Big data opportunities for the Digitally Transforming Football Industry Big Data in Sports conference Francisco Hernández-Marcos May 25 th , 2016 This document has been produced by 11 Goals & Associates. It is not complete unless supported by the underlying detailed analyses and oral presentation.
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Big data opportunities for the Digitally Transforming Football Industry
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Big data opportunities for the Digitally Transforming Football Industry Big Data in Sports conference
Francisco Hernández-Marcos May 25th, 2016
This document has been produced by 11 Goals & Associates. It is not complete unless supported by the underlying detailed analyses and oral presentation.
• Former Director of Online Strategy, depending directly from the Club’s chairman.
• Designed integrated Digital Strategy, both in terms of attracting traffic and monetising it.
• Designed and implemented Social Media model. Real Madrid climbed from #3 to #1 team worldwide, in a season where FC Barcelona won all possible titles, and Real Madrid experienced the largest decrease of fans of any football team (source: Sport Markt).
• Most active Facebook page worldwide in any category. A record that has not been broken by any sports team yet.
• First international team to open presence in Chinese Social Media.
• Several awards and recognitions, including that of the most valuable Facebook page in terms of economic value for the club.
• Football and Digital advise to football clubs in 4 countries.
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%
11 11 Source: SportYou
EUR mill. - Estimation Net (after tax) player’s wages (2015/16)
17
11
10
8
6
6
5
4,5
3,8
3
2,8
2,5
2,4
2,4
2
2
2
1,2
1,2
1,2
1,2
1
Cristiano
Bale
Ramos
Benzema
James
Kroos
Marcelo
Modric
Pepe
Casemiro
Arbeloa
Danilo
Kovacic
Varane
Carvajal
Isco
Keylor
Jesé
Nacho
K. Casilla
Chersyshey
L. Vazquez
21,2
10
10
7,5
6,5
6
6
5,8
5,5
4
4
3,5
3,5
3
3
2,5
2,5
2
2
1,5
1,5
1
1
1
Messi
Neymar
Suárez
Iniesta
Rakitic
Busquets
Alves
Piqué
Mascherano
Jordi Alba
Arda Turan
Claudio Bravo
Vermaelen
Ter Stegen
Mathieu
Adriano
Aleix Vidal
Rafinha
Barta
Sergi Roberto
Douglas
Masip
Munir
Sandro
Total: EUR 96,2 mill Average: EUR 4,4 mill Wage to Turnover ratio: 41% Net profit: EUR 42 mill.
Real Madrid CF FC Barcelona
Total: EUR 114,5 mill Average: EUR 4,8 mill Wage to Turnover ratio: 47% (73% with amortizations) Net profit: EUR 15 mill.
Football: The rules of the Business 1) Football has social value, and business value too 2) The better players the team has (measured by market wage), the better the team does on the
pitch 3) Revenue drives long-term team’s performance 4) Commercial the most important source of revenue: larger and growing faster 5) Matchday revenue drivers: Stadium ownership, VIP 6) Broadcast revenue drivers: domestic league value and team distribution, and success on
international tournaments 7) Commercial: Big-ticket contracts (dependant on TV audience) are key. Stadium naming rights will
bring significant growth soon 8) Main cost driver is team wages. It determines (un)profitability
Threat of media content piracy: Use Social Tech when it is strategic for you to be closer to your end-customers
Low
•The sports industry is about to be seriously threatened by Internet piracy. •Getting closer to the end-user would help clubs to gain insights and knowledge of the customer, and to react and change value propositions to fight piracy. •Also social technologies can create value-added, harder to be copied, services to bundle with the base product.
Live Sport Events
High Required Broadband
Non-Live
Live
Nature of content
News
Music Books Movies,
TV Series
21 21
Why Digital Transformation in Football?
Global revenue opportunities
Threat of piracy
Digital Transformation
Strategic problem
22 22
Strategic Digital Transformation in Soccer
More info: Strategic Digital Transformation in Soccer
Drivers •Accumulated Net Investment • Legal rate of amortization
+
+
Player valuation (sport+commercial)
26 26
Big Data opportunities for the Net Investment stream
Net Investment
Arrivals expenditure
Departures income
-
Drivers •Relative bargaining power with players/agents •Revenue Sharing Model • Flexible , performance driven, terms
Drivers •Relative bargaining power with players/agents •Alternative departure models (lease, free, etc)
Player valuation (sport+commercial)
Agenda
Football as a business (summary)
Digital Transformation in Football (summary)
Big Data opportunities in the Football industry
•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