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FC Barcelona | How to become the first billion-euro-a-year football club

  • New sponsorship deals with Nike and Rakuten will lead to a substantial uplift in commercial income
  • Barça is ‘proud’ of the role it played in LaLiga’s return to the collective selling of media rights
  • The rebuilding of the Camp Nou stadium will be transformational for the club

Manel Arroyo has been on the board of FC Barcelona for six-and-half years but it still feels a little odd to be sitting down to talk to him about something other than motorcycling.

Director general of Dorna Sports, the commercial rights-holder of the MotoGP championship, since 1992, Arroyo is very much its public face and the association is hard to shake.

Indeed, on the chill December day that SportBusiness International catches up with him, he is taking a break between back-to-back MotoGP meetings at the headquarters of IMG, MotoGP’s rights consultant, in west London.

PICTURE: Manel Arroyo, vice-president, media, marketing and communication, FC Barcelona

So how does one man handle the media, marketing and communication for the world’s biggest motorcycling championship and one of the world’s three biggest football clubs?

“We have a huge and fantastic team at FC Barcelona,” the Catalan explains. “As a board member, I can’t be across all the details. We have a huge team at Dorna too. This year we celebrate our 25th anniversary. We started MotoGP with 12 people; now we have more than 300.”

A key player in that Barcelona team is Francesco Calvo, the Italian who joined as chief revenue officer in October 2015 from Serie A’s Juventus, having overseen the modernisation of the club’s commercial strategy. In 2016, Calvo and colleagues have notched up 15 sponsorship agreements, including eight new deals, four contract extensions, and three renegotiations to improve the terms of existing deals.

This season, sponsorship income will be up a modest 5.4 per cent, from €151m ($157m) to €159m. The real impact of these deals will start to be felt in the next two seasons.

Sponsorship uplift

From the 2017-18 season, Japanese technology and entertainment company Rakuten takes over as the club’s main sponsor from Qatar Airways. Qatar currently pays €33m to have its logo on the shirt. Rakuten will be paying €55m per season, plus bonuses of €1.5m if Barça wins LaLiga and €5m if the team wins the Uefa Champions League.

The club is delighted with the deal, and not just for the minimum 65-per-cent uplift. “In the new world, the way that we communicate with our fans, our members, is completely different,” Arroyo says. “Rakuten is a company with global ambition. It is always in the Forbes list of the 20 most innovative companies. If you are working hand in hand with one of these corporations, you have an advantage. The way big data is managed today is crucial. In the past, when your only data was from free-to-air TV, you had big numbers but you were lost about what those people were looking for from you. In a digital world, you know.”

The percentage uplift arguably confirms the club’s tough negotiating position. The Spanish press reported in January that talks for a longer extension with Qatar Airways had fallen through because the club was making unrealistic demands on the Qatari airline – in the €50m to €60m-per-season range. In the end, Qatar agreed to extend its five-year deal for a further season at a small increase on its €32m-per-season contract.

The uplift in the renewal of the club’s kit supply deal with Nike sounds even more dramatic. In its current 10-year deal with the club, Nike pays €33m per season. The deal which begins in the 2018-19 season, is worth €155m per season. However, as Arroyo candidly points out, the difference has a lot to do with how sponsorship deals are reported by clubs.

“The numbers quoted by clubs are sometimes net, just the profits on the deals, whereas others publish gross income. This time, we have published the gross value of the deal. This figure is the total income from all the rights around the deal. This includes performance bonuses, royalties – everything.”

The exact mechanics of how the club will get to that €155m remain a secret between Barça and the US sportswear manufacturer but Arroyo does confirm that the basic fee will increase by 48 per cent and the royalty the club takes on kit sales by 50 per cent.

Media-rights income

The club is also benefiting from increased media-rights income for its matches in LaLiga and the Copa del Rey. In 2016-17, this is set to hit €150m, but after solidarity payments and other expenses will be a net of about €125m, Arroyo says.

Like all Spanish clubs, Barcelona will benefit from the return to the collective selling of its media rights. In the last season of individual selling, 2014-15, the 42 clubs of the top two divisions earned a total of just over €790m. In the first collective deal, covering the 2015-16 season, this rose to over €1.25bn per season, of which €650m per season came from international rights. New three-year domestic rights agreements were signed in December 2015, pushing total income for the period 2016-17 to 2018-19 up to €1.68bn per season.

The Spanish league is now approaching the market in “a more professional way” that makes the club confident the growth will continue in the next cycle, Arroyo says. This includes the creation of a unique broadcast slot for every match. “The value of international rights under the old system was just under €200m per season, now we are at €650m per season. There is a long way to go. This is the first season where we have been working on timings that make sense outside of Europe, in both America and in Asia.”

Collective selling

As by far the biggest earners under the individual selling regime, Barcelona and Real Madrid had an interest in defending the status quo. The two clubs took very different directions on the issue. While Real lobbied against the change, and was the only LaLiga club to vote against it when it was approved at a league meeting in September 2015, Barcelona saw the commercial logic of the proposal from the outset, when it was put forward by the G-30 group of small and medium-sized clubs.

