You have to get the ball in the back of the net. What matters most is what happens on the pitch. Soccer is our life – Professional Soccer has always thrived on tradition and the romantic idea of 11 friends playing as a team on the field. But in reality, it has long been a choreographed billion-euro business that follows its own rules. Professor Sascha L. Schmidt explains the digital future of professional soccer.
Professor Schmidt, you are senior professor and Head of the Center for Sports and Management at the Otto Beisheim School of Management in Düsseldorf. Where would you position professional soccer today as a brand?
Professor Sascha L. Schmidt: There isn’t such a thing as one professional soccer brand. There are several individual brands: the world football association FIFA, the European football association UEFA, the German Bundesliga, the English Premier League, the Spanish Primera División. And then there are the top clubs and players like Ronaldo, Messi, or Neymar. The list could go on. Each of the big players in the professional soccer business positions themselves as an individual brand among the competition. And they are becoming increasingly successful at doing it. When Cristiano Ronaldo posts something on his Facebook page, he reaches 120 million Facebook fans. He reaches more people in one single click than he would ever have reached in any interesting interview in the New York Times, for example.
How is digital transformation changing this brand experience?The brand experience has long shifted to the digital arena. Soccer has already entered the third stage of digital transformation. It began by allowing analog processes such as selling tickets to be carried out online. The second phase saw social media and user-generated content establish the guidelines for new consumer-to-consumer business models that would have been inconceivable in the past.
So actually, it’s not only what happens on the pitch that matters most?
Here, Bas van Velzen springs to mind. The young Dutchman can take amazing free kicks, and has clocked up millions of YouTube views around the world. He now has his own range of merchandise and invites world stars like Drogba or Mario Balotelli to compete against him. Players also see it as an attractive option to appear in these kinds of social media forums and present themselves to millions of people.
Back to digital transformation: What do you expect to happen next?
We are currently on the cusp of the third phase: the Internet of things, smart wearables, and sensors are finding their way into the digital arena. On top of that, there is augmented and virtual reality, artificial intelligence, and machine learning. That opens up a whole range of new possibilities for the fans. When it comes to global soccer brands like Real Madrid, Manchester United, or Bayern Munich, only a fraction of the fans have the opportunity to see a game at the stadium. With virtual reality, fans in the USA or Asia could enjoy the experience live, too, as if they were in the stadium.
But friends getting together for a game with chunky VR glasses doesn’t really make for much of an atmosphere, does it?
The solution here could be 3D hologram projection technology. This has already been used successfully for concerts or personal appearances, as was recently the case during the French presidential election campaign. From a technical point of view, it would be possible to turn entire soccer games into holograms and project them into other stadiums. Japan used the idea of 3D hologram technology during its bid for the 2022 World Cup. Using this technique, it would have been possible for games to take place in several different stadiums at once. The downside? Broadcasting games using holograms requires incredibly complex technology and is, as a result, very expensive. It’s a shame we won’t see this in action in 2022: Japan lost their bid to host the World Cup.
There is, of course, the question of whether the radical fans who swear by the traditions of soccer and stand up against commercialism would have accepted this anyway.
Traditional fans undoubtedly have their place in the stadium, contributing to the roar of the crowd and great atmosphere at the game. However, digitalization is about reaching new target groups. Today, we are seeing a generation of fans who, as digital natives, have completely different needs to their analog “predecessors.” Their experience of soccer includes second screens, real-time statistics, super slow motion replays, news feeds, individualized “MyView” camera perspectives, and much more. The live sports experience is becoming increasingly tailored to the individual. For technicians, it is no longer a matter of focusing on the ball; today, they need to consider the entire 360-degree fan experience.
How does that affect activities and processes within the game?
