
18
17
15
15
15
14
14
13
13
12
11
Real Madrid
PSG
Atlético Madrid
ManUnited
Bayern Munich
Chelsea
Juventus
FC Barcelona
Napoli
AC Milan
ManCity
Borussia
O. Marseille
Olimpiakos
Arsenal
B. Leverkusen
Shalke04
Kovenhaun
Ajax
Galatasaray
FC Zenit
Celtic
Real Sociedad
Benfica
CSKA Moskva
Steaua
Porto
S. Donetsk
Basel
Wien
Anderlecht
Viktoria Plzen
7,8x 1,6x 5,2x

15. 1414
Soccer big-ticket sponsorships
Shirt
Source: Forbes; The Economist; other
Note: Stadium ranking is not exhaustive
BACK-UP
80
45
40
39
31
Manchester United
(Chevrolet)
FC Barcelona
(Qatar Airways)
Bayern Munich
(Deutsche Telekom)
Real Madrid
(Fly Emirates)
Liverpool
(Standard Chartered)
Kit
41
39
38
38
37 88
Real Madrid
(Adidas)
Liverpool
(Warrior)
FC Barcelona
(Nike)
Bayern Munich
(Adidas)
Manchester United
(Nike)
Signed
Adidas for
USD 88
mill. for 13
seasons
beginning
15/16
•Manchester United -and other English teams- are pushing hard by signing very profitable big-ticket contracts. The reason behind
why they sell at higher price might be that the English Premier League has more TV eyeballs.
•We may infer that RM, FCB and BM must be very good at the rest of the Comercial revenue drivers: long-tail contracts, loyalty
cards, summer tournaments, etc. or that part of the revenues of the players are invoiced through the club.
•Stadium’s naming rights deals are a great potential source of new revenues in the future. However clubs are reluctant to hear
offers that are not large and long enough (Real Option framework).
Yokohama just
signed with
Chelsea for USD
61 mill.
beginning
15/16
Stadium
8,8
5,5
Emirates
(Arsenal)
Etihad
(ManCity)
EPIC
(Real Madrid)
Allianz
(Bayern Munich)
Veltins
(Shalke 04)
USD mill./year
Real Madrid
signed pre-
deal with IPIC
(terms not
disclosed)
Joint deal
with Shirt
?
?
?

16. 1515
Stadium Naming Rights in the USA as of 2013
Source: New York Times
BACK-UP
•75% of US clubs have sold stadium naming rights.
•Business much more developed than in Europe. Perhaps because sponsors have developed a better ROI framework.
•Best deals in recent years.
•European Soccer teams can and should be able to reach similar deals for their global audience.
Interactive chart (NYT)

17. 1616
Top Soccer clubs revenue breakdown
2013/14; EUR mill.
0 €
100 €
200 €
300 €
400 €
500 €
600 €
Commercial
Broadcast
Matchday
Source: Deloitte Football Money League, 11 Goals & Associates
Arsenal stadium (Emirates) is
considered as the most VIP facility,
with high Matchday revenue
~50% of home broadcast
revenues in Spain go to Real
Madrid and FC Barcelona
Being UEFA CL finalist made
Atlético to increase Broadcast
revenue by 86% in 1 year
PL’s large broadcast
contract, and its flat
distribution, secure
smaller teams with
enough income
RM’s and ManU’s
international focus
and strong
salesforce pays-off
Milan teams do not
own the stadium
PSG huge
commercial inflow
since Qatar
Investments Office
took over
Income per capita drives Matchday
revenue. Chelsea Vs Napoli
Bayern Munich big-ticket
sponsors are strong, and
shareholders of the club…

18. 1717
Cost drivers
Source: own analysis based on Annual Statements (2013/14); UEFA (2012)
ILLUSTRATIVE
EXAMPLES
Ratios to revenue
44% 48%
74% 69% 69% 69% 61%
51%
65%
17% 12%
Real
Madrid
FC
Barcelona
Average
Turkey
Average
Italy
Average
England
Average
Russia
Average
Spain
Average
Germany
Average
UEFA
Other
Amortization
Wages
•Team wages account for the most part of an average club costs
•There are significant differences in cost management among clubs (e.g. wage steps)
•57% of UEFA member clubs are loss-making
•Cost is the main driver of a Club’s profitability. Most Clubs are loss-making because
they are not enough diligent on the cost base
•UEFA is concern about these issues and is implementing “Financial Fair Game” policies
0%-8%-11% 2% -8%
Net profit to revenue ratio
EBITDA:
164 M.€
EBITDA:
134 M.€
-9%-22%

