Relevent Sports’ International Champions Cup reaches the point of profitability

Relevent Sports' executive chairman Charlie Stillitano explains how Stephen Ross’s $100m investment in the exclusive pre-season tournament is finally paying off, while Bayern Munich’s key board members illustrate the different ways the club benefits from participating. Bob Williams reports.

Relevent Sports executive chairman Charlie Stillitano

Relevent Sports’ International Champions Cup – founded by Miami Dolphins owner Stephen Ross and organized by veteran American soccer promoter Charlie Stillitano – has changed the face of the football off-season.

Consolidating series of club-organized mini-tours and one-off friendlies – and expanding upon US-based predecessors ChampionsWorld and the World Football Challenge – has created a global tournament in which Europe’s elite now spend every summer.

The ICC attendee list reads like the Champions League last 16 and the tournament has become so desired that Turkish club Fenerbahçe offered to pay to take part this year.

According to Stillitano, the ICC is now “at the point of profitability”, though Ross’s financial backing remains crucial to its success. Ross has invested over $100m – “a good deal of money,” he told Time magazine in 2017 – over six years to keep the event going. “But I really believe that in the long term, this is what America wants to see,” Ross added.

The ICC replaced the World Football Challenge after Creative Artists Agency sold the rights to the tournament to RSE Ventures, Relevent’s parent company, in 2012. Investment vehicle RSE was co-founded by billionaire real-estate developer Ross and his business partner Matt Higgins, a former New York Jets executive.

The competition has developed significantly since its 2013 launch, reaching a high with last year’s El Clasico Miami, just the second staging of a Barcelona-Real Madrid derby outside Spain (the first a largely-forgotten friendly in Venezuela in 1982).

Eight teams contested the first ICC across seven venues; this year’s event included 18 teams in 23 venues over three continents (Asia, the US and Europe). A women’s and boys’ tournament have been added while next year there will be a girls’ event.

The ICC has always taken place in the US, with Asia staging matches since 2015. Europe has hosted four tournaments while Australia provided venues in 2015 and 2016. Clubs are willing to travel further during years when there are no major competitions such as the World Cup or European Championship. Last year there were seven games in Asia and none in Europe; this year, following Russia 2018, there were three matches in Asia and seven in Europe.

The format has also changed over the years, moving from a group-stage competition with knockout rounds (2013-14) to a continental league-based competition (2015-17) to, this year, a single-league format with every team, for the first time, contesting three matches. Tottenham Hotspur won on goal difference after finishing on the same points as Borussia Dortmund and Inter Milan.

Some match-ups are specifically arranged, like the Manchester derby in Houston and El Clasico Miami, both in 2017. But the fixture list is largely determined by the continents and cities in which the clubs want to play, as well as the timing of their summer tours.

Participation the key cost

Participation fees are the majority of the ICC’s costs, with clubs earning from $3.425m (€3m) to $6.85m a game. Clubs are paid different rates according to their stature and popularity, with Real Madrid and Barcelona getting more than Benfica or Lyon.

“You pay more for the Rolling Stones than you would for a smaller band,” Stillitano tells SportBusiness. “It can be broken down to: the more popular the team, the more people will pay to go see them and then they get paid a higher fee than their colleagues.

“Everyone fights for the rights of their own team and there are healthy, honest disagreements because a team may be widely popular in Japan but less popular in the States, and some teams are more popular in the States than others.

“It’s candidly based on the history of the club, the legacy, what players they have now, how they are doing – it’s our own model that’s evolved over time, I don’t want to pretend it’s a computer model at all. Now we say, ‘you’re an A+ level team, you’re an A level team, you’re a B+ level team.’ There’s no one really lower than that and it all has to do with what translates to ticket sales and TV sales. It’s not always easy to determine but the parameters are pretty easy ones.”

Clubs’ contracts contain a number of clauses that punish teams for not bringing their best players, and the clubs buy into this agreement in the main. “We try to always bring the best team available,” says Bayern chief executive Karl-Heinz Rummenigge.

Relevent no longer pays clubs’ hotel and travel costs, but this is mitigated by the greater participation fees. Stillitano says: “We still arrange the hotels, the meals, the airline, their charter flight – we do everything. One of the benefits we have is because we are local and in a different market – the US or Asia – we will get hotel deals for them. We will show them three hotels and they will stay at the Four Seasons, the Ritz-Carlton or whatever and we will negotiate the fee for them. It’s full service.”

