Academic journal article International Journal of Sports Marketing & Sponsorship

The Proto-Image of Real Madrid: Implications for Marketing and Management

Academic journal article International Journal of Sports Marketing & Sponsorship

The Proto-Image of Real Madrid: Implications for Marketing and Management

Article excerpt

Abstract

Under club president Florentino Perez, Real Madrid Football Club appeared to utilise the proto-image of the firm (PIF) management approach. Such a strategy embraces the use of branding, values and mid- to long-term planning to generate income. In the case of Real Madrid, the strategy comprised the recruitment of 'Galacticos', which helped it to become the world's number one club in terms of both turnover and profile. Although the strategy delivered success economically, questions remain regarding its sustainability for a sporting organisation.

Keywords

Real Madrid

Galacticos

Florentino Perez

proto-image

PIF management strategy

Executive summary

In the light of the growing importance of sport in economics, this paper offers a business administration perspective on one of the world's major sports clubs, Real Madrid Football Club. It analyses the economic success of the club and uses various business concepts to understand, ex post facto, the processes and strategy underlying the Real Madrid model during the presidency of Florentino Perez (2000-2006).

This paper also attempts to discover the strategy blueprint and an explanation for its implementation. Following this, interest centres on answering such questions as:

1 Is the club's economic success a result of business administration and marketing?

2 Is the model sustainable?

3 Does it depend on the personality of leadership? If so, could it be replicated by subsequent presidents?

4 Why wasn't the model used in the past?

The paper proposes that the club president, Florentino Perez, embraced the proto-image of the firm (PIF) approach to business management. The PIF approach effectively centres on the use of branding, values and mid- to long-term planning to generate income. Central to the plan was the recruitment of the so-called 'Galacticos', high-profile players such as Zidane, Figo and Beckham.

The paper demonstrates how this business strategy helped the club to develop its commercial operations internationally, and how it aided the club in sourcing new revenue streams in areas such as merchandising, licensing and sponsorship. During the Perez presidency, the club emerged from high levels of debt to become profitable, in the process achieving the highest turnover and profile of any club in the world.

The conclusion drawn from the analysis is that the 'Perez' model, while financially successful, allowed poor sporting results, especially towards the end of the Perez tenure. This might signify a difficulty in striking a balance between excellence in business and in sport, or even a trade-off between the two. The model may also have been the 'brain child' of the incumbent and so may vary with a change of presidency.

The long-term viability of the PIF model at Real Madrid might never be fully understood because of the departure of Perez and the apparent reluctance of the club to continue with the 'Galactico' recruitment policy.

Introduction

The relevance of sports economics has greatly increased in recent years, not only as reflected in business publications, but also in economics departments and university programmes (Szimansky, 2003), reflecting an increased popularity among economists and in the business community. Sport in general has also become increasingly relevant to society, as seen through the growth of media coverage. There is now a vast diversity of sports-related TV programming, including channels dedicated to sport. Recent data shows that 70% of the Spanish population frequently watches TV news, where broadcasts devote around 20% of the time to sport--similar to the coverage given to politics (1). This social exposure of sports-related topics also contributes to the growing notoriety of those involved in sport. Sports stars gain equal prestige to many politicians--sometimes greater. …

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