A piece comparing the affect of globalisation on two Spanish clubs draped in history - FC Barcelona and Athetic Club de Bilbao.
In recent years, there have been massive changes in professional sport and business practices on a worldwide scale due to many advances and this report will show how this has had implications on sport managers worldwide.
This report will firstly take a brief look at how the commercialisation and globalised eras have come around and then look at both of these eras in more detail and how they have affected sport. The report will then draw upon this academic theory and present a comparison in the business models of FC Barcelona and Athletic Club de Bilbao, two Spanish clubs rich in tradition and history that have had to adapt due to business advances.
Changes in the Sports Development Framework
In 2004, Beech and Chadwick developed the sports development framework that is shown below in figure 1. This framework outlined the 7 stages that sport businesses have passed through, or may still be going through and elaborates on each stage. Many professional sports are now developed to at least the post-professionalisation stage with many sports now in the commercialised stage.
The sport development framework
Commercialisation is the stage that many professional sports are currently at. It is seen as a revolutionary process which is described as 'the sport develops an overtly business context, external organisations see the opportunity of using the sport for their own purposes, typically marketing in the form of sponsorship’ Beech & Chadwick (2004). This process of commercialisation has resulted in massively inflated revenue streams for many sporting organisations and therefore the importance of financial management becoming more relevant to sport managers. The main source of revenue for many football clubs within England is received through television broadcasting agreements. This greater exposure has led to sponsors wanting to become involved with sporting organisations and coincidentally leading to a new approach of trying to maximise revenue even more so through merchandise sales.
Below are two figures that have been drawn up by Beech (2010) that show revenue streams in the case of football clubs and the differences between the professionalised era and the commercialised era.
The Professionalised era
The Commercialised era
Globalisation isn't a stage that is directly recognised by the sport development framework but it does have similarities with the post-commercialisation era that is recognised as part of the framework. The term 'Globalisation' is a more widely used business term that has been developed due to advances in general business practice. BBC News (2008) described globalisation; 'this process is not new, but its pace and scope has accelerated in recent years, to embrace more industries and more countries.' This description was also backed up by Anitat (2002) who described it as 'the process through which an increasingly free flow of ideas, peoples, goods and services and capital leads to the integration of economies and societies.' Within sport ‘globalisation has added impetus to international rivalries that date in the modern era from the 1896 Olympic Games’ Hill (2006).
This increased exposure has benefited many sports and where sports such as soccer, cricket, tennis & golf have been global for years, less well-known sports are also benefiting such as lacrosse, table tennis and field hockey. However, according to Giulianotti (2002) ‘no single sport has benefited from its global exposures as much as soccer.’ This idea is partly described below, in figure 4, which was devised, by Hall (2006) and looks at how Manchester United have risen to be the global brand that they now are.
The rise of Manchester United as a global brand
Case study: How has globalisation changed the business models of FC Barcelona and Athletic Club de Bilbao.
Spanish football has gone through a transformation in recent years with unprecedented success for both the national tea. With Spain's first ever World Cup trophy coming only last year it marked the end of an 80 year wait for Spaniards to be able to declare themselves world champions of football. This case study is going to look at how two of Spain's most successful clubs, FC Barcelona and Athletic Club have adapted to the commercial development of world football and how their business models show this development.
An Introduction to FC Barcelona
In modern day football, FC Barcelona is arguably one of the world's largest and most successful sporting organisations with unrivalled success in national, continental and worldwide competitions in recent years.
FC Barcelona was founded in 1899 by a group of Swiss, English, Catalonian & Spanish footballers, and became a co-founding member of La Liga in 1928. The club was initially formed solely as a football club but later developed into a polideportivo (a multiple sports club) that competed professionally in other sports. FC Barcelona have played at the Nou Camp since 1957, despite the Nou Camp having a capacity of 99,000 and being the biggest football stadium in Europe, the redevelopment of the stadium is one of Barcelona's main concerns in their commercial development.
