FC Barcelona and Real Madrid have become two of the most lucrative sports franchises in the world due to reconstructing their business models to focus on new media and globalization. They have capitalized on the growth of internet users and social media platforms to expand their fan bases worldwide. Real Madrid specifically underwent a change starting in 2000 led by President Florentino Perez to focus on acquiring star players through huge transfer fees and sharing marketing revenues to become the most valuable sports brand, generating over €276 million by 2005. Both clubs have globalized themselves while maintaining local roots to achieve unprecedented commercial success.

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Armond Morris
Dr. Steve Spence
CMS 4500
8 December 2014
FC Barcelona and Real Madrid are two of the five most lucrative sports franchises in the
world. Over recent years these two clubs have continually grown in both their global awareness
and profits. This has not always been the case for these football clubs, as they have been in
existence since 1899 and 1902 respectively. These clubs have reached this amazing stature by
reconstructing their business models and growing along with world technology and the amount
of people with access to the internet. Two examples of the global relevance of sports are the
Olympic movement and world football (Kase 212). The global relevance the sport soccer has is
also essential to the globalization of these two brands and without this market these clubs would
not be able to generate the amount of revenue that they do. I will argue that the change in
business model along with the focus on and advancement of new media and the internet have
escalated these Spanish football clubs. The forms of new media I will use in support of the
argument include internet, cell phones, social networking and media, television and partnership
deals, as well as video games. These clubs in essence have globalized themselves and sought
recognition and goals outside of just the sports arenas. They achieve this through a multitude of
ways including deals with other major international corporations and through fan and brand
loyalty. Comparisons and contrast are prominent in regards to the two clubs. They are both in
Spain and both generate enormous amounts of revenue, but they are two separate entities and
accomplish their goals in different ways.

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Globalization is a key term for the processes that these clubs have executed over the
years. While doing this they have also kept the identity of their key supporters and local
perspective while simultaneously expanding around the globe reaching new people, which also
can be described as glocalization in some respects. New media and the advancements these
mediums have produced over recent time have made it easier for the clubs to reach new fans and
old fans alike that may have not felt connected or apart of the franchises at an earlier time. New
advancements from a technical perspective in combination with the worlds increasing population
of internet users can be paralleled with new revenue generating and increased value and worth.
These sports franchises have grown to be much more and now resemble in financial prowess and
business structure, the most successful of international business entities, expanding from just the
world of sports.
Real Madrid versus FC Barcelona in 2012 is very different, in every respect, from when
they first met in 1902. Politics, players, fans and the media have transformed it from a
quintessentially parochial affair into the globalized mega spectacle it has gradually become
(O’Brien 318). The internet did not exist at the time these two franchised came about including
its social mediums like Twitter, Facebook, or Instagram. However, in 2014 the internet and its
most popular social mediums are integral to the success and financial progress of the clubs.
Twitter is not the end-all-be-all of a brands success but it can be very telling. Real Madrid has
over 13.8 million followers while FC Barcelona has about 13.5 million followers on their Twitter
accounts (twitter.com). This strengthens both of the clubs global networks as anyone can access
the teams around the globe, not only in Spain, and keeps an open and constant line of
communication with fans. These are the same fans that integrate these clubs into their daily lives,
spend the money on the teams’ merchandise, and support products from the clubs best players

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and sponsors. Soccer is by far the world’s most popular sport and the general market reflects
that, especially in regards to the revenue that these franchises generate.
Soccer, the world’s most popular sport, generates about $170 billion globally per year
and soccer directly linked to Spain exceeds $9.6 billion dollars per year (Callejo 51). These
numbers have steadily increased over the last decade plus. This can be traced by both of the
clubs climbing the Forbes list for most lucrative sports franchises in the world. In this same time
frame, the number of internet users around the globe and in Spain has grown by the millions. The
globalizations of soccer along with globalization of internet access have been pillars of the
financial momentum of these organizations and realistically couldn’t be possible without this
global growth. In the year 2005, Real Madrid ranked in the top five of most lucrative sports
franchises in the world while FC Barcelona didn’t chart on the list at all. In 2014, less than a
decade’s time, both Real Madrid and FC Barcelona are two of the top franchises, respectively
ranking in at number one and two on the list (forbes.com). This reinforces the multitude of
changes that have shifted both these teams into globally recognized brands.
Real Madrid is a sports franchise that is over 100 years old. Over this period they have
shifted directions and operating plans to take a more global approach that matches the trajectory
of both the sport itself and the potential profits. Florentino Perez became the President of Real
Madrid in 2000 and under him the franchise underwent a change in business approach and
started generating more revenue than it ever did before. Real Madrid went from generating
around 138 million euro during the 2000-2001 season to generating around 276 million euro
during the 2004-2005 season (Callejo 53). Those are gains of over 130 million euro with steady
gains over each season and the trajectory to continue positive growth. In the way it was
conceived, the new business model was a huge financial success. “Real Madrid managed to win