19. 1818
Source: Transfer Markt; own analysis
Note: Some transfers data are estimations
Player transfers of selected clubs
-200
-100
0
100
200
300
Profile 1: Super-Investors
Ronaldo;
Kaká;
Alonso;
Benzema
Departures income (GBP mill.)
Arrivals expenditure (GBP mill.)
Net income (GBP mill.)
Real Madrid CF
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14Season
473
998
-525
-200
-100
0
100
200
300
FC Barcelona
281
640
-359
Total 05/06 to 13/14
Ramos;
Robinho
Diarra;
Gago
Robben;
Pepe;
Sneijder
Huntelar
DiMAría;
Özil;
Khedira
Coentrão
Modric
Bale;
Isco James;
Kroos
Suárez
14/15
Henry;
Milito
Alves
Ronaldinho Ibrahimovic
Villa;
Masch.
Fábregas;
Sánchez
Neymar

20. 1919
Source: Transfer Markt; own analysis
Note: Some transfers data are estimations
-50
0
50
100
150
Profile 2: Net investors profiting from opportunistic sales
Departures income (GBP mill.)
Arrivals expenditure (GBP mill.)
Net income (GBP mill.)
Atlético Madrid
Season
336
426
-90
-50
0
50
100
150
Valencia CF
280 291
-11
Total 05/06 to 13/1405/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
Agüero
Forlán;
Simão
Torres
Falcao
Costa
Villa
Joaquín
Albiol
Mata
Soldado
Mathieu
Player transfers of selected clubs

21. 2020
Source: Transfer Markt; own analysis
Note: Some transfers data are estimations
-20
-10
0
10
20
30
40
Profile 3: Capital generators (concentrated in few players)
Departures income (GBP mill.)
Arrivals expenditure (GBP mill.)
Net income (GBP mill.)
Real Sociedad
Season
77
46
31
-20
-10
0
10
20
30
40
Athletic Bilbao
84
49
35
Total 05/06 to 13/1405/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
Griezmann;
Bravo
Illarramendi
Del Horno
Aduritz
Martínez Herrera
Player transfers of selected clubs

22. 2121
Soccer business models
• Large, well-established teams with a long track record on
the pitch and a large fanbase all over the world.
• Revenues, large and stable, finance the team.
• Key to profitability is being able to restrain the payroll cost
of the players.
• Usually have successful junior academies, but it is difficult
for a player to walk all the steps onto the first team.
Description
• Real Madrid
• Manchester United
• Bayern Munich
• FC Barcelona
• Manchester City
• Paris Saint-Germain
• Chelsea
Examples
• Mid-sized teams with strong junior academies or a key
long-term investor, working to build a Commercial stream
and an international brand.
• Transfer fees come not only from the junior academy, but
from trading players who become stars in 2-3 years.
• From time to time succeed in Europe and get significant
revenues. Money buys time to build-up Commercial.
• Revenues are volatile and cash must be watched.
• Atlético de Madrid
• Shalke 04
• Valencia CF
• Fiorentina
• Ajax
• Monaco
• Small local teams with little chances to build-up a
Comercial revenue stream.
• Best source of revenue are transfer fees from players
coming from their junior school.
• Teams that do not succeed in developing talent are usually
money-losing clubs.
• Real Sociedad
• Villareal CF
• Elche CF
• Stade Rennais
• Atalanta B.C.
• FC Sochaux-Montbéliard
• Many Latam clubs
Factory of
players
“Lucky striker”
(prizes, trades, or
key investor)
Commercial
funds team
(wages & capex)
• Very small and small clubs that live almost exclusively on
tickets. Adapt budget to revenues (Cash In=Cash Out).
• Usually no formal business plan
Survival mode
Top ~1%
Next ~5%
Next ~20%
Source: 11 Goals & Associates; UEFA (2012)
Most clubs

