The Real Madrid Way. Steven G. Mandis
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team with the highest social media following was the Los Angeles Lakers at around 25 million, which also reflects the global appeal of basketball. In contrast, the New York Yankees had about 10 million fans on social media, which did not make the top fifteen of the chart below.
Table 1.3: Fifteen Most Popular Sports Teams on Social Media 2015
According to BBDO Consulting, Real Madrid has the highest brand value among European soccer teams. As of 2007 this value of 1.063 billion ($1.45 billion) was based on current and future income and expert opinion. The ranking is based on research that determines brand value using current and future income flow and expert opinion. BBDO Consulting states that its approach went beyond depicting only financial performance—it also analyzed scientific behavioral values such as brand popularity, image, sympathy, and loyalty. Income was examined in great depth, right up to the levels of sponsor contracts, merchandising, and revenue from season tickets, etc. The behavioral scientific side of the valuation comes from a survey of around 400 international experts.
Table 1.4: Five Most Valuable Soccer Brands 2007 by BBDO Consulting
According to PR Marketing, Real Madrid has the highest average jersey sales per year in soccer from 2009–10 to 2013–14. This demonstrates the passion, loyalty, and number of Real Madrid fans around the world. Adidas is the uniform manufacturer for Real Madrid. Sponsorship is provided by the Dubai-based Emirates Airlines. Many people believe that Real Madrid’s jersey sales are driven by individual star players only. While it is undeniable that players’ fans drive a lot of jersey sales, I will present some evidence later that the club’s community values may have more to do with jersey sales than people expect.
Table 1.5: Soccer Jersey Sales 2009–10 to 2013–14 by PR Marketing
On the field, Real Madrid has won eleven Champions League titles since the tournament of the best teams from each European league was established in 1955. The next closest competitor in terms of wins is AC Milan, which has won the Champions League seven times. Three teams (Barcelona, Bayern Munich, and Liverpool) are tied at five wins each.
Real Madrid has won a record thirty-two Spanish La Liga titles. Barcelona, in second place, has won twenty-four. Whenever Real Madrid plays their archrival Barcelona, it is commonly referred to as El Clásico. Real Madrid leads the head-to-head results in competitive games with ninety-two wins to Barcelona’s ninety. Whenever Real Madrid plays their crosstown rival Atlético Madrid, it is commonly referred to as the El Derbi Madrileño (“The Madrid Derby”).18 Real Madrid leads the head-to-head results in competitive games with 107 wins to Atlético Madrid’s 53.
Table 1.6: European Champions League Titles
In 2015, UEFA released its ranking of the most successful teams in Champions League competition history. These rankings were based on three points for a win, one for a draw, and zero for a loss.
Table 1.7: Top Teams in European Cup History (2015)
Real Madrid was recognized as the FIFA Club of the 20th Century in 2010, winning the award with 42.4 percent of the votes. Manchester United was a distant second with 9.7 percent.
Table 1.8: FIFA Club of the 20th Century Voting (2010)
Differences between MLB, NBA, and European Professional Soccer
With Moneyball being such an imposing force on how we think about sports, it is important to remember that Moneyball is about an MLB team. There are several differences between the MLB, NBA, and European soccer leagues that are worth highlighting because they can have a meaningful impact on strategic decisions both on the field and off the field. The differences will highlight that Real Madrid needs to have a strategy in place regarding teamwork because of the interdependence of the sport (see “Interdependence” sidebar on page 39).
Drafts, Taxes, and Revenue Sharing
In European professional soccer, there are no drafts and no salary caps or luxury taxes. It is an open market. European professional soccer teams can either develop players through their own youth academies or buy the rights to players in the transfer market and pay them whatever they want. In 2011, UEFA enacted financial fair-play rules. Since then, teams that qualify for UEFA competitions essentially have to prove throughout the season that they have paid their bills. Since 2013, teams have also been assessed against break-even financial requirements, meaning that they have to balance their spending with their revenues, which restricts teams from accumulating too much debt. Without a salary cap or luxury tax on players’ salaries, only a limit based on breaking even, teams are economically incentivized to expand their fan bases, cultivate sponsorships, and find other ways to increase revenues to afford better players.
The NBA and MLB, in contrast, have organized annual drafts to select players. Typically, the teams that finished with the worst record the previous season get to select first. This is to help with competitive parity. Therefore, a baseball or basketball team can draft a star player and not have to bid competitively for him. MLB has a “competitive balance tax” or “luxury tax” that is the punishment for large market teams that spend too much money. While MLB does not have a set salary cap, the luxury tax costs teams with high payrolls a considerable amount of money, giving them ample reason to want to keep their payrolls below the threshold level. The NBA utilizes a soft salary cap, meaning that while there is a salary cap, there are a variety of exceptions that allow teams to exceed it. In addition to the soft cap, the NBA utilizes a luxury tax system that is applied if a team’s payroll exceeds a separate threshold that is higher than the salary cap. Historically, around half of the NBA’s teams are over the cap. In both the NBA and MLB, big market teams like MLB’s New York Yankees or the NBA’s New York Knicks can generate revenues with their own sponsors and local television broadcasts and can afford to pay up to the cap or to pay the luxury tax if they go over the cap. Also, billionaire-owners such as the NBA’s Brooklyn Nets owner Mikhail Prokhorov, who was charged a reported $80 million in luxury taxes in 2014, can simply pay the tax. Small-market and other teams like the MLB’s Oakland Athletics in Moneyball may not have the financial resources, sponsorships, or local television broadcasts to pay up to the threshold, or may simply choose not to do so. However, the Athletics receive money from those that pay the luxury tax. In addition, in order to combat the growing revenue disparity among major league teams, MLB first instituted a revenue-sharing program in 1996 that, among many things, requires that every team pay 31 percent of their net local revenue, and then that money is divided up and equally distributed to every team (the NBA and NFL also have revenue sharing). Therefore, the small-market MLB teams have less of an economic incentive than a European soccer team to grow revenues because the latter would have to share the upside. The business conditions for a small-market team in MLB are similar to a “socialist” economic system, while European soccer is much more of a “free-market” economic system. The “socialist” economic system prevalent in North America has the leagues, rather than the teams, playing the dominant role in many marketing functions, especially internationally. A team like the Athletics has some constrictions in revenue growth, such as limits to their market