Stadium rental is the secondary cost. Relevent now enters into multi-year agreements with a number of stadiums and training centres, and the repeat business has led to more favourable deals. This year the ICC repeated four US venues from 2017 – the MetLife Stadium, Levi’s Stadium, RedBull Arena, Hard Rock Stadium – plus five from 2016 that did not participate last year – Michigan Stadium, StubHub Center, Bank of America Stadium, Soldier Field and US Bank Stadium.

Stillitano adds: “Trust is a big part of it. We have become a very good client to the different venues: for training centres, hotels et cetera, we are repeat customers. With the stadia, we have different relationships in that Mr Ross, as an NFL owner, has partners in different NFL stadiums.

“Because we are an annual event, we are treated more like a fixture on the calendar. That helps as we’ve been able to cut better deals as they know we’re going to come back every year. We now have a lot of cities that are interested in us and the visitors’ bureaus go out of their way to help us.”

On top of paying rent for the stadiums, in many cases Relevent will have to share match-day revenue with the venue owners as well. “In some stadia you will share concessions, in some you won’t. Some you will share parking, some you won’t,” says Stillitano. “It depends on the different stadium deal and I would say they have got better over the years.”

The ICC was noted for a dearth of sell-out games this year – partly due to number of stars resting after the World Cup – with Tottenham v AC Milan achieving an attendance of 31,264 in the 66,655-capacity US Bank Stadium in Minneapolis, and 29,195 fans coming to see Bayern Munich v Manchester City in the 65,326-capacity Hard Rock Stadium in Miami.

Relevent does its best to react appropriately to ticket demand by, for example, this year moving Manchester United v AC Milan from the Rose Bowl to the smaller StubHub Center in Los Angeles. But often the company’s hands are tied by the demands of the clubs and host cities in which stadiums they play, as well as the multi-year venue deals.

“This is a World Cup year so we have our challenges,” Stillitano concedes. “You always have to look at where the market’s going, what year it is, what players are here – but it’s really driven by where the manager and commercial department want to be and what the city is offering us. Sometimes they will say they want us at a certain stadium. It may seem to make more sense to be at a different size stadium but the city wants you somewhere specific.”

Adding to Relevent’s costs are sanctioning fees that must be paid to the United States Soccer Federation, set at five per cent of the gross gate receipts of every ICC match.

The 2012 ruling that USSF has authority over foreign national and club teams playing in the US – and the right to charge organizers sanctioning fees – eats into Relevent’s income. “The sanctioning fees do affect your bottom line. I would be lying if I said it doesn’t affect us,” Stillitano says.

Relevent’s revenue drivers

Having shelled out for the participation fees, stadiums and training centres and other related costs, Relevent has three main sources of income: ticket sales, media rights and sponsorship.

Ticketing delivers about two thirds of the ICC’s income, and is by far the biggest income stream. A precise figure for total revenue is not available because of the complex income-sharing agreements in place with some stadium owners. Stillitano told The Guardian in July: “There were 492,000 [tickets] sold in 2013, 642,000 in 2014, 985,000 for 2015, 964,000 in 2016 and 903,000 for 2017. And we think this year we’re on track for 1.1m.”

Tickets often cost more than $100, which has led in part to the lack of sell-outs. Stillitano defends the price points, saying: “Ticket prices are high compared to European games but they’re not high compared to a Knicks ticket or a Broadway show. As we grow sponsorship and TV that will make it easier to pay the teams and it won’t just be based on tickets. That’s been the big shift over the years.”

Sponsorship and media-rights revenues have risen since Relevent took control of these rights in 2014. In the first year of the tournament, 2013, teams retained the media rights in their home countries, with Relevent’s remaining rights “not worth much” according to Stillitano. SportBusiness research suggest they were worth about $600,000.

Relevent bought these rights from the teams the following year in return for higher participation fees. By 2017, the tournament was generating closer to $20m in media-rights revenue.

Stillitano says: “As our reputation grows we’re getting better and better national TV deals. We’ve gone from six-figure incomes to good seven-figure incomes for national TV. It’s changed drastically over the years. The fees have probably tripled over the past couple of years. As our reputation grows we’re getting better and better national TV deals.”

Greatest interest comes from European countries where the participating teams are located, and the US. “The rights fees in the States have come strong,” he says of the deal with ESPN, which ran from 2016 to 2018 and was worth about $1.5m in its final year.

“Before we almost bought time on TV – they were decent deals just to get the games on a good network, now we have several networks pushing to get the games and that obviously pushes up the fees.”

“It’s better that there’s one company that makes deals with the TV stations,” says Stefan Mennerich, Bayern’s director of media, digital and communications. “If Charlie is able to sell many matches to the TV stations in each respective region that helps to have negotiating power. That improves the income again.”

Relevent tries to strike one-year deals for ICC rights, backing its ability to grow their value year-on-year. Multi-year deals are usually at the broadcaster’s urging and come with steep escalators.

