Business of Soccer Summer Preview

An action packed couple of months, perhaps at unprecedented levels, awaits the soccer world this summer, considering international competitions like the European Championships and Copa America Centenario, as well as a few off-the field developments with Nike.  We’ll take a closer look at the financial aspects of the summer action in the analysis below.

Euro 2016:

The European Championships are well underway in France.  The tournament marks a change from previous Euros, where the number of participating countries has grown from 16 to 24.  Euro 2020 will bring further change, as the tournament will shift to a truly continental format, taking place across thirteen different cities in thirteen different countries.

Financially, Euro 2020 will be a record breaking competition for UEFA, in terms of both revenue and attendance.  By shifting each match to a different city, UEFA can concentrate their efforts on the most metropolitan areas across Europe, attacking areas with higher levels of incomes, bigger venues, and larger crowds.  Buzz for every game becomes intensified, given the fact that each country might only have a handful of matches.

From a macroeconomic perspective, this will reduce the burden of investing in large stadium infrastructure that can cripple economies long after the completion of the competition.  This is demonstrated in Portugal and Brazil, after the 2004 Euro and 2014 World Cup, where smaller communities struggle to find appropriate uses for oversized stadium venues.

By picking and choosing the biggest venues in metropolis capitals across Europe, UEFA will host its largest scale continental competition in history, maximizing match attendance and revenue.

Copa America Centenario: CONMEBOL’s Richest Copa

The public’s perception of the Copa America Centenario, hosted across several major cities this summer in the United States has been mixed.  Skeptics point to half-empty stadiums, sub-par performances especially compared to the concurrent European Championships, as well as exorbitant ticket prices.  A certainty, however, is that the Centenario will be CONMEBOL’s richest tournament in history, coming at a time when the South American Federation needs it most, considering scandal and corruption accusations in connection with the ongoing FIFA legal proceedings and investigations.

USA v Paraguay. Group Stages of the Copa America Centenario in Philadelphia. Courtesy Phillip Cunha, Business of Soccer

USA v Paraguay. Group Stages of the Copa America Centenario in Philadelphia. Courtesy Phillip Cunha, Business of Soccer

Thus far the tournament has averaged north of 40,000 fans per match, a strong but misleading figure, as attendance has varied from about 10,000 to 80,000.  Ticket revenues from the tournament’s higher profile matches, those including Mexico, Argentina, Colombia, Brazil, and the United States, will cover organizer costs, and continue to make the United States an attractive host country option for years to come.

The bottom line is this: significantly higher average levels of income across America, compared to that of any South American country, paired with massive stadiums, and an unprecedented level of demand for soccer, will push the Copa’s earnings into record levels.  Financially, it is the smartest move CONMEBOL planners could have executed.

Strategy Pivot: International Champions Cup & RELEVENT Sports

It appears that RELEVENT Sports, the organizing force behind the summer tours that bring the world’s finest clubs to America for preseason, have slightly scaled back this year’s tournament.  This will prove wise in the long run given the plethora of action that will occur this summer in the States.  In a summer where consumers have the Copa America Centenario in their backyards, and both Euro 2016 and the summer Olympics on television, RELEVENT took note, wary of the potential overexposure headed in the direction of American soccer fans this summer.

For the most part, RELEVENT have eliminated smaller sides and smaller venues from the docket this summer, in favor of bigger matchups and venues.  This will hopefully achieve the goal of accumulating larger crowds, more energy and buzz around the matchups, and ultimately, higher profits.

To illustrate, the New York Metropolitan area last year saw the likes of Paris Saint-Germain, Chelsea, Benfica, and Fiorentina clash at Red Bull Arena in New Jersey, amassing roughly 58,000 spectators over the course of three contests.  This summer, Real Madrid matches up with Bayern Munich in the area’s single clash at MetLife Stadium.

In one night, RELEVENT can cut administrative costs of hosting and coordinating one versus three separate matches on an evening that should safely draw over 60,000 fans.  This is a good strategy and should be evaluated by the organization going forward, as the market continues to become increasingly saturated from the number of world class soccer exhibitions happening every summer.  Bigger match-ups, bigger venues, bigger profits.

Nike x Air Jordan x Neymar: Unchartered Territory

Earlier in June, the Jordan Brand debuted the Neymar x Jordan Collection, a first of its kind move which propels the Nike branded Jordan line into the world of soccer.  Note that the Jordan Brand is owned and produced by Nike.

Jordan x Neymar.  Midtown Manhattan.  Photo courtesy Phillip Cunha, Business of Soccer

Jordan x Neymar. Midtown Manhattan. Photo courtesy Phillip Cunha, Business of Soccer

The release is an interesting one for the Jordan brand, one that has gathered steam in the soccer communities in the recent past.  While some had hoped for an American athlete to be the first soccer representative of the Jumpman logo, Jordan’s choice of Neymar makes the best of their options for a number of reasons.

Primarily, an international star like Neymar makes the collaboration more beneficial from a global branding perspective.  The young Brazilian’s quality and star power is matched by few in the world of sport at the moment, while his fun loving personality, flair, and style of play will broaden Jordan’s reach to soccer markets that struggle to absorb the impact of the Jordan brand, one that is mainly focused on American sports and athletes.

One might argue with merit that the Jordan brand is late to pursuing the soccer market, or that maybe a collaboration with a more dominant player, namely the Nike branded Ronaldo (either the Portuguese CR7 or Brazilian R9), would better embody the company’s branding of dominance on the court.  While the idea is entertaining, a collaboration with either Ronaldo, would overexpose and stretch both athlete images and confuse consumers.  Both players have their own personalized lines and apparel, diversifying them more would simply dilute the power of each of their respective sub-brands within the Nike portfolio.

This is a good move from Nike and the Jordan Brand, who showed good judgment in selecting Neymar to carry the Jordan torch into the soccer world.

Photo courtesy of Nike Soccer

Photo courtesy of Nike Soccer

Nike Nostalgia

Nike recently has reached to their past in efforts to continue to deliver their unmatched aesthetic and innovative prowess.  This is best demonstrated by their recent offering of the Mercurial Superfly cleat in classic Ronaldo (“R9”) colorways.  Opportunities in this segment of the market have been explored and predicted in greater detail here on Business of Soccer. Nostalgia marketing, when done correctly, can be quite effective and rejuvenate a brand’s following and bring back some that may have dropped off or become less engaged over time. It’s a tactic Nike has used before and done so successfully, and the release of these retro-inspired boots should serve to prove a smart and timely decision again for the sportswear giants.

 

What do you think about the upcoming events in the soccer industry? Let us know in the comments section below, or via Facebook or Twitter.

Reporting on the business side of the world's game.