Welcome back to Football Benchmark and welcome back also to Andrea Sartori Global Head of Sports of KPMG.
Hi Luca! Today we want to focus on the commercialization and the internationalization of the most prominent European football clubs. In particular, we want to focus on their expansion in Asia, considering that it is the most flourishing market at the moment. Let’s start with looking at the most successful European clubs in terms of commercial revenues. Yes, first of all, we have analysed, the eight European teams with the biggest commercial revenues. Unsurprisingly, taking into consideration the sporting performance, Real Madrid is the leader of this ranking, and they leapfrogged Bayern Munich, for the first time after a long period. For all these clubs, commercial revenues are the most important sources of income. Consider that Real Madrid’s commercial revenues represent 48% of their total operating revenues, This is 53% at Bayern Munich and 58% at Paris Saint-Germain. Here we should note, that PSG’s commercial revenues are under UEFA scrutiny, due to some alleged third party dealings. So, in order to sum up, we can say, that the great majority of the total operating revenues of these clubs comes from commercial revenues, right? Yes. I would like to point out that four out of these eight clubs are English. Yes, and we can also notice that there are no Italian teams among them. Yes, unfortunately it is true. In the following infographic, we can notice that, surprisingly, if we focus on Italian clubs, Inter is the best performer – they sit ninth in Europe in this ranking by commercial revenues, while Juventus is eleventh. Inter’s commercial revenues are almost EUR 160 million. We should notice that a quarter of this income, EUR 37 million, comes from partnerships with new Chinese sponsors, according to Inter’s latest financial statement. This shows how influential the new Suning ownership at Inter has been. Here we can see then that Inter registered higher commercial revenues than Juventus. The Zhang family, behind the Suning group, also expects that if Inter starts winning trophies, they will perform even better in terms of commercial revenues. Actually, now Inter is among the top 10 by commercial revenues, am I right? Yes, as we said, they sit ninth. It is also true, that other clubs can improve in terms of commercial revenues, too, once they have great sporting results, as those bring better brand exposure. Just a quick note on Juventus’ commercial revenues, we have not yet taken into consideration the Cristiano Ronaldo effect, as we are now focusing on the 2017/18 season, right? Yes, and I think this is the area, where Juventus can grow most. So, do you expect an improvement from Juventus in this respect in the 2018/19 season? Yes, I expect an increase here, although I think that this improvement will be really remarkable only if Juventus wins something also on the pitch. Otherwise, the impact on commercial revenues would be definitely smaller. Moving on to other clubs: Milan’s commercial revenues are almost half of Inter’s, while Napoli’s and Roma’s commercial revenues are around a fourth. This shows how much Italian clubs can improve in terms of commercial revenues. Well, and the Far East is one of the regions, where clubs want to expand, especially due to the passion for football and the economic power resources in Asia. On the following slide, we can see how these clubs tried to expand in Asia. Indeed, this map, realized by KPMG, shows how the big European clubs have invested in Asia. We can see where they built football academies, fully branded by these clubs. We can see Milan, Barcelona, Inter Manchester United, Liverpool, Napoli, several English clubs, Bayern Munich. We can see how these clubs have tried to “colonize” a territory never explored before by European clubs with their brands. Yes, we have to take into consideration that we are referring to a region with almost 4 billion people and rapidly growing economies. While 15 or 20 years ago, clubs tried to expand in North America, in the past 5 years, they focused on the Asian market. What are their goals? They want to expose their brands in order to build loyal supporter bases, develop partnerships and increase commercial revenues. In this map, we can see how many clubs decided to open football academies in Asia. For instance, Milan and Inter have 4 academies there, while Juventus has 6 academies. The countries where they have opened these academies are Kuwait, Saudi Arabia, the United Arab Emirates, Oman, China and Japan. These are all markets where clubs can expose their brands, build new partnerships and licensing agreements, and so increase their commercial revenues. Yes, and in my opinion, this is also a strategy to get new supporters, especially young ones and a way to take their brands and their clubs into countries where people have never had the chance to see their favorite players in person. Yes, you are completely right. In general, supporters are really loyal to their clubs – people usually do not change their favourite team during their life. So, clubs want to recruit new supporters, especially when they are still very young, in order to make them loyal fans for a lifetime. Moreover, clubs have not just established football academies, but they opened headquarters, too. Well, the graphic that we can see right now is about social media followership and we will come back to this topic later, but, if we focus on the infographic regarding the headquarters, we can see that, for example, Inter and Juventus have their own offices in Asia Inter has one in Shanghai, while Juventus will open one soon, and there are many more clubs involved. Yes, we can see that 5 English clubs have their own headquarters in Asia – Manchester City alone have three. Then, we can spot three Spanish clubs.