23. Organizational development of soccer clubs
22
Sport Stadium Commercial
• Late 19th and early 20th • Late 1940s • 1990s
Years
• English teams • Real Madrid • Manchester United
Pioneer(s)
• Spain’s La Liga1 • Arsenal • Real Madrid
Current leader(s)
•Every time a soccer club adds a new organizational structure there is some degree of
conflict, specially with the previously dominant one.
•Leadership (new organization) usually comes from the club’s chairperson (examples:
Santiago Bernabéu with Real Madrid stadium, Florentino Pérez with commercial department
at Real Madrid, etc.).
•Broadcast is irrelevant in terms of organization. It’s a contract with few people managing it.
1 IFFHS

24. Typical organizational chart of a large Soccer Club
23
Chairperson
(some executive role)
CEO
BU
Sport
BU
Operations
(Stadium)
BU
Commercial
(incl. Broadcasting)
Board of directors
(some executive role)
ILLUSTRATIVE
Staff departments
(Comm, Legal, HR, IT, PR,
Finance, etc.)
In real life, line departments work so
independently that they rather be
considered Business Units (BU),
specially in larger clubs.
‐ Transversal communication is small
‐ Some activities are replicated across
BUs (e.g. Marketing)
‐ Difficult to implement horizontal
projects.
‐ Metrics and KPIs pretty much based on
the BU space
• Some clubs formally assign the chairperson, or even the
board members, some executive role (e.g. FC Barcelona)
• Anyhow, with rare exceptions, the Chairperson/Board
always plays some executive role, like hiring/firing coaches
BU output
BU P&L?

25. Agenda
 Soccer as a business
 Is the current model exhausted?
 Key Qs for Digital Transformation

26. Is the soccer industry about to be disrupted?
25
Today
Source: https://www.techdirt.com/articles/20120916/14454920395/newspaper-ad-revenue-fell-off-quite-cliff-now-par-with-1950-revenue.shtml
Soft change? Hard change like newspapers?

27. 2626
Is the current model mature enough? Exhausted?
YoY growth rate by revenue source; World’s top soccer 20 teams of each year
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Matchday Broadcast Commercial Total
•Revenues growth rates are not only not maturing, but accelerating
•Growth is specially driven by Commercial
•Matchday is maturing
•The marginally decreasing rates until 08/09 are explained by the crisis
23,8%
14,2%
11,6%
3,6%
Source: Deloitte Football Money League; own analysis

28. 2727
YoY growth rate by revenue source; World’s top 4 teams (RM, MU, BM and FCB)
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Matchday Broadcast Commercial Total
•Taking only the 4 most “advanced” teams
we see no pattern of exhaustion
•Total revenues grow strong again after the
crisis, driven specially by Commercial
•Matchday is maturing
-0,7%
9,0%
9,9%
16,4%
Source: Deloitte Football Money League; own analysis
Is the current model mature enough? Exhausted?

29. 2828
EUR -> GBP exchange rate
Source: Google Finance
GPB depreciated significantly against EUR in 2007-9
BACK-UP
•Currency distortion around 2008 for
British teams, especially in regard to
local income such as Matchday or
domestic Broadcast rights

30. 2929
Soccer in McKinsey’s Digital Transformation curve
Source: McKinsey&Co (framework); 11 Goals & Associates
•Soccer’s industry is at a point where digital
innovations could be done, but not close to
the tipping point, thanks to commercial
strength and growth
•However a club could trigger and accelerate
an industry digital transformation, specially if
new revenues are generated (impact on sport
performance)
•Digital newcomers are unlike to appear due to
the sports’ nature and historical leverage, but
some incumbents are very committed to
their digital operations (e.g. ManCity)
CONCEPTUAL

31. 3030
Wrapping-up
¶Although Commercial revenue seems to have a bright future
ahead, and the industry is resilient to non-digitalization, a
digital first-mover could enjoy extra revenues to continue
investing on the team and ensuring its success.
¶A successful first-mover could trigger and accelerate the digital
transformation of the industry.
¶Is it possible to significantly create value from digital without a
strong Comercial Business Model? What’s the difference
between using digital for “business as usual” and creating a
digitally-based business model?

