Inter: Galaxy or Inter: Galaxy or Black Hole? Black Hole? Yang Sun Ming Gong Xueping Li
Jan 14, 2016
Inter: Galaxy or Inter: Galaxy or Black Hole?Black Hole?
Yang SunMing GongXueping Li
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In a TV talk show......
• Host: Suppose that one of your key defenders is injured, what you do?
• Adriano Galliani (AC Milan CEO): We’ll buy a veteran defender and utilize his experience.
• Luciano Moggi (Juventus GM): We’ll buy a high potential young player and train him to be the best.
• Massimo Moratti (Inter Milan Chair): We’ll buy another star forward…
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Inter Man Utd (benchmark)
€118,000,000 Annual Player Wage Cost
€115,000,000 Annual Player Wage Cost
€148,400,000 Turnover in 2003 Growth Rate varies around Ø
Negative Profit (there are other spends)
€251,400,000 Turnover in 2003 12% Compound Annual Growth Rate
Profit ≈ 20% * revenue
Bought 106 first-team players (Including 20 superstars) in 10 years (Spent €562,800,000)
Spent less than €200,000,000 on buying players (6 star-players) in the past 10 years
Ø Champions since 1989 9 League Titles in the past 12 years
Sources: Man Utd Annual Report 03, The Deloitte Football Rich List 2004, http://www.footballtransfers.info/, and http://sports.163.com/tm/021206/021206_270400.html
=
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P-V-C
• Purpose Value of Money =
Make the money you spend be worth the money, so that you run a healthy business.
• Viewpoint Massimo Moratti (Chairman of the club,
enthusiast of soccer)
• Context Running F.C. Inter Milan in the next 10~15 years
(long-term scope)
Value AddCost
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The Rich List really follows their historic performance
1. Manchester United € 251.4 40% 33% 27%
2. Juventus € 218.3 10% 54% 36%
3. AC Milan € 200.2 16% 55% 29%
4. Real Madrid € 192.6 30% 34% 36%
5. Bayern Munich € 162.7 40% 60%
6. Arsenal € 149.6 27% 50% 23%
7. Liverpool € 149.4 28% 42% 30%
8. Internazionale € 148.4 20% 57% 23%
9. Newcastle United € 138.9 34% 43% 23%
10. Chelsea € 133.8 33% 32% 35%
2003 Revenue Souce Distribution
Revenue Match Day Broadcast Commercial
Source: The Deloitte Football Rich List 2004,
millions
9 titles in 12 years
5 titles in 10 years
……
3 titles in 10 years
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Market Segment
Royal FansCore Market
Mostly local/regional90% Revenue
Driven by long-term performance
Tottering FansMarginal MarketCan be global10% RevenueDriven by short-term performance, big faces, etc.
Sources: Man Utd Annual Report 2003
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Revenue Management is not the core competence!
Hire sports business MBA’s and/or sports business consultants (they are all over) to figure out every possible ways to make money – but you are not promoting your position on the “rich list” unless you maintain playing success.
Let’s focus on the core competences that really make a difference …
Sources: Man Utd Annual Report 2003
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The Core Processesnow and in the future
GatherPlayersGatherPlayers
TrainPlayersTrain
Players
PlayMatchPlay
Match
ReleasePlayers
ReleasePlayers
Players Team Team
Team
Players
Performance
Primary“cash in” Process
Primary“cash out” Process
ManageBusiness
$$FansMedias
Sponsors
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Purchasing Behaviors
• In a TV talk show......• Host: Suppose that one of your key
defenders is injured, what you do?• Adriano Galliani (AC Milan CEO): We’ll
buy a veteran defender and utilize his experience.
• Luciano Moggi (Juventus GM): We’ll buy a high potential young player and train him to be the best.
• Massimo Moratti (Inter Milan Chair): We’ll buy another star forward…
GatherPlayersGatherPlayers
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Player-In Player-Out at Inter(Clu: No way to make money by trading players)
Source: http://www.footballtransfers.info/…… …… ……
€462,800,000106 Players in 10 years
€284,500,000
Christian Vieri £32m(1999) present
Ronaldo £18m(1997) £28.49m(2002)
Francesco Toldo £18m(2001) present
Hernan Crespo £16.57m(2002) £16.8m(2003)
Fabio Cannavaro £14.57m(2002) present
Clarence Seedorf £13.5m(1999) Swap (2002 F. Coco)
Robbie Keane £13m(2000) £11m(2001)
Dennis Bergkamp £12m(1993) £7.5m(1995)
Nwankwo Kanu £4.7(1996) £4.5m(1999)
GatherPlayersGatherPlayers
ReleasePlayers
ReleasePlayers
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Training is the essential value-adding process.
It is impossible to improve all the measuresand it really takes time (Δt) to improve!