Big Data has become an integral part of training and big-game competition. Microcameras, sensors, and wearables constantly gather every piece of performance-related data. Drones record tactical moves and the paths players run for analysis. What’s more, clubs like TSG Hoffenheim and Borussia Dortmund in Germany have long been working with footbonauts. These are small soccer arenas with intelligent ball-feeding machines that allow the players’ technical and responsive skills to be measured and compared under laboratory conditions. This provides objectifiable parameters that can be used in the transfer business, for example. You don’t have to be a prophet to know that clubs that don’t use this kind of technology will lose out in future.
What does this mean for the club of the future?
Clubs will increasingly develop into content organizations. Today, it is more important than ever to integrate data analytics into your business model. This applies just as much to the area of sports development as it does to marketing and internationalization. Manchester City has set a benchmark here, as the club has long had a department with data analysts.
What kind of people in particular are needed for these jobs?
In the club of the future, the digital top-scorers will perform well in all areas of the data analytics field. There’s a requirement for data scientists, but also for data entertainers and data designers.
With Big Data, there’s always the issue of what actually happens to the data that’s collected.
Being the clubs’ capital, professional players have long been transparent. Now fans are also becoming transparent customers who reveal data. With each and every interaction, they leave digital fingerprints behind that allow the clubs to individualize their offerings further. Their aim is always to create added value for the fans and to strengthen how much they identify with the team. The smaller clubs in particular have the opportunity to involve fans in investment and transfer activities using crowdfunding and micropayments. This is interesting from an economic point of view and really gets the fan and customer base involved.
“Fans are becoming transparent customers.” — Prof. Sascha L. Schmidt
In what ways can global soccer brands get people involved across cultural boundaries?
Clubs like Real Madrid and Manchester United were among the first to internationalize their operations and have shown how it’s done by communicating with their target groups in a culturally appropriate way. Bayern Munich has recently managed to do a lot of catching up in China and – as outlined in our latest Harvard case study – achieved top engagement rates on social media. There are aspects of a global brand that have to be treated differently according to the region. For example, Bayern Munich’s social media sites in Asia have different areas of focus compared to those in Europe. While in Germany there’s a clear focus on sport, in China more attention is given to the Bayern Munich stars. In China, people are just as interested in stories about Thomas Müller’s wife’s horses as they are about any injuries the striker may have.
What does that mean for e-commerce?
For a long time, merchandising played a minor role in the sales mix for soccer clubs in Germany. Digitalization has, however, provided it with a big boost. Leading clubs now supply international markets. What matters for e-commerce is not only the internationalization of the products, but also reliable and prompt delivery. Digitalization is one aspect, fulfillment is the other. It requires local logistics centers and the corresponding supply structures.
Let’s take another look at the overall picture: How can digital activation shape and change the business model and the role of stakeholders in the long term?
Digitalization has caused a further boost to growth. It is only a question of time before the first clubs break the billion-euro mark in sales. Increasingly, the race for growth is also beginning to shift to neighboring fields. Soccer club Schalke 04, for example, has founded its own e-sports department and has a number of teams involved with various computer games. But other technology-driven business models can also arise in different areas altogether. The expertise that clubs gain from using drones to observe training sessions can be used in other fields, too. For example – as has already been demonstrated in England – there could be a business model in the security sector to observe critical fan movements before games and take necessary measures if required. Away from soccer, drones could also offer clubs exciting marketing opportunities in new forms of competition and league formats.
If you had to configure the ideal club of the future in the “FIFA Manager” computer game, how would you do it?
First and foremost, the focal point would be the sport. Digitalization creates attractive possibilities for training and competition management, in scouting and transfer activities, in performance diagnostics and medical care, and in player development. Overall, intelligent data management can increasingly create added value for the clubs of the future. I see a lot of potential for new business beyond the sport and competition that include aspects like internationalization, e-sports, and operating companies in adjacent business fields. Digitalization is an invitation to look beyond our own boundaries and to develop new profitable business models.
Interview: Marcus Schick / grasundsterne
Translation: Toby Skingsley
Pictures : Constatin Rimpel