Chadwick (2009) stated that ‘clubs in countries such as England and Italy have been owned by local business people or industrial families FC Barcelona was founded as a membership club. This is still the case, with the club achieving a total worldwide membership of 145,000 in 2006’ this is an idea that has faded away in Spanish football 'but a handful, like Osasuna, Real Madrid, Barcelona and Athletic Bilbao, are still run as sports clubs, with thousands of members (socios) as owners rather than a small group of shareholders' Rogers (2009).
An Introduction to Athletic Club de Bilbao
Unlike their case study counterparts, Athletic Club are unable to claim any sort of on the pitch success.
In recent times with their last domestic trophy having come in 1984, when they succeeded in winning La Liga. However, one ideology they may be able to claim success over their illustrious counterparts is their resistance to changing the club ethos and scope through commercial development.
‘Athletic are one of the oldest and most successful clubs in Spain. Formed in 1928 (only Recreativo de Huelva are older), the club has since won eight national championships and twenty-three king’s cups’ Murphy (2011). The club is seen more as a religion for a majority of its Basque supporters who see Bilbao as ‘a symbol of Basque nationalism and pride’ Murphy (2011) and this religion like idea is shown by which the clubs stadium 'San-Mamés' is more commonly known as 'The Cathedral'.
The idea of Basque nationalism that runs throughout this sporting organisation is shown in Bilbao's policy of 'cartena' which 'has existed for almost 80 years, according to which the team employs only Basque players' Nili (2009). This policy is unique and is a characteristic that Bilbao supporter's and socios are very proud off. This was reaffirmed in a survey by 'El Mundo' (A Spanish newspaper) that found '76% of the Athletic fans said that they would rather see Athletic relegated to the Second Division than allow the club to give up the tradition of la cantera’ Murphy (2011). Despite this smaller selection pool of young talent, Athletic still seem to succeed in La Liga and manage to find an array of young talent that helps the club stay in La Liga.
The political history of the two clubs and its commercial implications
Nili (2009) stated that ‘the main claim is that the differences between the two clubs’ behaviour can be attributed to varying characteristics of Basque and Catalan nationalism.’ This idea is one that goes deeper than the football club itself and looks towards the Spanish civil war which may go on to inadvertently explain FC Barcelona's motto of 'Mes que un Club' or in English 'More than a club'.
Even from the very beginning when football was starting to gain popularity in Spain, so were both the Catalan and Basque movements this meant 'Football became manifestly political very quickly in the case of both clubs' Nili (2009). This led to Bilbao implementing the cantera policy in 1919 whilst the catalanist FC Barcelona were being heavily fined and banned for 6 months due to crowds booing the Spanish national anthem at a Barcelona home game.
The Spanish civil war and the following Franco regime were also underlying incidents that showed how much both clubs meant to their respective regions and supporters alike. 'Following the war the Franco regime went to great lengths to “exorcise” the separatist spirit away from both clubs. One of the first symbolic steps was to force the clubs to change their names to “patriotic” Spanish names: the Catalan “FC Barcelona” became the Spanish “Barcelona Club de Football”, and the four red-yellow stripes in the club’s crest, representing Catalonia, were now two, like the Spanish flag; the English “Athletic Bilbao” became the Spanish “Athletico Bilbao”. The two clubs were forced to conduct all official meetings and communication in Spanish only’ Nili (2009).
FC Barcelona's victory over the oppression by Franco over them during the Civil War seemed to come when they beat Real Madrid 5-0, in Madrid in February 1974. This led to widespread Catalan celebrations and even an unusual soccer mention in the New York Times, who said 'that Johan Cruyff, the famous Dutch player who led Barca’s display, had achieved for Catalan nationalism in 90 minutes of play more than many politicians were able to achieve in decades of political struggle.'
Despite these points relating to both clubs history being seemingly unrelated to their commercial development, it would only become apparent that both clubs relationship with Spanish politics and their underlying business practices and beliefs would affect their outlook on their commercial development in the last 15 to 20 years.