Spiritual Mental Technical Physical
Adaptability Aggression Flair Crossing Passing Acceleration Natural fitness
Ambition Anticipation Important matches
Finishing Set pieces Pace Stamina
Controversy Bravery Influence Dribbling Long throws Agility Strength
Loyalty Consistency off the ball Corners Penalty taking
Balance Versatility
Pressure Creativity Positioning Heading Tackling Injury proneness
Condition
Sportsmanship Decisions Teamwork Marking Technique Jumping
Temperament Determination Work rate Long shots First touch
Professionalism Dirtiness
Cross-position capability Cooperate characteristics
TrainPlayersTrain
Players
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Squad Transition
Δt
t
Performance
Old Generation
Young Generation
TrainPlayersTrain
Players
PlayMatchPlay
Match
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Squad Transition
Δt
t
Performance
Old Generation
Young Generation
TrainPlayersTrain
Players
PlayMatchPlay
Match
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Organizational IssuesAre Essential!
• Belief must be aligned!(Making money has no conflict with splendid performance)
• Great changeroom atmosphere must be maintained
• Give opportunities to young players!• Try to retain the knowledge
from the old generation.• Cross-organizational issues: Good
relationship with partner clubs (switch players, co-own players, co-train young players, outsourced training, etc)
Manager* and Coaches
Players
Top Management
* Manager = Head Coach
TrainPlayersTrain
Players
PlayMatchPlay
Match
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Have the right people!
GatherPlayersGatherPlayers
TrainPlayersTrain
Players
PlayMatchPlay
Match
ReleasePlayers
ReleasePlayers
Players Team Team
Team
Players
Top Mgt
Manager*
Scout
Manager Coach
Manager Coach Top MgtManager
Performance
physiotherapist
physiotherapist
Process that primarily“cash in”
Process that primarily“cash out”
* Manager = Head Coach
Make (theright) Decision
Control the Training
Control the Match
Make (theright) Decision
Align the Belief
Top MgtManager
Manager, Coach, Phys. Manager, Coach, Phys. Manager, Top Mgt.
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Business Rule #1
• Buy no more than 1 star player each season
• Benchmark Man Utd.• Benchmark Real Madrid
# of stars
value add
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Business Rules #2
• Buy players you need, not those you want!
– Ask for your coaches’ opinion.– Still need to train them well.– You need world class nutritionists and
physiotherapists to take care of them.
• Benchmark Man Utd.• Bad example: Real Madrid
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Business Rules #3• Spend at least €5m/year in your
youth team– You need world class scouts to address this.– You need world class coaches to train them.– You need world class nutritionists and
physiotherapists to take care of them.– Give chances to young players.– (Note that not all young players will work out.
You need to risk-pool them)
– Benchmark Man Utd• The following key players in Man Utd 02-03 squad
are from Man Utd Youth Team:David Beckham, Ryan Giggs, Nicky ButtPaul Scholes, Gary Neville, Phil NevilleWes Brown, John O'Shea
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Business Rules #4
• Give at least 1 full season to your manager (head coach)
03-04 Hector Cuper Alberto Zaccheroni
02-03 Hector Cuper
01-02 Hector Cuper Marco Terdelli
00-01 Marcello Lippi
99-00 Marcello Lippi
98-99 Gigi Simoni Luciano Castellini Roy Hodgson Mircea Lucescu
97-98 Gigi Simoni
96-97 Gigi Simoni Luciano Castellini Roy Hodgson
95-96 Roy Hodgson Ottavio Bianchi Luis Suarez
Not like this: (Inter 10-year Manager List)
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Business Rules #5
• Hire a world class VP/GM
• In player purchasing/selling– You can really get the player you need– at a reasonable price– negotiate well to address payment
installment agreement.
• In day-to-day management– Utilize his leadership to create great
organizational atmosphere.
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Ultimate Recommendation• Hire Industrial EngineersIndustrial Engineers
(not MBA’s) to address:– Strategic Decision Making– Tactical/Operational Decision
Making– Knowledge/Information Base– Process Control and Continuous
Improvementin your core competences
Differentiation Cost
Add Science to the Art of Sports!Add Science to the Art of Sports!
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Add Science to the Art of Sports!Add Science to the Art of Sports!
GatherPlayersGatherPlayers
TrainPlayersTrain
Players
PlayMatchPlay
Match
ReleasePlayers
ReleasePlayers
Players Team Team
Team
Players
Top Mgt
Manager*
Scout
Manager Coach
Manager Coach Top MgtManager
Performance
physiotherapist
physiotherapist
Make (theright) Decision
Control the Training
Control the Match
Make (theright) Decision
Align the Belief
Top MgtManager
Manager, Coach, Phys. Manager, Coach, Phys. Manager, Top Mgt.
IE’s
IE’s
IE’s
IE’s
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Questions