Marketing strategies of football clubs

Introduction.

Contemporary economic realities have a significant impact on the football business, and they affect not only large and well-known clubs that have been operating on the market for a long time, but also new formed teams whose lifespan does not exceed five years.

In recent years (especially before the FIFA World Cup in Russia), there has been a clear tendency of government authorities to contribute to the development of various sectors of the economy, including the sports (football) sphere. However, club managers, who solve a number of issues related to promoting the brand of a football club in the external environment with the help of financial, investment and marketing tools, remain the main driver of development of sport companies.

Consequently, the active actions of specific specialists determine a football club’s position in the external environment, as well as issues of its brand popularity, attracting fans to stadiums, and increasing sales of club-related products. Marketing management in a football club should be carried out on the basis of a marketing strategy, which is aimed at solving a number of specific issues and ensuring the football club’s sustainability in the external environment even in times of crisis. In this regard, the relevance of theoretical and practical research of this problem cannot be questioned.

Theoretical research in the field of marketing strategies of football clubs and the ways of their optimization has been conducted not so long ago, but in recent years many Russian and foreign scientists have become interested in this topic. In particular, this topic was covered by N.A. Osokin [2], I.V. Solntsev [5], V.V. Galkin [1], Yu.V. Kostikov [13], A. Andrikopoulos [14], D. Plumley, R. Wilson [12], D. Maderer, [11] A. Manoli [15] and some others. This article was first published in the Russian scientific journal “Creative Economy” in 2020 [18], but due to the popularization of research on sports topics, it was translated into English for publication in an international peer-reviewed open access journal.

Despite a fairly detailed study of many aspects of the marketing component in the system of football club strategies, some issues still remain unresolved. For example, there is no clear understanding of what indicators are used to evaluate the effectiveness of the implementation of marketing strategies of football clubs.

Moreover, there is no generally accepted definition of the marketing strategy of a football club, which, firstly, does not allow us to understand exactly which aspects of the club’s marketing activities it should reflect, and, secondly, what methods it should be developed with. The development of marketing science in the field of sports in this projection involves the creation of methodological recommendations or evaluation methods tested in real conditions, which comprehensively take into account both quantitative and qualitative characteristics of the club, which should be taken into account during creating, applying and making changes to the marketing strategy.

This reflects the need for continuous updating of theoretical provisions on ways to improve the marketing strategies of football clubs. Thus, the purpose of this study is to collect and aggregate information on the current state of marketing strategies of football clubs, search for their problems and propose a number of initiatives that can have a positive impact on the development of football clubs.

Marketing strategies of football clubs: how they work, options for improvement

Marketing strategies of football clubs are a substance that is certainly important and worth the attention of many researchers. This is due to the fact that in the modern digital era marketing component of sports organizations comes to the fore. It is not entirely important how many trophies a club wins per season, what is much more important – the amount of new fans that club attracts to the stadium and club’s opportunities to expand its fan base.

Just by the name of the topic, we can tell that there is something wrong with the marketing strategies of football clubs. Otherwise, the theme would not contain the phrase path of improvement. Of course, football clubs have marketing strategies, and clubs have even spent a lot of money on their development.

It’s a completely different matter that this money was received in insufficient quantities and not from the marketable sources. Quoting the words of the digital director of the Russian Football Union and co-founder of Softsport, Ivan Ryndin: “Today sports marketing in Russia is underfunded, not everyone understands the value of this area – or realizing that the result will not come quickly, they focus their attention on more clear and linear development issues: buy/sell players, negotiate financing with regional authorities for the next season. If we take the sports market, we will notice that the press attaché in the singular deals with all matters in the information environment – both matches reports, communicating with journalists and works with social media marketing and filming videos. Everything else is a consequence of this situation. I don’t want to talk about Russia’s special path. But the lack of market conditions for sports clubs and a lack of understanding of the importance of working with the audience leads to what we see now – interest in sports in general is not nearly as great as its potential” [7].

As we mentioned above, marketing management in a football club, as well as the marketing in companies in other industries, should be carried out on the basis of a marketing strategy. In a sports environment marketing strategy should be focused on solving issues related to [9]:

· production and sale of souvenirs, paraphernalia and other branded items;

· coordinating relations with sponsors, concluding contracts with them, as well as involving them in events held by the sports club;

· managing commercial opportunities of sports facilities that are controlled or entrusted to a football club;

· management of advertising, public relations and interaction with various media resources;

· sales of rights to television, radio and Internet broadcasts;

· implementation of digital projects on the Internet [1].

Presented set of issues is not comprehensive and can be supplemented in connection with the country-specific characteristics of the football club’s activities, as well as modified based on the ownership structure and a number of other factors [5].