How presidents elected by the fans have made a difference
As both FC Barcelona and Athletic Club are owned by a collective group of 'socios', it is up to them to elect the president for their club. The result of these elections in recent years has had quite an impact regarding each teams view on commercially developing themselves as a 'brand'.
Jose Maria Arrate
In 1994 as a result of Athletic Club's presidential elections, local wine merchant Jose Maria Arrate was elected to the role of president of Athletic Club. After being elected, Arrate wrote a piece for Bilbao's centenary book which sums up all the traditional values of Athletic Club de Bilbao to a tee;
'Athletic Bilbao is more than a football club, it is a feeling—and as such its ways of operating often escape rational analysis. We see ourselves as unique in world football and this defines our identity. We do not say that we are either better or worse than others, merely different. We only wish for the sons of our soil to represent our club, and in so wishing we stand out as a sporting entity, not a business concept. We wish to mould our players into men, not just footballers, and each time a player from the cantera makes his debut we feel we have realised an objective which is in harmony with the ideologies of our founders and forefathers.'
This quote is quite revolutionary due to the fact that this is a club president, who has a major control over the business functions of Athletic Club stating this and not just a loyal fan. This statement is one that portrays the passion and the link between Basque nationalists and Bilbao vividly.
The 2003 FC Barcelona presidential election marked a change in the history of the team as Joan Laporta was elected club president. Chadwick & Arthur (2009) described Laporta as 'a progressive, young reformer' who 'not only promised playing success but also a new focus on building the club’s off-field commercial activities.’ After missing out on the signature of David Beckham to rivals Real Madrid, Laporta's marquee signing of Ronaldinho from Paris Saint Germain in 2003 was one of his first acts of his ideology of improving their off-field commercial activities. At this time, Laporta's vice-president was ex Nike executive, Sandro Rosell and he was seen pivotal in securing the signing of Ronaldinho over Manchester United. Ronaldinho then led Barcelona to back-to-back league titles and a Champions League trophy.
One of Laporta's most controversial and risky moments as Chairman was to declare that he wanted to turn Barcelona into a 'global entertainment brand.’ This idea of a global entertainment brand was seen as ‘something akin to Walt Disney’ Chadwick & Arthur (2009) which then led to Chadwick considering Walt Disney in relation to Barcelona's political past. Burns (1999) had said that FC Barcelona were a non-fascist club, however due to Laporta's (2007) claim that 'If an alien came to earth the first things I would want them to know would be Coca-Cola, Disney and Barca but there is work to be done’ coupled with unconfirmed reports that Walt Disney is in fact a fascist organisation, lead to Chadwick (2011) considering if the idea of becoming a brand akin to Walt Disney goes against everything the club once politically stood for.
This 'Disneyisation' of football was looked at by Duke (2002). Unfortunately this research limited itself to only looking at professional football in England however there was an interesting table in Duke's research that is displayed in figure 5 below.
The Disneyisation of English professional football
In the case of FC Barcelona, the merchandising aspect of the above table relates to quite an extent, especially in the example of replica shirts. This idea of selling replica shirts links back to Laporta's decision to sign a marquee player, such as Ronaldinho when he was first elected to club president. This impact was looked at by Nili (2009) said that; ‘his Barca shirts and other related merchandise, sold all over the world, made him a global icon.’
Current Athletic Club president, Fernando Macua is the man who has been by many as the first president of the club that may bow under the financial constraints of the club not welcoming the commercial advances in football. Due to the lack of revenue in recent years and other clubs high-spending transfer spending and in the case of Malaga FC, 'financial doping' Beech (2011) from foreign investors, Macua announced that for the first time in the clubs history they would 'use the team’s shirt for commercial purposes, generating 2 million euros a year for three years' Nili (2009) (This deal will be looked at in more information in section 3.5.2). Macua also announced that Bilbao would be moving to a new UEFA five-star, 55,000 capacity stadium in time for the 2014/15 season and therefore leaving their mercurial San-Mamés home.
