Real Madrid, Case Study Example

It is a common statement made in Spain that it is far easier to change political party or religion than it is to change soccer teams because soccer is a way of life, and fans stay fans of their team for their entire lives. Indeed, soccer organizations have gained global popularity by promising their fans victory in addition to a good performance. Real Madrid has adopted a unique business model often eschewed by athletic organizations. For over four decades, sports have indeed profoundly evolved from amateur to professional status due to the fact that they have become far more commercialized. As a result, professional sports have vastly encroached in the fields of business and economics. Sporting success has thus emerged as the main goal of sports organizations in addition to profit, which is evident in the sport of professional football in America. Soccer is the most popular sport in Europe, and Real Madrid is one of the top organizations that has achieved global fame, netted high profits, created a strong and large fan base, and had engaged large audiences in comparison to the other European football teams. The organization targets males age fifteen and older Real Madrid became the richest football organization in the world because of its cogent and clever business strategy referred to as galacticos. This commercial strategy indeed amplified the income of Real Madrid because the organization garnered more television rights, guest appearances, and merchandise sales.  Real Madrid has a mission statement of becoming the best European football team in the world while leveraging the brand on a global scale. The goals of the organization include financial flexibility, touting a team of the most talented players, and exploiting the various distribution channels to enhance. The organization touts a large fan base, as over 240 million people tune in each week to watch Real Madrid matches, which constitutes over 60% of the fans residing in Spain. The strategy aims on fostering fan loyalty, enhancing the brand through particular colors and logos, and offer a brand that appeals to people of all ages ranging from small children to adults.

The marketing strategy of Real Madrid is nuanced and multi-layered and involves targeting different segments that are clustered in the United States, India, and China. To do so, the organization appeals to the emotions and sentimental connections vis-a-vis player-studded advertisements. Fan tours and tournaments geared towards young soccer players in the targeted segments in India, China, and the United States. To maintain brand attraction, the organization vowed to sign a world-class player at the talent level of David Beckham every year. Product diversification has also been an integral mechanism to enhance the brand of Real Madrid. A general move away from the galacticos strategy has resulted in less focus on signing star players every years and more on stressing the importance of the team concept. This move away from the Galacticos strategy is a risky one for Real Madrid,   as balancing sports and business remains tenuous and shaky. Nonetheless, the sports side has recently suffered because of a preoccupation with marketing and brand enhancement rather than the organization winning within the sports arena. Furthermore, segmented marketing runs the risk of losing fan base popularity in areas such as Asia where stars such as David Beckham had enjoyed immense success, thereby limiting the potential for sponsorship in addition to curtailing licensing growth opportunities. Nonetheless, it is unequivocal that Real Madrid embraces a unique business strategy that focuses on signing big name players in order to nurture and protect the brand on a global scale. Attracting sponsors is of paramount importance, and players are required to give back a certain percentage of their endorsement money back to the soccer club, which generates more revenue vis-a-vis offering a public share. Of course there are always risks with business strategies that include relationships between player and coach that may be antagonistic in nature and result in fractures within the team atmosphere. Moreover, the creation of new laws and regulations, the macro environment, the risk of players—especially high-profile player—getting injured, and the current business environment that is quite volatile in nature. While the organization has the power to sign and trade players, the players have their salary as a means of business control. As such, the players retain more control because they are the ones who attract fans.

Works Cited

Hopwood, M., Skinner, J., and P. Kitchin, (Eds.). Sport public relations and communication. Oxford, UK: Butterworth-Heinemann. 2010. Print.

Kase, K., Urrutia de Hoyos, I., Martí Sanchis, C., and M. OpazoBretón, M. “The proto-image of Real Madrid: Implications for marketing and management.”  International Journal of Sports Marketing Sponsorship 8.3(2007): 212-223.

Read, A. “Real Madrid and Social Media.” Real Madrid. 30 Mar. 2010. Web. 16 Oct. 2015. www.theuks-portsnetwork.com/real_madrid_and_social_media