Participating clubs with their own channels, such as Manchester United and Liverpool, are given the option to buy rights.

Clubs, too, can also buy back sponsorship inventory in the stadiums, such as perimeter advertising, as Manchester United and Bayern do for their respective partners Chevy and Audi. Rummenigge says: “In our case we have to involve Audi in perimeter sponsors at the games as our tour is called the Audi summer tour.”

This year the ICC has 13 sponsors, with Heineken the main ‘Presenting Partner’ – having replaced Guinness in 2016 – and Mastercard, La Liga, McDonald’s, Hertz, Hennessy, Rakuten, Konami and Avocados from Mexico eight new ‘Official Partners’ for this year. As the tournament has matured, the ICC has been able to secure multi-year deals, with Ally, Gatorade, Vivid Seats and XYIENCE continuing as ‘Official Partners’ from 2017. Sponsorship revenue rose to around $23m in 2016, an almost four-fold increase on 2014.

Stillitano says the ICC format itself has increased sponsorship revenue for summer friendlies. “The model when clubs toured not as the ICC but as a team, a lot of sponsors would say, ‘we need you to do games in Malaysia or the US or China’ wherever that might be and the club would go out and create a tour around that sponsorship,” he says.

“When we bought all the home territory rights for TV, we bought all the sponsor rights, too. That has really changed the dynamic of the tournament. Before it was a hodgepodge of club sponsors, ICC sponsors…now we can go out and monetize that. Heineken is a good example. They didn’t have an interest in single games but now it’s a tournament and each team play three games and we’re tied together between Asia and the US, Heineken is now interested.”

From next year, Relevent will try to help some clubs with their overseas commercial endeavours via a subsidiary called Relevent Plus, which will provide activation for the teams and their sponsors.

Stillitano says: “We found that a lot of clubs would hire outside agencies that would provide watch parties or sponsor events. Relevent Plus is an opportunity for the clubs to hire us to do the actual events. It makes a lot more sense as we can do it cost-effectively and we can integrate it into our marketing. We want to give more to the teams than just taking care of them in pre-season, we want to give them activation around their sponsorships and brand. It’s been very well received thus far.”

Power to the clubs

There are several advantages to major clubs participating in the ICC, of which the fees are only one.

It also takes some of the effort out of planning summer tours. “It’s much better to have someone who co-ordinates everything: the dates, the stadium, the organization here in the country,” says Bayern Munich’s president Uli Hoeness.

Stillitano notes: “When you are running a tour yourself…and you are in a new territory, it’s never easy. We’re able to work with their people and give them some comfort – and that comfort leads to trust.”

Almost immediately after one tournament ends, the clubs let Relevent know which continent they intend to play in the following summer, generally Asia or the US. Only then can a preliminary fixture list be formulated.

Relevent also arranges summer friendlies outside of the ICC, such as Manchester United’s matches against Club América at the University of Phoenix Stadium and against San Jose Earthquakes at Levi’s Stadium.

“Some managers, like Jose Mourinho, will ask for two games outside the ICC. We still arrange that and take the risk on that. That’s almost a courtesy to the manager and the club,” says Stillitano. “You don’t want those teams putting on a game in a market where you’re going to be so you may as well deal with the logistics of those games too.”

Playing in the ICC also increases Europe’s top clubs’ leverage with Uefa, the continent’s football governing body.

Plans for a European Super League date back to 1998 and rumours of a breakaway have continued ever since. Stillitano and Ross play a small but significant role in this ever-evolving situation. In 2016, to much controversy, Stillitano held talks in London with representatives from Arsenal, Chelsea, Liverpool, Manchester City and Manchester United – nominally to discuss the ICC but the formation of a super league was also on the agenda.

It wasn’t long after that Uefa made life easier for the top clubs of its top four leagues – Spain, Germany, England and Italy – by making qualification easier and giving greater payouts for long-term success.

Stillitano insists Relevent maintains “a strong relationship” and “good friendship” with both Uefa and Fifa but he admits the ICC helps maintain a sense of “collegiality and camaraderie between the big European teams”.

Bayern, for one, agree, with this sentiment. “The ICC is thinking in the same direction as the big clubs,” Rumminegge says. “The international clubs like each other – there are big friendships. So it doesn’t matter which club you play because most are friends of ours and it’s nice to meet them in a convenient way without the pressure of playing each other in the Champions League.

“The most important thing is that Relevent is showing Fifa and Uefa that the clubs, together with a private company, can do the job maybe better than them.”

Hoeness adds: “Sometimes it’s not so bad to have a second option in your pocket.”

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