The goal of this article series is to offer a road map for successfully operating a professional soccer club. As someone who has run multiple clubs, I offer a candid approach to the modern game - and business - of professional soccer.
With a proper soccer operations blueprint laid out (see part one of this series), we turn to the critical element of revenue generation. Importantly, this instalment focuses on structuring an elite commercial operations group rather than specific selling strategies and tactics.
Meanwhile, at a club near you….
The sponsorship team pitches a big partnership to a major regional manufacturer - who only wants to buy blocks of group tickets to reward staff. The season subscription team sells four club seats to an individual - who owns a fast-growing tech company eager for the brand awareness a major sponsorship can provide, but the topic never comes up.
A client, who buys a luxury box to one match each season, owns a furniture, fixtures and equipment supply company and would readily do a business-back sponsorship if her company could outfit the new stand opening next season, including cash and discounted pricing on her products, but mistakenly assumes the FFE contract is already awarded.
A local club licensee would happily purchase a luxury box if it could customise the box’s interior to showcase its product lines to potential buyers, but has only ever spoken to the club’s licensing manager.
In many clubs these five opportunities (multi-match group tickets sales, two major sponsorships, discounted FFE pricing, a luxury box sale) would result in…the sale of four club seats. That’s it.
The best partnerships match existing assets and new opportunities
Let’s break this cycle of dysfunction and hang some big numbers, shall we?
Building a high performance commercial ops group starts with prioritising internal communication and coordination. An elite unified sales, service and marketing group is the goal, and it is achievable.
Media revenues lead the way
Club commercial revenue streams can be sorted into three main categories: media (broadcast), commercial, and matchday.
In first division soccer, media provides the dominant revenue stream. In 2019, media accounted for 59 per cent of total Premier League and Serie A club revenues, 54 per cent in La Liga, 47 per cent in Ligue 1, and 44 per cent in the Bundesliga. For elite clubs regularly playing in international cup competitions, media likely accounts for a smaller percentage of revenues than average as these clubs tend to have more and larger commercial deals, and bigger stadia delivering more matchday revenue.
Almost all media revenue is centralised through league-wide deals. As individual clubs do not control those deals, their media revenues are fixed. Our unrelenting focus should be: how do we successfully build revenue streams above that amount?
Commercial ops departments need to understand they are one group
Club commercial staffs have swelled in size over the last decade. Today they are typically composed of departments operating in functional silos. Balkanised workflow and communication are the norm, and these harm productivity and revenue generation.
The three main staffs which should comprise a commercial ops group are: sales (sponsorship, premium, ticketing, licensing/retail), client servicing, and marketing (brand management, activation). And indeed, individual teams are typically separated within these three staffs, which leads to lots of counterproductive fragmentation. But before laying out an optimal group structure, we need to address the gating issue so many clubs get wrong: what is its strategic approach to revenue generation?
A club must choose an identity: is it sales-focused or brand-focused?
A sales-focused club marshals its brand assets to drive revenue. Those assets are facilitators but not gatekeepers as revenue comes first. A brand-focused club sells through marketing programmes to partners that, first and foremost, reinforce its brand.
“Sales and brand - these are not mutually exclusive by any means and the highest performing clubs work these two priorities in tandem very effectively, but one side has to lead,” says Michael Kirschner, the co-founder of Uptown Marketing, who has previously held senior sales and marketing roles at the National Basketball Association (NBA), Madison Square Garden, and Chicago’s Cubs and Bulls.
“The litmus test: is there an organisational commitment to be nimble enough, strategic enough, to create customised marketing programmes based on specific client goals (a sales-focused approach)? Or is the organisation steadfast in their belief that existing club assets, which it views as its priority, must be sold first (a brand-focused approach)?”
For clubs with higher stature and long-term competitive success, the operating approach inevitably shifts towards a brand focus as they will have many more commercial opportunities from which to choose.
Barcelona's decision to put Unicef branding on their kits eased the transition into traditional sponsorship
In reality, only the biggest clubs have the marketplace heft to operate as true brand-focused organisations. Take FC Barcelona. Historically, in protecting its unique 'more than a club' brand positioning, it refused to sell its jersey front sponsorship. In 2006, as its competitors added tens of millions a year in revenue this way, it transitioned into this sponsorship market by paying the non-profit Unicef €1.5 million a year to be its jersey sponsor. Five years later, the Qatar Foundation bought the jersey sponsorship in a deal worth €150 million over five years. Clearly, the average first division club does not have the luxury of such an approach.