Recent shirt sponsorship deals
Both FC Barcelona and Athletic Club de Bilbao have been very unique in that until 2006 neither of them had had shirt sponsors in their history. However, due to the fact 'Barcelona were falling behind their rivals due to a combination of internal politics, poor management and the constraints of history' Chadwick & Arthur (2009) they seem to have felt the need to try and reach the commercial heights of Real Madrid & Manchester United. On the other hand; 'The contrast with Athletic Bilbao could not be sharper, both economically and culturally. The Basque club is light years away from the global brand paying hundreds of millions of dollars and has traditionally financed itself only with resources coming from its members' Nili (2009)
Barcelona & Unicef
This all changed in 2006 however, when the radical Joan Laporta announced that Barcelona had agreed a deal to display the UNICEF logo on their shirts. However, seemingly to tie in with his eccentric personality, this deal was one that was completely different to any before it, as it included Barcelona paying UNICEF in the form of a donation for their logo to be displayed on the Barcelona shirt. Many Barcelona fans accepted this as the club presented 'the club shirt as 'free from commercials', since the centre of the shirt is 'donated' to UNICEF.' Nili (2009)
Athletic Club de Bilbao & Petronor
Despite their resistance to shirt sponsorship that has stemmed for over 80 years, Bilbao announced in 2008 that they would be displaying a sponsor on their shirts for the first time. The company that they chose to go for was the Basque-based fuel company, Petronor. Petronor are an organisation known as 'an avid supporter of the Basque national movement' Nili (2009) and therefore do have some relation to the values of the club. The clubs president Macua however 'took a defensive tone and explained that the 6 million euros generated from the deal provides the club with critical financial resources' and hoped that this much needed revenue would help the clubs faltering fortunes after only just surviving relegation for the past 2 seasons.
Barcelona & The Qatar Foundation
In December 2010, Barcelona announced a record-breaking £125m deal with the Qatar foundation to bear their logo on the Barcelona shirts over the next 5 years. This came in the wake of Barcelona revealing a debt of £369.45m and a loss of £64.36m in the 2009/10 season. Barcelona also revealed that the UNICEF logo would be sat in unison with the Qatar foundation's on their new shirts.
Conclusion of the case study
In conclusion it would seem that both clubs, despite their rich traditional values have recently started to bow under financial implications to adapt to commercialisation. Most notably in the area of shirt sponsorship with both clubs now receiving money from organisations purely for commercial reasons.
The implications for the presidents and directors have been strife, as shown throughout this case study. As well as the implications in the case study, most noticeably stadia & merchandise there are other, less-noticeable implications such as offering your organisations website in multiple languages; this is a characteristic that both Bilbao and Barcelona implement on their official websites. Another implication will be in the form of fixtures purely for commercial and revenue impacting interests. FC Barcelona have recently been touring and playing one off friendly games against opposition in areas where there is high potential for brand growth such as China, Korea and Hispanic areas of America.
‘In this modern footballing age of agents, commercialisation and multi million deals for foreign stars, Athletic are a throwback to a more romantic time in football. Athletic was the last club in Spain’s Primera División to allow perimeter advertising boards in its stadium.’ Murphy (2011) However, Nili (2009) believes that the move to the new stadium could be the beginning of the end of Bilbao's policies; 'the move to a new stadium that will replace “San Mames”, known as a traditional centre for Basque nationalism, will be carried out under the pressures of commercialisation (which stems from globalisation), demanding greater match- day revenue.’ This same idea could also be related to FC Barcelona, with them not allowing shirt sponsors and plans that were set afoot for the Camp Nou to be renovated to allow for commercial boxes and opportunities, only to be scrapped due to the club running out of money.
However, the fact this whole case study has been looking at football in Spain, a complete different country to where the game originated, would it be right to question if the game is in it's second wave of globalisation, with the first wave being the globalisation of the sport itself?