A modern football club has long been comparable not only to a global corporation, but also to a large media company that produces specialized content (sports spectacle and its surrounding components), increases its audience due to its quality and quantity, as well as the sports results of the club’s teams. Moreover, trends show that sports results do not always occupy a dominant position [6].

At the same time, football clubs monetize the audience in three main ways: through the sale of television rights, through sponsorship revenues (larger the fan base à higher the popularity of the club à more investments of the club’s sponsors), as well as through the sale of paraphernalia associated with the club (mostly on match day).

Classically these sources are the main income components of football clubs, however the proportional division varies significantly depending on the country where the football club operates.

In Europe the sale of television broadcasts is a significant source of income for football clubs. For steadily developing clubs, the normal figure is 30-40%, but in some countries this amount allows for 50-70% of the club’s annual budget (Fig. 1).

Figure 1. Graph of income distribution of football clubs by category

Source: Deloitte Football Money League 2020

An extremely high dependence on funds received by clubs from the sale of television rights can lead to collapse in difficult economic conditions, for example, associated with the coronavirus pandemic in 2020. For example, 13 clubs in the German Bundesliga could not help resume playing this season, as otherwise they would have lost their livelihood.

In Russian football, over the past five years, clubs receive less than 5% of their revenue from the sale of television rights. This is also an extremely unhealthy situation.

On the one hand, there is no dependence, however, there is no need to talk about a normal level of income in normal economic activity.

The reason for the lack of a normal level of income in Russian football clubs is the state character of the Russian Premier League main broadcaster, the Match TV channel, which essentially owns a monopoly on broadcasting, and therefore dictates prices and, as a consequence, the income of the clubs [4].

Sponsorship revenues are extremely important for maintaining Russian football clubs on the brink of survival. These cash flows, contrary to the logic of market functioning, account for approximately 50% of the income of football clubs, while in European analogues this percentage barely exceeds 10-15% [5].

As for the third component of a football club’s income, revenue on the day of the match is formed due to the physical number of people in the stadiums. The principle of direct dependence works: the more people visit the stadium on the day of the match, the greater the revenue will be [10].

Russian clubs have the potential to increase matchday income, and it is based on two key essues: Russia has got state-of-the-art stadiums since the 2018 World Cup, and the overall interest in football has increased, as confirmed by the statistics in Figure 2.

Figure 2. Attendance at stadiums of RPL clubs

Source: PwC. A comprehensive study of the economics of Russian football-2018/2019

The data suggests that Russian football clubs have the potential to reduce the share of sponsorship revenue in their budgets, as they can take full advantage of new or refurbished stadiums and increase revenue by using them wisely. As mentioned above, in Russia the majority of the income of football clubs comes from commercial income, which should reflect the success of the club’s marketing strategy, but in Russian practice it includes sponsorship funds. But this is a misconception: the largest share of sponsorship revenue comes from money received outside the competitive market. This means that clubs receive subsidies from the government and state companies (more than 75% of Russian football clubs in Russia exist this way) or from sponsors of another order.

However, despite all the disadvantages, Russian football clubs over the past year have demonstrated positive dynamics in the field of commercialization of their brands and monetization of spectator interest (Table 1). For example, 100% of clubs have organized points of sale of merchandise at stadiums. A slightly less significant part of clubs organizes entertainment events before matches (the main example is FC Lokomotiv), sponsorship entertainment venues, and also creates specialized children's and family sectors.

Table 1. Marketing activations of Russian football clubs

Clubs work less with transport infrastructure on match day. In the 2019/20 season, only 9 out of 16 clubs had a special procedure for public transport, and only one club provided discounts on taxi services for fans.

Thus, the prerequisites for changes in the marketing strategies of Russian football clubs are obvious and understandable: irrational structure of income, dependence on sponsors, lack of an integral approach to the implementation and evaluation of marketing activities. In this regard, the authors have developed a concept for a possible structure of a football club’s marketing strategy, which will ensure the comprehensive nature of brand formation in the external environment. Marketing activations were offered in 4 blocks: general, digital, IT and matchday.

Within the framework of general block, authors proposed to focus on the following provisions. Firstly, Russian clubs should strive for cross-country communications, greater integration into world football and an increase in their fan base abroad [11]. To do this, clubs’ marketing teams should at least create an international official website and maintain social networks in foreign languages. The Russian champion St. Petersburg “Zenit” is an excellent example of club with international orientation. Zenit’s website is presented in 13 languages, and social networks are maintained in at least 4 languages (Russian, English, Spanish, German). Spartak’s website, which is a main competitor of Zenit for the title of the most popular club in Russia, is presented only in 3 languages (Russian, English, Chinese).