For the vast majority of clubs, installing a sales-focused culture delivers the highest value over time - and I say this as a former chief marketing officer of the New York Knicks, an NBA franchise which had the heft to be a brand-focused club. The Knicks could afford to pass on good partnerships if we felt they were not entirely on-brand. That’s simply unrealistic for most, particularly in a down-market environment such as now.
In such difficult environments, in fact, the value of strategic marketing increases. “In the most successful partnership proposals,” explains Kirschner, “there is a healthy mix of existing club assets (eg., signage, exclusivities, etc.) and customised new programmes specifically designed to meet client marketing objectives - and, importantly, also meet club objectives.” That creativity is born from a sales-focused approach.
Staff coordination and cohesion
Once a revenue orientation of the club is formally adopted, pulling together the internal departments that comprise a commercial ops group is the critical next step. Expressly communicating to them that they are part of one larger team matters. Breaking down the operating and communication silos matters. Sales, servicing and marketing groups need to fully understand the club’s commercial goals, financial goals, strategic goals from a branding perspective and, importantly, strategic goals from a competitive standpoint (e.g., “reaching budget goal Y will fund the 2021 practice facility upgrade”). Be explicit. Foster comprehension and a sense of mission.
Laying out each department’s role in the group, its expected deliverables in generating revenue, and its staff members’ individual targets and responsibilities needs to be done transparently, repeatedly and consistently. This sounds fundamental, but it is much less common at the club level than one would think.
Manchester United's group managing director is tasked with ensuring the Premier League giants remain successful off the field
Avoiding a Game of Thrones reporting structure
Often clubs have C-level executives in both chief marketing officer and chief sales officer roles, both reporting to the club’s chief executive. This is a recipe for constant conflict over prioritisation. Just as in soccer ops, defining the commercial ops chain of command is crucial to high performance. That starts with clearly defined leadership. Keep it simple with both functions and all the different sales, client servicing and marketing teams rolling up and reporting into a single senior executive role, such as a chief sales and marketing officer (CS&MO).
An important caveat: finding a qualified CS&MO may be the hardest business ops hire below the chief executive role. Great sales people tend to be linear - “give me X to sell and I will sell X” - and that relentless focus underpins their success. But it also tends to be a transactional focus vs a broader strategic one. What if X could have been X, Y, and Z?
Conversely, most marketing/branding executives have never personally sold anything, and while they have strategy down cold, that doesn’t automatically equate to leading sales teams and generating revenue. Finding a brand-focused, strategic sales executive to lead commercial ops is a top priority, and it’s not easy.
On compensation part one: in a sales-driven culture all staff should be incentivised
The goal should be ‘collaborative competitive’ vs ‘cutthroat competitive’ and team selling promotes that.
There are many suitable compensation programmes for commercial staff and none of them are perfect, so let’s not be prescriptive. Some best practices standout, however. Firstly, the entire sales, service and marketing teams should be financially incentivised. Every group employee should be rewarded when reaching group goals as this fosters collaboration and cross-selling. “One simply can’t underestimate,” says Kirschner, “the positive impact of a fully aligned commercial group.”
Secondly, incentive schemes shouldn't be entirely individual performance-based, as this discourages the sharing of information, contacts, etc. In reality, best results will flow from collaborative/team selling. “The goal should be ‘collaborative competitive’ vs ‘cutthroat competitive’ and team selling promotes that,” notes Kirschner.
Finally, sales management needs significant discretion in determining incentive pay. This is an important staff retention tool, as often the best partnership for the club can negatively impact individual staff members. An example: it’s not uncommon for multiple sales staff to deliver offers for the same inventory. The offers will have varying brand prestige, different mixes of cash and trade, different contract lengths, etc. It’s the CS&MO’s job to select the deal best matching the club’s strategic and financial priorities. But it’s not the seller’s fault if their deal isn’t selected. At year end, without a proper discretionary component, there’s no way to compensate for successful, though not utilised, work.
