Global Company and Global Team – Real Madrid

Volume 12 Letter 10

A global brand can experience local problems when the brand is seen as an extension of the country from which it originates. The recent backlash in China against Japanese made goods is perhaps indicative of what can happen when a company is expanding a product line but has failed to become part of the local culture. One could argue that the same, to a certain degree, has happened to BP in Russia, Google in China and Huawei in the USA. All are seen as outsiders trying to gain a foothold into a local market. Should you doubt the power of patriotism just remember how a Brit was received in the USA as he spoke about the BP Oil disaster. Not that an American would have had an easy time but one thinks BP could have found a Gulf Coast Exec amongst its ranks who could have brought more empathy to the situation. So has anyone got this right?

For the last five years the football club, Real Madrid, has brought in more revenues than any other football club in the world. While much of the success is due to crazed Spanish football fans, the real story lies in Real’s ability to build a global brand attracting fans worldwide. The core of the team is made up of Spanish players but to boost the foreign fan base increasingly different nationalities are recruited as part of the starring cast. Updates on club activity and other club related content is provided in a myriad of languages on a variety of social media sites as a way of supporting its global brand.

Over one-third of Real Madrid’s revenue is generated by merchandise and licensing fees. As a testament to the global reach of the club, their collection of Real football memorabilia sells in outlets and on line in over 90 countries. Lest you suppose this is in reality just a Spanish club with a mild following from abroad, consider that the large majority of Real Madrid merchandise is sold overseas. This includes the co-branded Adidas – Real merchandise that “significantly surpasses sales at a national level!”

The ironic twist in this whole global branding story is that Real Madrid is owned by approximately 91,000 local shareholders. The club sells out its forty games a year to local ticket holders and Real is a big part of the local culture in Madrid. One could argue that much of Real’s appeal is that the team is from Madrid!

So how does a Spanish football club become a global brand followed by hundreds of thousands of fans worldwide? Real Madrid has worked hard to strike this global / local balance that global companies need in order to succeed. For example the “face” of Real Madrid changes depending on the country, having the star player along with a local national player (or at very least a player who speaks the local language) represent Real Madrid in a given region. Ten nationalities are represented on the 25 member team coming from South America, Africa and many parts of Europe.

Recently, there has been negative sentiment towards Spain in Europe given the state Euro bailout. This has seemingly not affected Real Madrid. How do they manage this potentially damaging global image of Spain?

  1. Find local partners: Real Madrid uses its players of 10 different nationalities to help sell the brand abroad.
  2. Manage the global versus local paradox: Much of Real’s appeal is that the team is located in Madrid. However, team information is provided in numerous languages and by different players to different regions of the world to show the “face” of Real Madrid worldwide
  3. Understand local markets: One can’t sit in Chicago and understand Shanghai (or Seattle or LA for that matter). The player from Ghana for example is the face of Real Madrid in Africa communicating to Africans who can relate to him.

In this case, negative sentiment in Europe against a Spanish state Euro bailout doesn’t extend to Real Madrid. After all, more Europeans than Spaniards call Real Madrid “MY TEAM”!

For more info go to:
2. All Business is Local, John Quelch and Katherine Jocz, Penguin Books 2012

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