“We are proud of our role in bringing around the central selling of media rights,” Arroyo says. “We had been working towards it since 2010, when we started working with the G-30 clubs. It was about trying to make our league more competitive and to have financially healthy clubs. In 2010, we were at around €140m per season, and there were some clubs in our league at around €15m per season. Now the lowest-paid club is about €46m. To help achieve this, our income was frozen at €140m per season.”

Arroyo’s experience of running a world championship, albeit in a different sport, had taught him the value of competitive balance. “When I joined the board, my colleagues asked me whether I thought the situation was sustainable. It was clear to me that the wealth gap did not make sense. We need clubs in our league which are competitive. If they discover a new player, they are not forced to sell him the season after. It is a benefit to us if the teams we are playing against are also in a healthy position. Now we are growing towards what we had hoped for, which means increasing our own media revenues but also helping the others to grow.”

Champions League overhaul ‘absolutely necessary’

Another area where the club will enjoy an increase in media-rights revenue in the coming years is from its participation in the Uefa Champions League. One of the biggest political stand-offs in sport in 2016 was that which pitted the European Club Association and Uefa against the European Professional Football Leagues over the changes to the format of the competition and the way its revenues will be distributed, which favours clubs from England, Spain, Germany and Italy.

Most of the changes from the 18-19 season onwards were agreed between Uefa and ECA, leaving EPFL furious about its lack of involvement. The league body objects to the creation of a joint venture between the clubs and Uefa to manage the governing body’s club competitions.

As one of the most powerful members of ECA, Barcelona is firmly behind the changes. “This is an evolution of the Champions League that everyone understood was absolutely necessary,” Arroyo says.

“In any club competition, who manages the competition? The clubs. The Premier League is managed by the clubs, the Spanish league is managed by the clubs, the NFL is managed by the clubs, the NBA by the clubs. The clubs take the risks, paying the salaries of the players. This new joint venture has real power and working with Uefa, we need to make this both successful and compatible with domestic leagues.”

Global expansion

On September 6, in a burst of media razzmatazz, Barcelona opened a US office at 250 Park Avenue, New York. Former star player Ronaldinho kicked balls into an empty net for photographers while the top of the Empire State Building was illuminated in the club’s blaugrana colours.

The office was to be the gateway for the club into the Americas and two months later, it landed its first fish: Canada-based financial services company Scotiabank became the club’s official banking partner in Latin America and the Caribbean in a multi-year deal.

The decision to launch in America was entirely down to the success of the club’s Hong Kong office, which had been opened two years earlier. In that time, the China office delivered 15 local and regional deals but, crucially, also two global ones, with mobile phone company Oppo and food manufacturer Nestlé.

“For years, there were debates among board members about whether to open offices around the world,” Arroyo explains. “Finally, we opened a Hong Kong office and its performance motivated us to open the office in New York. We want to replicate there what we have achieved in China. The US is the world’s first sports market. We are there to find new sponsors and build relationships but also to learn about how they manage the sports industry.”

Barcelona in numbers:
Media-rights income €181m p.a.
Sponsorship income €159m p.a.
Kit sponsor (Nike, from 2018) €155m p.a.
Main sponsor (Rakuten, from 2017) €55m p.a.
Cost of rebuilding Camp Nou €600m
Potential value of naming rights €200m
Annual payment to Unicef €2m
Global fan base 300m
Followers on social media (July) 145m
Children helped by FCB Foundation 1m

Social media

Expansion can take many forms and for any sports club these days digital and social media are essential ways to expand reach. Barcelona has been hugely successful so far in this area, but there is a feeling at the club that it is not getting its just reward for driving millions of people to social platforms.

In July, Forbes ranked Barcelona as the world’s top sports team on social media, ahead of the likes of Real Madrid, Manchester United and American Football’s NFL. The club had a total of 145 million followers generating 1.45 billion interactions across all platforms. Such exposure and engagement levels help the club to increase the value of their sponsorship agreements.

“Everyone is now watching clips and highlights on social networks,” Arroyo adds. “That expands the audience. You can show a photo of Messi after scoring a goal, with the logo Qatar Airways, Beko or Nike – clearly this picture has value. These images, or clips from a training session, immediately have millions of views and shares. It has a special value. If someone says they want to follow you, you know who is following. You know about the person, about what they like.”

For Barça, however, the value from sponsorship and targeted marketing does not come close to what it believes it should be earning from the content.

As Arroyo puts it: “The big platforms in social media are using our images, our players, our brands, our content to create more and more followers and we see no straight cash from that. Clearly, there is a benefit we can get in being able to give exposure to our sponsors. But we are missing out on another kind of value. The risk involved, the budget to create all this digital content, is on our shoulders. To make a film costs money, and someone must pay.