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6 championships in the first 4 years of that philosophy and also became one of the most
lucrative, financially stable, and marketable brands in all of sports” (Gil 205).
Under Perez the club adopted a model that focused strictly on acquiring the best players;
having these players perform at the highest level, have this translate into wins, to ultimately
make more money. Under Perez, the Spanish soccer club signed some of the biggest and best
soccer stars including Gareth Bale, David Beckham, and Cristiano Ronaldo. This adds another
dynamic to the foundational change the franchise went under Perez and can be described as
“Real Madrid has become less certain of its ability to represent Spain and Spanishness” (O’Brien
318). This reflects upon the club focusing less on the grass root origin or birth place of its players
and if they hailed from Spain. Bale was acquired for a record 100 million euro in 2013, Ronaldo
for 94.4 million euro in 2009, and Beckham for about 36 million euro in 2003. All three of these
players have no previous ties to Spain before them being acquired by transfer. Acquiring these
players has allowed, in part, for Real Madrid to secure on-the-field success, by spending money.
The dollar amounts of these transfers are extremely high and all clubs are not capable of making
them. This puts wealthy clubs such as Real Madrid at an advantage, but not without risk. These
are large sums of money that are not even a part of the contract between the player and the club;
this is solely for the players rights. To help combat the financial risk, Perez required players
under Real Madrid to give 50 percent of all their marketing dollars to the club while also
benefiting from receiving guaranteed backing from partners the club already has. This helps the
club recoup much of the margin lost from shelling out huge transfer fees in acquiring players.
This formula also benefits the team in a way that it expands the fan base. Fans of the
acquired players generally follow the players and in turn embrace the team they play for. Due to
the globalization process and internet being more accessible, fans of players such as Ronaldo and

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Beckham are able to instantly and constantly connect with them by buying their jerseys and
apparel and supporting other products the players endorse. Due to the particulars of the player
contracts, the franchise benefits directly from all these endeavors. This business structure that
Real Madrid has embraced does not exist however, without its flaws. Since the 2000 season,
Real Madrid has won six championships. That is a high level of performance and success but
also reaffirms that regardless of how much money you spend or the players you acquire, winning
can’t be guaranteed. Intangible factors such as player and team chemistry, coaching ability,
player injuries, and player performance will always play a major role as well. Taking into
account that most all cooperation’s must spend money to generate new money Real Madrid must
make some concessions. To sign proven players with the skill sets they desire they must often
sell the rights to current players including young players who play in their farm system or junior
teams. This is a huge risk because young players are hard to judge on potential and can very well
end up being superstars at any point of their career. This creates a perpetuating cycle for Real
Madrid where they will face a high turnover rate of players and constant roster adjustments. As
long as the current model allows players to be bought for a set price, teams like Real will almost
always be competitive and put a spectacular team on field.
As stated before Real Madrid has transformed itself into a global brand over the last
decade plus. Around the time Perez became team president, 1999-2000, Real Madrid Television
was launched. As the television outlet stands now it is broadcasted by satellite around the world
in two languages, Spanish and English. The channel is indicative of the brands power by it being
totally centralized on Real Madrid but also all the sums that make the channel. Real Madrid is
invested in many levels of soccer and basketball also. Basketball is only behind soccer in terms
of world popularity and this gives Real Madrid fans the opportunity to indulge in both while

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supporting the same organization while also bolstering the fan base. The television channel is
also represented through the internet and helps keep the global web of Real Madrid and its fans
connected, allowing fans anywhere around the globe to interact in many facets. This excerpt
from Real Madrid Football Club: A New Model of Business Organization for Sports Clubs in
Spain explains the role of modern technologies influence on Real’s business model:
Using new technologies is an important way of exploiting the brand. Real Madrid
aims to design a model allowing it to relate to its supporters without any type of
barrier or limitation. For this purpose, it will use a multichannel strategy to exploit
its brand. The club is putting particular emphasis on the use of the new Internet-
based technologies, for which it aims to promote its Web page as a channel to
provide information and encourage the online sale of products. (The Real Madrid
Web page was the sector leader, both in terms of page views [250 million] and
number of unique visitors [18 million], during the 2003-2004 season. The gross
sales from the club’s online store reached $720,000 during the 2002-2003
season). On the other hand, transmitting content to cell phones is the other key
aspect with regard to the new technologies. To achieve this objective, Real
Madrid has signed an agreement with the telecom firm Telefónica, which
provides the technology, communications, know-how, and resources to package
content through various channels that can then be transmitted to the fans (Callejo
59).
With the rapid growth of cell phone users and internet access, this shift in approach could
not have came at a better time. Anyone with a cell phone that is a fan of Real Madrid can have a

