Real Madrid Essay

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Introduction: Real Madrid is the most successful sports franchise in the world today. They have succeeded in growing their brand internationally and have become one of the most recognized names in all of professional sports. They face fierce competition from rivals such as Barcelona and Manchester United who compete with them on and off the field. The business model President Forentino Perez has constructed for Real Madrid is centered on the financial success of the club and has been resilient to worldwide and local economic volatility. Underlying Real Madrid’s business model is a tremendous history and at its core is a commitment to assembling the best talent in the world of futbol today. 1. What is Real Madrid’s Business Model? Perez implemented a strategy to secure the financing needed to deliver on his promises when elected. Perez employed several major initiatives to raise the capital needed to carry out his plan. These initiatives included: rezoning and sell off the clubs old training pitches which netted €500 M for the club, recapturing the exploitation rights that had been previously sold off which included buying back the stadium’s VIP boxes, refurbishing and doubling the amount of boxes to 200, setting up a separate legal entity (Sociedad Mixta) that would manage the club’s merchandising and licensing, sponsorships and players-image rights (which under the players contract the club owned 50 percent), distribution business, online and new technology businesses, and international development. Other sources of revenue came from the licensing and sponsoring area. Real Madrid structured licensing deals with more than 70 companies who produced over 600 products. Sponsorships included Audi, Pepsi, and Telefonica and a three year contract for 12 million Euros per year with Siemens Mobile IC to have their name on the team’s jersey. All of these

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