“The social networks say, ‘we give you exposure’. But TV also gives us exposure, and it pays for the rights. It should work the same way with social networks. We understand that the social business model is still in evolution. With traditional media, you give rights, you receive money in exchange. Of course, broadcasters have the most valuable kind of rights. But the way sport is consumed today, in short clips on social networks, it makes sense to be paid for that.”

Stadium development

In April 2014, following only the second referendum of members in the club’s history, the decision was taken to rebuild the Camp Nou rather than build a new stadium on the site. In March this year, two architectural firms, Nikken Sekkei from Japan and local architects Pascual i Ausió Arquitectes, were chosen from 26 applicants to design the redevelopment, which will increase the capacity from 98,500 to 105,000. Work is scheduled to start in the 2017-18 season and end in 2021 or 2022, with a budget of €600m.

Arroyo says the new stadium will be transformational for the fans in terms of their match-day experience and for the club commercially.

“Our stadium was built in 1957,” he points out. “When you go to new stadiums around the world, like [Arsenal’s] The Emirates in London, you realise that ours is a stadium to play football, theirs is a stadium to play football and do business.”

The new complex will have all the modern services like restaurants and stores and facilities to improve access and mobility that fans in many European countries now expect as standard. “We need to create an atmosphere where fans arrive earlier, talk to their friends, and want to stay after the match and have a drink. Now, fans arrive a minute before the match and leave as soon as it ends.

“We are adapting to the level of stadium for a club of our level: if we are the number one in terms of followers, in terms of budget, we need to have a first-class facility. And it is not just for matches. This year, 1.9 million people visited our stadium tour experience and we have targets to grow that number.”

Rebuilding, rather than relocating, inevitably means disruption and inconvenience for fans but the development has been planned to minimise this, with work taking place on only one side of the stadium each year. “We will also do a lot of the work during the summer,” Arroyo says. “With the number of fans we have, there was no other stadium in Barcelona that could have offered a temporary solution.”

Defining success  

The club has set itself a target of €1bn in annual revenues by 2020-21, and believes it is on course to be the first club to break that barrier. This year the club will earn €679m and be pushing €700m next year.

It is the kind of ambition that might be voiced in the boardroom of any of the clubs in the upper echelons of the Deloitte rich list. But what about Barça being mes que un club – something different, something unique in football?

The motto was coined in the 1960s as an expression of Catalan pride at a time when the regional identity was suppressed by the country’s Fascist dictator, General Franco. The political passion is still very much a part of the club’s DNA – in 2014 it signed the Catalan National Pact for Self-Determination – but as Spain has evolved into a modern democracy, so the meaning of the phrase has shifted and broadened. “In the past, it had certain meanings, one of which was about dictatorship in Spain,” Arroyo says. “Now, there are other things, other values, which make us mes que un club.”

He mentions some of the things which are products of these values: a commitment to youth development both at the club and around the world; the investment in charitable initiatives; keeping season-ticket prices at an affordable level for its members; and the creation this year of an independent, club-owned university.

“First, we are a multi-sport club, and clearly our fans, our members – who are our owners – expect us to be at the top of any championship we play in. But it is also a form of success that as a club we are admired everywhere, that our strategy is followed by many other clubs, and that many kids in the world follow us and our players. How you win and how you lose is important, because we are a reference point for kids everywhere,” Arroyo says.

The club has a relationship with the UN children’s charity Unicef dating back to 2006 and famously carried the Unicef logo, rather than a brand name, on its shirts until 2010 when it was replaced by the Qatar Foundation.

In February, the club voted to increase its annual contribution to Unicef from €1.5m to €2m. In the 10 years the club has supported the charity, Arroyo points out, more than one million children have benefited in some way. Every year, a further 500,000 children around the world benefit from the club’s own charitable initiative, the FCB Foundation, or its collaboration with 11 others, including the Bill and Melinda Gates Foundation.

“We want to be the club of kids everywhere,” Arroyo says, as our interview draws to a close. “And I think we are.”

In the Pakistani city of Quetta, there is a five-year old Afghan boy called Murtaza Ahmadi who would probably agree.

 

CURRICULUM VITAE: Manel Arroyo, vice president, media, marketing and communication, FC Barcelona

Arroyo was first elected to the board of FC Barcelona in July 2010. His position on the board was confirmed in the elections of July 2015.

The 56-year-old Catalan was already a high-profile figure in the sports industry for his role in motorcycling. Since 1992, he has been director general and a board member in Dorna Sports, the organisers of the World MotoGP Championship.

At Dorna, he is responsible for all media relationships for the organisation, principally the management of content, production, sales and distribution on various platforms.

He began his career as a reporter at Radio Vic and then joined the national radio station RNE. In 1986, he joined the public-service broadcaster TVE, where he worked as a commentator of Formula 1 and rugby. He was also assistant director of the sports programme Estadio 2.

In 1988, he joined the Reial Automòbil Club de Catalunya to head up the press and publications department. He was a member of the team which designed and built the Circuit de Barcelona-Catalunya and in 1991 helped organise the first grand prix at the circuit, as well as working to ensure the Rally of Catalonia formed a part of the FIA World Rally Championship.

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