On the pitch, the Catalan club recently won the Spanish First Division La Liga for the 21st time, its 3rd consecutive title. On May 28th, the side faces Manchester United in the UEFA Champions League (UCL) final, hoping, once again, to be crowned the best in Europe. This comes two years after Barça (as the club is affectionately known) won a staggering six trophies – the domestic league and cup double, the UCL, the European and Spanish Super Cups and the FIFA World Club Cup.
Off the field, Barça is a well-oiled machine and ranks second (to Spanish rivals Real Madrid) in the Deloitte Football Money league 2011, which profiles the highest earning clubs. For the season 2009/10, the club recorded revenue growth in three key areas (commercial, match day and broadcast revenue), with a total year on year revenue increase of 9% to €398.1.
So, how has Barcelona achieved all this? There are 5 lessons that businesses can learn:
1. Sound business model
The club is soundly managed, innovative, responsible and accountable.
Firstly, as the figures above testify, marketing and sales are aligned and the club has doubled revenue over the last two years. One key driver is the 5 year shirt sponsorship deal, signed with the Qatar Foundation, worth €30m a year until 2016. The club also boasts a number of blue-chip sponsors such as Nike, Audi (check out the Audi Barcelona customized car here) and Turkish Airlines.
Secondly, Barça learns from others. The club has entered into innovative, strategic relationships with other leagues – in May 2008, Barça signed a five year commercial agreement with Major League Soccer in the USA. This made Barça the first European club to form a partnership with the MLS and its marketing arm Soccer United Marketing. The deal commits FC Barcelona to playing six matches in the USA, helping them to expand its brand and increase its fan base in the rapidly developing US market.
The club looks after its major assets – its star players. The club treats the players responsibly and pays them market rates aligned with their phenomenal on-field success. Barcelona is the highest paid team in global sports, measured by average first-team wages (above Real Madrid and the Yankees). According to the Global Sports Salaries Survey 2011, Barcelona’s first team players earned an average €110,000 per player per week.
Barcelona is also accountable. Unlike other rival teams that are answerable to shareholders or rich tycoons, Barcelona is democratic and accountable to its members, or socis, which number 170,000. In the annual general assembly, management must answer to an assembly that consists of 2,500 randomly chosen socis and the 600 most senior members.
2. Quality leaders
The club has inspirational and quality leaders throughout its structure. Sandro Rosell was appointed club president, by its members, in June 2010 and immediately tackled the debt that was burdening the club. He is attributed with brokering the Qatar shirt sponsorship deal. On field matters are managed and led by the charismatic and youthful coach, Josep (“Pep”) Guardiola – a former player and product of the famed footballing school (more of that later). Guardiola’s ability to develop and inspire individuals to believe in themselves, his focus on technical excellence in conjunction with discipline and a high work ethic have found him a place in football and FC Barcelona’s history.
3. All star team
Barça has an all-star team as opposed to a team of stars. You cannot necessarily achieve success in football by waving a check book and Barcelona, realizing this, prefers to develop talent in-house and promote from within. This approach is in direct contrast to other sides, such as arch-rivals Real Madrid, who have famously pursued a ‘los galacticos’ (or galatics) approach – buying the best, already-established global footballers. On the field, Barça has no prima donnas and the club plays as a genuinely collective unit – a team in name and truly in practice.
In last week’s Economist, Schumpeter revealed how Barça’s management style is consistent with two admired theorists. Firstly, Boris Groysberg, an Associate Professor in the organizational behaviour unit at Harvard Business School, is a strong supporter of growing stars as opposed to buying them. He conducted an interesting study of over 1,000 Wall Street star analysts who switched firms. Published in his book, “Chasing Stars: The Myth of Talent and The Portability of Performance”, the study revealed that company-switching analysts saw an immediate and lasting deterioration in their performance. The results prove that the success of star analysts was as dependent on team-mates and co-workers as on their own talents. Most stars who switch firms turn out to be meteors, quickly losing their luster.
Secondly, Jim Collins, who wrote “Good to Great”, claims that “greatness is not primarily a function of circumstance but largely a matter of conscious choice and discipline”. In other words, to achieve sustainable corporate success, a company needs to consciously choose a unique set of values. Barça does this (I’ll cover this below, in point 4).
4. Leverage and increase brand value
Barcelona is a Catalan club rich in history (founded in 1899) and tradition. As an illustration of this, its museum is the second most visited museum in Spain. The club’s motto, its claim, is ‘Mes que un club’ (more than a club). More than just a Spanish football club, FC Barcelona stands as the ultimate icon of the Catalan people. It is the team that fought (both politically and physically) against dictatorship during the Spanish Civil War of the 1930s. It is 100% owned by its supporters and fiercely protects its proud heritage. The club is also renowned for a style of play that mirrors the passion and vibrancy of its supporters. It is an icon for the community.
Barcelona leverages its brand value and is constantly looking to increase it by extending its local roots to a global reach and audience (such as the MLS partnership). For instance, Barça has 4,000 members in Japan and an estimated 300 million fans globally. Being accountable to its members, the club must also show its stakeholders (members) how it is increasing brand value. Barça’s brand values also incorporate the pursuit of social commitments through its own foundation. According to the official website, the club “contributes 0.7 per cent of its ordinary income to the FC Barcelona Foundation in order to set up international cooperation programmes for development, supports the UN Millennium Development Goals and has made a commitment to UNICEF’s humanitarian aid programs”.
5. Home grown talent and succession planning
Barça believes in developing its own, home grown talent and this leads to effective succession planning for the club. Eight of the team’s leading players are graduates of its football school, La Masia, which was founded in 1979. This list includes the Argentinean Lionel Messi, the best player in the world, as well as Iniesta, Pique, Xabi, Puyol and coach Pep Guardiola. La Masia is unique among football schools as it concentrates on life skills as much as on footballing skills – teaching young adults that have had to leave their families to train at FC Barcelona. The students are taught the importance of team spirit, self-sacrifice and persistence and these are attributes clearly in evidence in the club’s starting line-up each week.
The future is of course not entirely rosy. Barça has made errors and is still shadowed by large debt. The club has been forced to close down its football academy in Argentina to ease its massive debt burden. Opened in 2007, on the outskirts of Buenos Aires, with the goal of widening player recruitment, the school had cost Barça €5m. There are also critics who claim that the club has sold its soul in pursuit of commercial revenues. After 111 years with a ‘clean’ jersey many were opposed to Barça being paid to carry a sponsor’s logo on the iconic Barça jersey. Sport and football are also unpredictable businesses and the team did experience a period without trophies in the early 2000s.
However, for now, the club is in rude health and many of the reasons for its success can be applied to modern businesses.