While, regarding Italian clubs, at the moment, Inter is the only club to have an office there, also thanks to their Chinese ownership. Furthermore, Juventus will open their headquarters there soon. We can also notice that Singapore, Hong Kong and Shanghai are the most popular countries. Maybe because they are the most “European” ones? Well, I would say that clubs go to Singapore also for taxation reasons, because of some financial advantages. You should also consider that some commercial partnerships can be made through these headquarters. This explains why these clubs see advantages from a fiscal point of view. I wanted to ask you, why such clubs open offices in Asia, so I guess that this is a reason. Yes, this is one of the reasons, but not the only one. Indeed, it is also very important to be present and have some local partners in those markets. To sum up, it is really impressive to notice how 5 English clubs, 3 Spanish clubs, one Italian (even if Juventus will open a local headquarter in Asia soon) and also some German clubs are trying to expand into this market. Well, at KPMG, you also analyzed the social media performance of these clubs. This is really important, as followers are like customers. Now, we can also try to analyse the Chinese market, looking at one of the most important social media platforms used in China, namely Weibo. In this infographic we can see how many followers European clubs have on Weibo. We can see that there are no Italian teams, and, on the other hand, English clubs are again the leaders. Yes, they are represented by 5 clubs here. Actually, this ranking is very similar to the commercial revenues ranking, but Paris Saint-Germain is not present here. The fact that there are 5 English clubs, (actually, Arsenal is included here, too) shows how strong the Premier League brand is. For example, PSG is increasing more and more and it is becoming an international brand, but it is playing in a league that is still considered less prominent than LaLiga or the Premier League. By the way, do you know what the most surprising figure in this slide is? It is Real Madrid sitting in seventh position. Indeed, when I saw this result, I was really surprised. Absolutely, if we take into consideration the rest of social media, namely Twitter, Instagram and Facebook, Real Madrid is in first position. Yes, it is the absolute leader. I would like to add a last comment regarding the previous slide about Italian clubs. Indeed, in China, the most followed Italian club is Milan, maybe due to their old glories in the past 20 years under the Berlusconi ownership. If we focus on the “Western” social media and the global followership of these clubs on those platforms, we can see that Real Madrid move from the seventh place to the first one. Well, I guess that here we can already see the Cristiano Ronaldo effect, right? Yes, definitely. Indeed, in the past 7 months, Juventus increased their followers from 50 to 68 million, an increase of 35%. We have just seen that Milan is the most followed Italian club on the Chinese social media, so we have prepared a comparison between them and Barcelona. We did so, in order to understand the differences between these two clubs’ followership, and so their opportunities to grow in foreign countries. Yes, we have taken into account Barcelona and Milan, but the result would be the same, if we compared Real Madrid or Manchester United to Milan, Juventus or Inter. This infographic shows how popular and global the Barcelona brand is. In fact, in the case of Barcelona, Spanish followers are just 2% of their total followers globally, and Spain is only the 12th country regarding the number of Barcelona followers on social media. On the other hand, if we consider Italian clubs, Milan have 8% of their followers from Italy, and Italy is the 2nd country regarding the number Milan followers. And it would be the same for Juventus or Inter, too. We have seen that European clubs have really great chances to expand globally, as their social media performance also proved. Football Benchmark ends up for today, Thanks to Andrea Sartori, thanks to our viewers, Football Benchmark will be back next week!