On compensation part two: pay peanuts, get monkeys
Here’s a bright line rule: do not cap incentive-based compensation. Sales is a momentum-driven process and nothing kills momentum quicker than telling staff they’ve maxed out their annual compensation. Cue the long lunches and late daily arrivals - it’s human nature, why hustle? So long as they generate revenue, they need to be rewarded for it.
Today, this capping phenomenon is often linked to C-level pay packages of other executives, particularly the chief financial officer, who often view their roles as most important at the club and, excluding the chief executive, no other employee should earn as much or more than them. So they cap compensation for revenue-generating roles. Clubs with this approach don’t retain top sales people for long. And frankly, it is much harder finding elite revenue-generating staff than it is admin/finance staff. Pay accordingly.
Billy Hogan (left) and Peter Moore, the current and former chief executives of Liverpool, have overseen an uptick in commercial fortunes at the club
Bring in specialists to create a market for unique, high-value inventory
Building a high performance in-house commercial ops group has to be top priority. Over the long-term, no external group will match the focus, high-level output and profit margins of a great internal team.
That said, a club really should engage a top agency, such as Oak View Group, CAA, or Wasserman (there are several other highly effective ones, too), when it has major new inventory to sell, such as naming rights to a new stadium or stand.
Firstly, it’s a question of bandwidth. Internal teams should be right-sized to excel at selling and servicing existing club inventory - why would we think it could add a major new sales initiative effectively? Secondly, big ticket item sales processes benefit strongly from an auction scenario with brands competing for unique, high profile inventory.
Outside agencies specialise in building that market scenario. They can do so because they access C-level decision-makers at the biggest multinational companies, while a club’s in-house team has similar access and relationships locally and regionally. That tandem approach - internal team (local/regional) and outside agency (national/international) - creates the market scenario leading to the biggest deals. Finally, clubs benefit from these agencies’ structuring expertise when completing their largest and longest-term deals, which represent millions in revenue and can run decades in length.
Fostering client mobility enhances customer service and cross-selling
Client mobility is based on the concept that customers are not simply sponsors, or season subscribers, or premium clients, or licensees. Rather, they are customers whose club relationship can be multifaceted, may be serviced by multiple teams within the organisation, and evolves over time.
“It’s not that difficult, really,” notes Ben Hatton, the former commercial director at Manchester United and managing director at Blackpool FC. “With a client-centric approach, the current needs of the customer should dictate the sales and service resources the club deploys. As the customer’s needs evolve over time, the club should be able to engage whichever internal team best addresses them and provides the best opportunity for the club to drive revenue. Internal communication and coordination propel that.”
Brighton upgraded former workwear partner SnickersUK to sleeve sponsor this season
A centralised service team fulfilling deliverables across the sales group greatly increases information flow and underpins cross-selling efforts. It also constantly reinforces the priority placed on broader group success. The latest crop of customer relationship management (CRM) systems allow clubs to create unified customer databases, providing visibility, access and insight across the sales and servicing teams.
A brief note on data. (I’ll dive in deeper next week with a fan/matchday focus in part three on customer expansion) CRM systems are essential IT investments that must be paired with regular staff training. It is not uncommon that after the upfront investment in technology is made, only its most basic functionality is exploited by clubs due to staff turnover, senior managers never committing to learning and using the systems, etc.
Finally, let’s return to the examples at the top of this article. A unified commercial ops group is trained, focused and rewarded for club-wide results. It should be actively seeking out customer intel and ensuring that the appropriate team is addressing customers’ needs and pursuing opportunities. Broadening client relationships through upselling and cross-selling club inventory should be the top priority.
Frankly, we never know what that four club seat client relationship might turn into.
About the author: Mark Pannes is the managing partner of Inner Market Media, a sports sector advisory firm. In addition to chairing the Center for Sports Communications & Media board, he is a teaching fellow at the University of Texas at Austin, where he is based. Having previously served as chief marketing officer of the New York Knicks and founding director of HSBC Private Bank's Global Sports Group in London, Mark has run elite professional soccer clubs on both sides of the Atlantic, where he has served as chief executive of Italian side AS Roma and the Vancouver Whitecaps Major League Soccer (MLS) franchise.
This is part two of a four-part weekly series. Find part one here. Next up, on 16th December, Mark delves into the all-important business of customer expansion, before addressing the challenge of stakeholder engagement on 23rd December.