How football clubs manage their brands:
From conception to internationalisation

Brand Finance's 2021 annual report estimated the total brand value of the top 10 football clubs at over $13 billion, over four times the $3 billion recorded in 2011. This exponential increase is an expression of sport organizations’ growing focus on their own image. Building, managing, and promoting their brand now seems to be the other match to which football clubs have committed themselves, with the aim of making it a lever for creating financial and symbolic value.

Before dealing more specifically with the field of football, it is important to be clear on what a brand is. In its broadest sense, a brand is defined by the American Marketing Association as “a name, term, sign, symbol, design or any combination of these elements used to identify the goods or services of a seller or group of sellers and to distinguish them from competitors.” The focus here is on the attributes that differentiate one brand from another.

For companies, the brand creates value in two ways: On one hand, the marketing of a well-known brand leads to higher profits, because the brand's notoriety and image justify holding a higher market share and maintaining a higher margin rate; on the other hand, the reputation of a brand allows companies to reduce their marketing costs. For a strong brand, the launch of a new product requires lower commercial, promotional, or advertising investments.

Developing a brand, a three-step process

- Definition of brand identity: developing a brand first requires defining one's identity placed at the heart of four other dimensions: the person(s) (e.g. athletes), the product(s), the organization, and the symbol(s). This step must lead to a singular result that emphasizes the uniqueness of a brand, so that it can be distinguished in the market.

- Market positioning: once its identity has been defined, the brand must analyze the different types of consumers likely to be interested in it. The segmentation criteria used must result in population segments of critical size. This step makes it possible to carry out differentiated marketing actions according to the segments and to propose a specific offer adapted to them.

- Development of marketing actions: This operational phase is the concrete activation of identification, positioning, and segmentation steps. It must combine the uniqueness of the brand in the field and aims to recruit or retain customers, using tools that fall within a broad spectrum of marketing approaches (e.g., relational, experiential, digital, or responsible marketing).

The specificity of sport brands

In the sports industry, the brand concept emerged in the mid-1990s. This can likely be explained by the fact that increasing competition from other entertainment industries has led sports event organizers to develop a more strategic approach to brands in order to ensure long- term sustainability. This is all the more complex because of the specificity of the product offered. The product consists of the following two components:

- The “core”: it is the show, its stage (stadium), its actors (players and spectators) and their costumes (jerseys, among others).

- The “auxiliary characteristics”: integrated into the main show, these are the peripheral entertainment (music, contests, group activities, etc.) which allow fans to connect with each other and experience a sense of belonging and pride.

The influence of external stakeholders

The development of a brand on the ground cannot be the sole responsibility of the club, but it must involve four main stakeholders: the media, sponsors, fans, and local communities. Their influence manifests itself through several stages of brand management, from identity construction to its internationalization. The process of building, managing and disseminating a football club brand must therefore include the following stakeholders because of their legitimacy, skills, and resources.

- Media: These are the leading source of revenue for clubs, with an average of 45% (in 2019-20 according to Deloitte's annual report). In addition to the financial income relating to television broadcasting rights, the media offer clubs the opportunity to increase their visibility and penetrate new international markets.

- Sponsors: The second largest source of income (38% on average) for clubs, sponsors aim by their presence in sport to increase the dissemination of their brand, but can also participate in the development of the clubs to which they are linked.

- Fans: Clubs are increasingly inclined to involve direct (stadiums) and indirect (media) consumers in their development, in order to strengthen the emotional link with fans, in particular through digital fan experiences. This makes it possible for clubs to retrieve and study data in order to segment their offer in terms of ticketing (17% of clubs' off-movement revenues) and merchandising, but also to expand their fan base on social networks. This in turn allows clubs to interact with the public and to highlight selling points with sponsors.

- Communities: Co-branding between a football club and its host city can, on the one hand, provide the host city with media exposure that can generate positive benefits for the local population, tourists, and potential foreign investors. This co-branding can, on the other hand, benefit the club's brand, as is the case with Paris and the PSG, whose identity and story are largely based on physical (Eiffel Tower) and symbolic (blue and red colors) references of the French capital, which is the main asset in its internationalization strategy.

Internationalizing a football club brand, a must in the sporting global era

The next step after brand building is the dissemination strategy. In a globalized context, choosing internationalization is self-evident. As for the means of internationalization, they may concern adjusting broadcasting schedules or recruiting foreign players from target markets. They may also involve a direct presence of the foreign public via pre-season tours and the opening of training academies, or club shops.

To summarize, from its conception to its internationalization, a football club's brand goes through three levels. The first level reflects the brand’s strategic construction in order to develop its identity into a market positioning. The second level concerns the operational deployment of the brand, by conducting marketing actions faithful to the club's identity and the positioning it has chosen. The third level is the yield level which underpins the results of the brand’s construction process, in terms of awareness, associations, and loyalty.

The next question is, then, how to evaluate the strength of a brand and its value. Brand Finance defines the former as "the efficacy of a brand’s performance on intangible measures, relative to its competitors”. It is directly influenced by on-pitch performance and brand management. In order to determine the strength of a brand three areas are analyzed: marketing investment, stakeholder equity, and the impact of those on business performance. Metrics within these categories include stadium capacity, squad size and value, social media presence, on-pitch performance, fan satisfaction, fair-play rating, stadium utilization, and revenue.

Regarding the brand value, Brand Finance calculates it by using the “royalty relief” approach. “This involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a brand value understood as a net economic benefit that a licensor would achieve by licensing the brand in the open [i.e. global] market.” (Brand Finance, 2021)

Conclusion: Branding, a complex process, all the more so in sports

To have longevity, a club’s brand needs a balance between its deployment on the field (the competition itself) and off the field (the entertainment that surrounds it). A brand is then built from an identity, before choosing a positioning in the market and sending clear messages that give it substance. In addition to the delicacy of this process, brand managers must also deal with internal (sporting and financial objectives) and external (competition from other brands and other types of entertainment) pressures. However, the main opportunity, both in symbolic and economic terms, remains the opening up of global markets, thanks to sports’ power of communication.

References:

Brand Finance. (2020). Brand Finance Football 50 2021

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