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constant flow of information, in close to an immediate time frame, without going out of their
way. Embracing the now and focusing on new technology is the biggest reason Real Madrid is
capable of generating this amount of revenue and transforming the team into a globalized brand.
FC Barcelona is the second most lucrative sports franchise in the world, trailing only
Real Madrid. Having this in common, by this I mean not being privately owned and having
members apart of a board that not only own stake but vote on leadership positions and have input
on decisions. FC Barcelona is more centric on its Catalonian roots and involving people that live
near the team, in comparison to Real Madrid. As of 30 June 2008, FC Barcelona had 162,979
members, or socios, with 17% being foreigners (Hamil 476). This shows the large number of
members who are Catalonian and/or from Spain.
The struggles for Barcelona were much more apparent than those of Real Madrid. Under
the presidency of Joseph Nunez, the team struggled both on the field and off, especially in
comparison to Real Madrid. Besides not winning any league titles in his last few years and
profits diminishing, the democratic validity of the members board was also tarnished under his
term. The franchise didn’t begin to reverse this trend until the 2003 season, in which Joan
Laporta was elected. Just like Real Madrid in the early 2000’s, FC Barcelona, under new
leadership, began to totally change its approach to its business, its fan base, and its plan on
becoming a global brand. The team made sure to put emphasis back on true democratic
operation, open dialogue with all of the board members while restructuring the business model
putting emphasis on building the best team and winning on-the-field, to ultimately maximize
profits.
While getting the best team was the primary focus for FC Barcelona, the approach they
took was a little different in comparison to Real Madrid. Real Madrid had signed players such as

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David Beckham who chose to sign with them over Barcelona. The team also saw one of its
biggest stars at the time, Luis Figo, to leave the franchise and sign with Real Madrid. This
changed the approach that Barcelona took when building a team:
A survey has shown that in the emerging markets of China and Japan, there are at
least 21 million people who say that they identify more strongly with FC
Barcelona than any other club. The study also revealed that these fans identified
more strongly with the identity of the club than with any one particular player.
This is the key to the Barça brand and what makes it much stronger than if these
fans followed one player – like David Beckham at Madrid. What happens to all of
these supporters – female supporters – when that player leaves for another club?
He takes his fans with him (Hamil 487).
FC Barcelona put a focus on team building; they would sign few world class stars, many
international stars, and develop skilled players through their farm system. They believed this
would help combat some effects of high transfer fees and high turnover of the player roster. This
could provide the team with better chemistry between players and a focus on promoting the team
as a whole rather than promoting its biggest stars primarily. Going through their grass root
program of junior players, FC Barcelona helped mold Lionel Messi. Messi is Argentinean, but
him playing for Barcelona on the junior level puts him under the moniker of “home grown”
talent.
Video games are a multibillion dollar industry, taking in more money than the
film industry (Wolf, 2006). According to the Entertainment Software Association

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(2008), from 1996 to 2006 computer and video game sales in the United States
grew from $2.6 billion to $7.4 billion. SVGs ranked second in total number of
units sold in 2006, accounting for 17% of industry sales (Entertainment Software
Association, 2008) (Kwak 81).
Video games are huge mediums for sports fans around the world and a dynamic to team
support and competition that other mediums can’t duplicate. To be able to take control of your
favorite teams and favorite players and control them to your liking is an exhilarating experience.
This helps bolster the ways in which fans can interact with their favorite clubs and support them.
The marketing and promotion opportunities with games such as Fifa are substantial. They can
add mindshare, sense of pride, and global promotion for your club, based on the cover athlete
alone. Sports franchises such as Fifa get the most polarizing players eligible to grace the
videogame for promotional and credibility reasons. Over the last two editions of Fifa the three
cover athletes have come from either Real Madrid or FC Barcelona. In Fifa 14 the cover athletes
were Gareth Bale of Real Madrid and Lionel Messi of FC Barcelona. In Fifa 15 Lionel Messi
was the lone global cover athlete, with other players splitting the cover for special editions.
These are two of the most celebrated soccer players in the world from the two biggest sports
franchises in the world. Fifa 14 has sold more than 12 million copies worldwide and Fifa 15 sold
more than 5 million copies in only a single day in stores.
Just like its rival club Real Madrid, FC Barcelona is heavily dependent upon its global
appeal. To take advantage of this, technology must be looked at and embraced in such a way that
fans around the world feel like they are truly connected to the franchise. This puts an emphasis
on internet, cell phone, streaming and television. Like Real, FC Barcelona owns and runs its own
television channel. The television channel is profitable for the company and creates positive

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revenue (Hamil 487). The approach on television differs from that of Real on the premise of it
being subscription based and the games are often pay-per-view. In Japan, FC Barcelona is the
most popular franchise and their fan base in China is strong as well. This makes more sense of
the focus on internet focus and the franchise being technically savvy. Both of these countries
have huge media markets and allowing the fans to access team info and purchase merchandise at
any given time does a lot to strengthen the brand and generate revenue.
In conclusion, these two franchises sought to elevate themselves from sports clubs to
global brands through the process of globalization. The population of the game of soccer coupled
with the ever growing cell phone population and internet consumers has given these franchises
the ability to connect with more of their fans than previously possible. The change in business
models along with the focus on new media and the internet have propelled these Spanish
football clubs into much bigger brands. These forms of new media include internet, cell phones,
social networking and media, television and partnership deals, and video games. With both Real
Madrid and FC Barcelona on an upward trajectory, globalization being a continual process,
technology becoming more immediate to use by more people, it is hard to argue that these brands
have yet to realize their full potential. These are already the two biggest franchises in
professional sports and they will probably only continue on a path of growth and globalization.

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