32. Agenda
 Soccer as a Business
 Is the current model exhausted?
 Key Qs for Digital Transformation

33. 3232
#1 What kind of Digital Transformation?
• Same Business Model, different processes
• Incremental innovation
• Seeking efficiency, but not always
• Low risk, medium return
• Suboptimal strategy, but creates value
• Ex.: Most large commercial banks such as BBVA or Grupo
Santander
Performance DT
Strategic DT
Soccer clubs have much more to win from Strategic DT ,
but only if conditions for a good execution are set, specially
Chairperson/Board leadership and commitment
• New Business Model
• Disruptive innovation, but it does not have to affect the core
business if execution plan is well shaped
• Seeking revenue growth
• High risk, high return
• Optimal strategy, but not easy to execute
• Ex.: Netflix, Coursera (~Stanford), edX (MIT, Harvard)

34. 3333
Strategic DT on the innovation curve(s)
PerformanceDT
#1BACK-UP
StrategicDT
• Strategic DT requires to invest
time and cash in developing a
Business model before it becomes
a better alternative.
• The Chairman and the CDO (Chief
Digital Officer) should negotiate
and agree what investment and
time seems reasonable before
beginning to see business returns.
• E.g.: It took Dick Fosbury 5 years
to refine his high jump style until it
showed better results that the
incumbent style.
Same BM
BM 1
BM 2

35. 3434
#2 What kind of Digital Business Model?
Factory of
players
“Lucky striker”
(prizes, trades, or
key investor)
Commercial
funds team
(wages & capex)
Survival mode
Digitally-enabled
Business Model?
D+Factory of
players
D+“Lucky striker”
(prizes, trades, or
key investor)
D+Commercial
funds team
(wages & capex)
D+Survival mode
The question
being, how the
new BM would
look like?
Strategic DT
Performance DT

36. 3535
Pioneering a new business model
• Several top teams working on digital
Business Models.
• Creating a fan-centric community to
increase fan engagement, ticket and
commercial expenditure, and TV audience,
seems to be the most interesting model.
• Digital enables fan-disintermediation,
opening a wide range of business
opportunities directly captured and
managed by the clubs.
• Runs away from newcomers to “Commercial
funds team” BM, and leverages on existing
fanbase.
#2
Factory of
players
“Lucky striker”
(prizes, trades, or
key investor)
Commercial
funds team’s
(wages & capex)
Survival mode
Digitally-enabled
Business Model?

37. 3636
#3 Mission of Digital in a Soccer Club
Mission
To create a technologically-enabled fan-community with superior customer
experience in order to close any distance (physical, informational, cultural,
emotional, commercial, etc.) between the Club and the fan, whoever he/she is.
Open new sources of revenues. Improve current revenues directly (e.g:
eCommerce) or indirectly (e.g: increase demand).
ILLUSTRATIVE
EXAMPLE
Awareness Familiarity Consideration Purchase Loyalty
Active Evaluation
Post-PurchaseExperience
Initial
Consideration Purchase
Trigg
er
Brand touchpoints
Brand touchpoints
Purchasing funnel Customer journey (McKinsey)

38. 3737
Strategic shift #3
Content and
Brand provider
Leading
relationship
with fans
(customers)
E.g.: Nespresso, Apple, Ferrari USA, Tesla Motors, Zara

39. “Marketing is dead”
Harvard Business Review – 9 Aug 2012
Source: http://blogs.hbr.org/cs/2012/08/marketing_is_dead.html
Traditional marketing — including advertising, public relations, branding and
corporate communications — is dead. Many people in traditional marketing roles
and organizations may not realize they're operating within a dead paradigm. But
they are. The evidence is clear.
Buyers are checking out product and service information in their own way, often
through the Internet, and often from sources outside the firm such as word-of-
mouth or customer reviews.
Actually, we already know in great detail what the new model of marketing will look
like. It's already in place in a number of organizations. Here are its critical pieces:
 Restore community marketing
 Find your customer influencers
 Help them build social capital
 Get your customer advocates involved in the solution you provide.
Most read article in Aug 2012
From Brand to Fan
BACK-UP
#3