As for the second component of the general block, it is worth noting that football clubs are gradually moving away from the concept of maximizing utility (winning trophies) as an exclusive goal and turning to maximizing profits. Obviously, only a separate pool of teams, which includes from 30 to 50 clubs, can claim a championship within countries, as well as successful performance in the largest European tournaments. What remains for the rest ones? Realizing that it is quite difficult to achieve material success in the form of cups in the club museum, they need to modify and focus their activities on the club development as a financial enterprise. And if there is sufficient amount of financial resources, then clubs strive to succeed in both [2].

The next key point in the general block is the use of sponsors’ money on the principles of borrowed capital. Firstly, the principles of lending will allow clubs to be more focused on increasing the return on received investment [12]. This will make them more disciplined. Secondly, this will allow clubs to concentrate their efforts on other sources of income in a competitive market. And they can be much larger if used correctly.

Finally, the brand of a football club in the 21st century should be constructed on the basis of the main trends: the dissemination of socially oriented values and personalization of the club for each fan [13].

Turning to the second system block of the structure, these are IT solutions. The prospects for IT process optimization are based on the active use of CRM systems based on Big Data analysis. It provides football clubs with the opportunity to increase not only ticket revenue, but also commercialize the brand. For example, in the 2018/19 season Zenit, using a CRM system, attracted more than a million fans to the stadium per season and increased the effectiveness of advertising campaigns by 27%. Moreover, the club managed to significantly increase the open rate of letters and transfer almost all communication online for the benefit of fans [8].

An equally important element of any marketing strategy should be digital activations. It’s hardly worth explaining their importance, because every club in the Russian Premier League has a fairly significant presence on social networks, but in the lower divisions the situation is much worse. It would seem that it is possible to form fan movements on the principles of “support your local team” in the Russian regions, but residents of cities where National Football League and Professional Football League clubs are present hardly know much about the clubs that represent these cities (Table 2).

Table 2. Digital rating of Russian football clubs in the 2018/19 season

The fourth and final building block concerns optimizing the use of sports facilities on match day. Successful European clubs receive up to 20% of annual income from matchday events, while for Russian clubs the figure for the entire history of the league did not exceed 8%.

According to the authors, Lyon chose the most optimal scenario for the development of communications with the audience. Lyon began to use the areas around and in the stadium for promotion marketing events from the moment the stadium was put into operation. The club came up with the idea of dividing the area around the stadium into different zones, holding weddings at the stadium, organizing quests and using other opportunities to earn money. As a result, the overall increase attendance over 2 years was 30% in stadium, the club increased revenue by 15% and income from non-football events by 61%. Revenue from ticket sales, as a side metric, jumped 60%. Russian football clubs have excellent potential for developing similar event strategies (new stadiums and their insufficient occupancy). So Russian clubs have prospects for the future – all that remains is to make this future profitable.

In conclusion, it is worth noting that the situation with the marketing strategies of Russian football clubs is quite ambiguous. It is not possible to find data in the public domain that would accurately indicate how much marketing is financed, but a general understanding of the situation emerges without any particular problems. Based on the auditing and analytical agencies reports, authors conclude that clubs have begun to realize that focusing only on sports results will not bring results in 100% of cases. In this regard, many teams have begun to move towards strengthening their marketing presence not only on match days, but also in everyday life, ensuring a comprehensive and systematic approach.

The work proposed a possible option for optimizing marketing strategies. The structuring mechanism was developed with the condition for the further development of the assessment system for the football clubs’ marketing strategies. A pattern was also observed in which clubs should choose comprehensive marketing strategies of internationalization, personalization and digitalization for further growth. It was revealed that clubs have settled relatively well in the domestic market, and can direct their efforts to increase the number of fans in other countries, and subsequently, monetize them through marketing activities.

Conclusion

All of the above allows us to conclude that the concept of integration and comprehensiveness of the marketing strategy entails an understanding that a football club, as an organization, not only operates in conditions of interaction with macro- (demographic, socio-cultural, political, technological factors, the state of the economy, international events) and microenvironments (clients (fans); suppliers (club academies and other football clubs that train players, manufacturers of equipment and sports equipment); competitors), but is also subject to the principle of mutual influence with them [14]. Thus, one of the main stakeholders of a football club is the fans. Fan participation in value creation is an extremely important theme in sports marketing approaches and methods, which means that managers of professional football clubs need to identify and use different channels of communication to develop relationships with their fans.

The active development of new technologies and communication channels between clubs and their potential clients constitutes a positive context for the development of football marketing. With their help, it is possible not only generate new ways of interaction, but also create a good understanding of the brand, ensure its promotion, and evaluate the effectiveness of the marketing strategy with lower costs and problems.

Summarizing all above, the marketing strategy of a football club can significantly facilitate its task of increasing material well-being, as well as ensure an increase of spectators in the stands and brand recognition not only in a particular country, but also abroad.