DIPLOMA IN CLUB MANAGEMENT Real Madrid’s Sustainable Economic- Sport Model Steven G. Mandis PhD 1 DIPLOMA IN CLUB MANAGEMENT 01 The eSports Industry THE GLOBAL ESPORTS ECOSYSTEM AUDIENCE GROWTH, RELEVANCE AND APPEAL 2 TODAY’S AGENDA 01 02 03 The eSports FIFA eSports The FIFAe Industry Ecosystem • The global eSports • Introduction to FIFA eSports • FIFAe tournaments ecosystem • Our Vision and Mission for • Stakeholder benefits • Audience growth, relevance FIFA eSports and appeal 3 DIPLOMA IN CLUB Why Did Real Madrid Care About What Happened at MANAGEMENT GS? The Global eSports Ecosystem Culture Can Change (“Drift”) - Outsiders See It, Insiders Don’t 1970’s 2000’s 5 How I Met Real Madrid • By chance, I met a Real Madrid Board Member, who introduced me to Senior Real Madrid Executives • He said they were very focused on culture and would find my work interesting • He didn’t know they had read my book • When I met Real Madrid management, I was shocked that they knew about me and my book • I didn’t know much about the sport of soccer, Real Madrid or European competition • A few of my embarrassing questions: “was Emilio, the vulture, a good player?” and “who is Raúl?” • After learning about how Real Madrid managed their club, I felt compelled to write a book about their approach • Especially after the books Moneyball and Soccernomics • I asked for unprecedented access to write the book and to be granted full transparency • I was surprised they accepted – an outsider who doesn’t speak Spanish and doesn’t follow soccer • At the end of the presentation, I will explain why they accepted 6 6 Before Starting, A Few Things • People are very passionate about soccer and their favorite clubs • One’s club and one’s identity can be intertwined (I will speak more about this later) • If I say something nice about Real Madrid, please do not take it as implying anything (absolute or relative) about your club • This discussion is not a comparison of what or who is better or worse • Some clubs share similar traits (so some things I say about Real Madrid may apply to your club too) • My research focus is on facts, data and analysis to develop a big picture and “probabilities” • I consider exceptions (there are always exceptions), but look at the big picture • Also, when I say “Higher Likelihood” doesn’t mean “Guaranteed” • When I use the phrase “Real Madrid’s values”, recognize “values” mean different things to different people • Don’t think of values as better or worse – think unique and authentic 7 7 Just A Few Last Things • Everything in this presentation is my own opinion • This has not been approved or authorized by Real Madrid in any way • I believe Real Madrid management recognize they are not always perfect • Some of my research focuses on pressures that cause management to “drift” from their values or culture • Like most successful management teams they are always seeking to learn and evolve • With that background and those caveats, we can begin 8 8 DIPLOMA IN CLUB MANAGEMENT The Real Madrid Way or La Formula Real Madrid 9 DIPLOMA IN CLUB MANAGEMENT Received Feedback on Drafts of My Book from Sports Experts DIPLOMA IN CLUB MANAGEMENT The Question on Every Sports Executive’s Mind is… Who won the pickup game (and trash talking) between Michael Jordan and me? BTW – I am terrible at basketball…and trash talking DIPLOMA IN CLUB MANAGEMENT The Real Question What is the Secret to Building a Successful Sports Team? • Until Moneyball there were two common beliefs • Money • Talent • Moneyball added a third • Data Analytics Anything else? DIPLOMA IN CLUB MANAGEMENT What I Discovered About Money, Talent and Data Analytics Money and Talent don’t Guarantee Success Last Champions League Trophy 2008, Since 2015 4x DNQ SF 2016, otherwise mostly R16/QFs RU 2020, otherwise mostly R16/QFs Mostly R16 DIPLOMA IN CLUB MANAGEMENT What I Discovered About Money, Talent and Data Analytics Money and Talent don’t Guarantee Success Neither Does Data Analytics Have not won a World Series with Moneyball 2016 John Henry says Red Sox will rely less on analytics: “I spent at least two months looking under the hood, and came to the conclusion that we needed to make changes.. One of the things that we’ve done — and I’m fully accountable for this — is we have perhaps overly relied on numbers, and there were a whole host of things… …the shift is toward using analytics as just a tool rather than the be-all-end-all. Baseball is a complex, dynamic, living thing that has to really be nurtured on a daily basis, 12 months of the year. I think we were reliant too heavily on analytics.” DIPLOMA IN CLUB MANAGEMENT Why Not Ask One of The Most Successful Sports Teams on the Planet Which Sports Team Would You Ask? How Do You Define Success? • On the Pitch – Trophies? • Off the