40. Soccer is social
0FFLINE
(CIRCULATION)
Marca: 177.866 /day
Diario As: 155.443/day
Real Madrid: ~0
WEB 1.0
(DAILY REACH %)
WEB 2.0
(FANS/FOLLOWERS)
Facebook/Twitter (mill.)
Marca: 0,98/1,49
Diario As: 0,34/0,67
Real Madrid: 82,8/15,0
MD: 67.704 /day
Sport: 61.981/day
FC Barcelona: ~0
Facebook/Twitter (mill.)
MD: 0,28/0,64
Sport: 0,29/0,89
FC Barcelona: 83,4/14,3
Web 2.0 allow football clubs –better than ever before- to be in touch directly with their fanbase
39
Sources: OJD (2014), Alexa.com, Facebook Inc. (5-3-15), Twitter Inc. (5-3-15)
BACK-UP #3

41. 4040
Soccer should be mobile too, real mobile
Source: The Economist; Ofcom
BACK-UP #3

42. 4141
Frameworks to design a great community strategy
Football fans
Team Supporters
General public
“Pools” “Web” “Hub”
Web 2.0 and Community Marketing (SlideShare)
Fan segmentation Type of Affiliation Gamification
#3
Role in Ecosystem
Copy
Ignore
Minimum presence
Combat
Complement

43. CommercialSport
42
Stadium Digital
• N/AType of Marketing • Experiential MKT • Brand Management • Relational MKT
• TeamCore Asset • Stadium • Brand • Tech
• Industry’s, very strongCulture • Club’s, strong • Sales-oriented • Tech savvy
• QualitativeSkills • Mixed • Qualitative
• Negotiation
• Deal-making
• Quantitative
• Team-working
• Product-building
• #Championships
• Tournaments’
classification
KPIs • Ticket sales • License sales • # fans?
• Fan engagement?
• Digital revenue?
• Team
• Flat
Organizational
pattern
• Functional
• Hierarchical
• Product/Geography
• Hierarchical
• Project-based
• Flat
• Short-TermTime horizon • Short/Long-Term • Short-Term • Medium-Term
#4 Where to set Digital in the organizational chart?
• Live & TV fansClient • Local fans • Client brands • Global fans
Often, Digital Transformation is all about Digitanization, or how to shape the organization to tackle the
digital challenge. The different nature of the Digital business leads to think of the creation of a Digital BU.
Output

44. 4343
Organizational implementation of DT
#4
Chairperson
CEO
BU
Sport
BU
Operations
BU
Commercial
Board
Staff dep.
Digital
Short-Term
•First, a small Digital unit is created to
begin understanding the club dynamics,
creating links to other departments,
and proposing a Digital Strategy.
•Unit depends on the Chairperson, to
protect it from “business as usual”,
specially when CEO comes from a
strong BU.
•Priorities: Strategy and Organizational
changes
•Once the club buys the Digital Strategy,
the units grows until create a BU and
have a seat in the steering committee.
•Still depending from the Chairperson
who provides motivation and
leadership, and who helps coordinating
with other BUs while readapting
internally the BM.
•Priorities: Executing strategy,
implementing changes.
•When new BM is implemented, BU
processes are well established, and an
attribution model is in place (see
forthcoming chart), the BU changes
dependency, to depend from the CEO.
•Under the new model, CEO sets goals
and demands performance to the unit.
•Priorities: Revenues, direct or indirect
according to what the attribution model
measures.
Chairperson
CEO
Medium-Term
Chairperson
CEO
BU
Commercial
Long-Term
BU
Digital
… …
A) Strategic DT; large club
ILLUSTRATIVE
EXAMPLE
BU
Commercial
BU
Digital

45. 4444
•Alternatively we might create a Digital Projects Office and focus on each BU’s performance.
•Advantages:
‐ Less “turf battles” with BUs over what is digital or not.
‐ BUs do not have to worry about building up digital competences.
‐ Digital gets some “quick wins” that allow it to consolidate within the organization and win the respect of BUs.
‐ Chairperson does not have to play an active role.
•Disadvantages:
‐ The Digital Projects Office is not a true leadership office. Projects optimize each BU goals, but not the global organization.
‐ Continuity between the Digital Projects Office and the BU Digital is hard due to the different nature of the structures and its
people. It’s harder to change we something is grown-up.
Chairperson
CEO
BU
Commercial
Short-Term
Digital Projects
Office
#4
B) Performance DT; large/mid-sized club
Organizational implementation of DT ILLUSTRATIVE
EXAMPLE
Chairperson
CEO
BU
Sport
BU
Operations
BU
Commercial
Board
Staff dep.
Long-Term (if shifts to Strategic DT)
BU
Digital
BU
Sport
BU
Operations
Board
Staff dep.