Pitch – Revenues? or Profits? Valuation? Fans? • Both – Sustainable Economic-Sport Model? DIPLOMA IN CLUB MANAGEMENT Most Successful on the Pitch: Real Madrid On the pitch 13 European Cups / Champions League Trophies Next highest is Milan (7) DIPLOMA IN CLUB MANAGEMENT Most Successful Off the Pitch: Real Madrid Off the pitch Note the difference between Top 3 and #10-15 #1-3 in Valuation #1-3 in Revenues DIPLOMA IN CLUB MANAGEMENT Most Successful Off the Pitch: Real Madrid Off the pitch Note the difference between Top 3 and #10-15 #1 Social Media Followers 450+ Million Fans DIPLOMA IN CLUB MANAGEMENT So I Asked Real Madrid (Successful On, Off and Both) If you don’t have time to read the book, then do what some of my students do, listen to the 26 minute BBC World Service documentary and pretend you read the book DIPLOMA IN CLUB MANAGEMENT What is the Secret to Building a Successful Sports Team? • Real Madrid told me: You need money, talent and data analytics to compete on the pitch… and off the pitch to increase your probability of success, but culture is the glue that holds everything/everyone together • Culture is the invisible but powerful force that influences behavior of the members of a group • To RM, culture means everyone working around a common mission • Need a culture to get the players on the pitch (and management / operations off the pitch) to work together and sacrifice for greater good 20 DIPLOMA IN CLUB MANAGEMENT Is this surprising? Let’s Ask “Pop” Gregg Popovich won 5 NBA Titles with the “Small Market” San Antonio Spurs San Antonio is #31 media market in the U.S. (#26 of 30 teams in NBA) 21 What Did Gregg PopoviCh Say? Culture, Talent and Luck “Good fortune has something to do with it . It didn’t take a whole lot of genius to draft Tim Duncan . Like any successful franchise whether sports or business, it’s about the people you bring in and their character… The principles you live by and stick by in good times and in bad times… I think our culture, that corporate knowledge, is something that sustains us year after year New people that come in get indoctrinated in the way we do things, our culture, and the leaders pass it on” 22 DIPLOMA IN CLUB McKinsey & Co. Study on the ImpaCt of CultureMANAGEMENT • Companies with defined and distinguishable cultures provided: 300% HIGHER returns to shareholders than companies without defined or distinguished cultures • Also concluded, every winning culture has its own authentic personality and soul that can’t be copied 23 DIPLOMA IN CLUB MANAGEMENT What Was Real Madrid Management’s Genius? • Most often the values of the founder or the owner or a legendary executive is the basis of the culture • Real Madrid is unique because the community dictates the culture • The entire strategy both on and off the field is based on the adherence of the values and expectations of their community members • When culture is drawn from the shared values of the community it can forge extraordinary loyalty, inspiration, strength, passion and identity 24 DIPLOMA IN CLUB MANAGEMENT When Culture is Drawn from the Shared Values of the Community, The Results can be Extraordinary… • Loyalty • Inspiration • Strength • Passion • Identity 25 DIPLOMA IN CLUB The Genius…Florentino Surveyed the Socios MANAGEMENT Ø What values do we want to serve as the foundation for our club? Ø What attitudes and beliefs about competition and team do you hold? Ø What are the goals that you want to pursue and why? Ø What do you expect from the management, the coach and the players? Ø How do you want to be treated and communicated with? Ø What kind of atmosphere and experience do you want when you attend or watch the games? Ø What players (former or current) represent your values and ideals? Ø What player do you most want to join Real Madrid that is not already on the team? 26 DIPLOMA IN CLUB Survey Results MANAGEMENT Ø Wanted to go back to 1955 to 1960 Ø Wanted the best players from around the world Ø Open and multicultural club – social inclusion Ø Players with their values Ø Gentlemen and champions Ø Never give up, will to win Ø Play beautiful, imaginative and attacking soccer Ø Respected on and off the pitch Ø Social responsibility (Foundation) Ø Economic Responsibility Ø Transparency 27 DIPLOMA IN CLUB Survey Takeaways MANAGEMENT Ø Wanted to win with players with values that represent them, playing in a style and attitude they like, and the club managed in a professional and responsible matter Ø Most of all they wanted to be respected Ø Ohh…and the player they most wanted was Luís Figo 28 Real Madrid Wrote Down Their Mission Statement Real Madrid wrote a Mission Statement (codified it for the future)… In business this was starting to become more common by 2000, in sports it was revolutionary 1996 article in