46. 4545
Chairperson
CEO
BU
Sport
BU Commercial +
Operations+ Digital
Board
Staff dep.
Short-Term
•For small and medium-sized clubs where stadium and commercial is managed within the same department, there is the
opportunity to integrate all those activities with digital into a team with goals aligned and high aspirations.
•Small teams do not need to “overcomplicate” the fit of Digital into the organization.
•The fitness of this model depends not so much in the size of the club, but on the dynamics of the organization, although there is
some correlation.
Chairperson
CEO
BU
Sport
BU
Operations
BU
Commercial
Board
Staff dep.
Long-Term (if significant organizational growth)
BU
Digital
#4
C) Strategic + Performance DT; mid-sized/small club
Organizational implementation of DT ILLUSTRATIVE
EXAMPLE
“It’s good to
be young”

47. 4646
#5 Measuring value creation dependencies between BUs
BU Sport
Cost center
Championships
BU Stadium
Profit/Inv. center
BU Commercial
Revenue/Profit center
BU Digital
Cost center?
Revenue center?
Fan base and
engagement
Revenue
Attribution model
Titles -> Revenue
Attribution model
Fans -> Revenue
Without an attribution
model someone could
even argue BU sport is
not a revenue
generating activity…
When externalities among BUs exist,
attribution models (Bayesian, Big Data,
etc.) should serve to understand
interrelations and to assign transfer
costs and revenues among BUs (BU’s
P&L; cost accounting).
Attribution model
Titles ->Fans
Attributionmodel
TV ->Commercial

48. 4747
#6 What’s the right digital culture?
ILLUSTRATIVE
¶ The actual culture to implement depends on the strategic goals and specially on
the organizational chart we are implementing.
¶ In general each Club BU has its own culture. At least, BU Sport’s is different from
Stadium's or Commercial’s. Culture is “fragmented”.
¶ So we would suggest to engine a specific culture for BU Digital, based on the
following premises:
‐Flat, decentralized power.
‐Expert authority (instead of managerial authority)
‐Promote some “cultural tension” (not conflict) with the rest of the organization.
‐Openness, informality, individual initiative, express real feelings in a safe
environment, tolerance to failure, etc.
‐Passion for testing and analytical research.
‐Constant search of fresh air: interaction with universities, rotation of
professionals, workshops, out-of-office training, etc.
¶ But please, do not think this a high-tech start-up.

49. #7 What to offer Free, Cheap, or Premium
FREEMIUM = FREE + PREMIUM
“Attract audience with free versions of the product, introduce them to paying with
affordable versions of the product, and monetize them with premium versions of the
product”
FREE
CHEAP
(Affordable)
PREMIUM
ILUSTRATIVE
Online business models
are usually Freemium.
It’s an issue to manage
in an industry used to
charge for everything.

50. Agenda
 Soccer as a business
 Is the current model exhausted?
 Key Qs for Digital Transformation

51. •Strategic consulting services in technology and digital marketing for top executives
•We advise companies on digital transformation
Francisco Hernández
•MBA London Business School.
•IEP University of Chicago.
•11 years of digital experience.
•Ex Director Online Strategy Real
Madrid C.F.
•Other companies: ABN Amro,
Abengoa, McKinsey&Company.
•Professor at ESCP Europe.
•Lecturer in Europe, Latam and
Asia
•PWC: 10 e-Business talents in
Spain.
Sonia Fernández
•MBA Stanford.
•15 years of digital experience.
•Ex CEO Vindico Europe.
•Ex CEO Match.com Spain.
•Ex CEO MercadoLibre Spain.
•Other companies: Fon, Grupo
Prisa, 3i, Lehman Brothers.
•Professor at OBS-UB, EOI and MIB
•Lecturer at universities and in-
company training
•Author of two books on
networking and social networks
published in 2004 and 2001 franciscohm
francisco.hernandez@11goals.com | (+34) 605 58 66 55
soniafernandez
sonia.fernandez@11goals.com | (+34) 619 721 781

52. Thanks very much for your
attention and interaction
Francisco Hernández
francisco_hernandez@11goals.com
(+34) 605 58 66 55