The ‘brand’ is increasingly bandied around in the world of football. Sportingintelligence explains what is meant by a brand and how you calculate its value. Alex Miller reports.
By Alex Miller
26 November 2010
Ask anyone with even the most basic knowledge of football to name the clubs with the biggest and most valuable brands; chances are Manchester United, Real Madrid and Barcelona will feature prominently in the answers.
Quite right too, because those three teams are the three biggest brands in world football today. All of them are said to be worth in the region of one billion Euros. Other super brands include Arsenal, Chelsea and Liverpool from the Premier League. Italy’s Internazionale, Milan, and Juventus; Bayern Munich from Germany and Galatasaray from Turkey.
But while naming a number of the top football brand may not be a difficult ask, explaining why they are the top brands and why they are worth a particular amount is a far more complex matter.
There are a raft of consulting companies willing to release annual surveys of the top football brands, but do they answer satisfactorily how they arrive at their results? Indeed, some surveys look blatantly disagreeable. To be fair to these consultants, they are not wrong – they simply have their own method of calculation.
In short, there are two types of football brand – and two separate ways of calculating the value of the brand.
The smaller, easier brand to calculate is that of the so-called smaller clubs, the clubs with an overwhelmingly local support base. The second more complex club is the club with a fan base that is both local and worldwide.
Stuart Whitwell, joint Managing Director at Intangible Business Brand Valuation, says: “Brand value is complicated. It is not measured on financial measures alone; it is also a measure of what the club has been doing or achieving in the past.
“There are many elements to take into account. These include the loyalty to the name and the degree of loyalty in terms of attendance and money spent with the club. Brands can be powerful and allow clubs to extend into other products and markets – they are a huge pull and involve a concentrated pool of people, the fans.
“If a club has a brand valued at one billion Euros, that is not to say that amount will necessarily be converted into cash. Brand goes beyond cash”.
Other measurements used in the mix to calculate brand value can include forecasting the amount of revenues a club can expect to generate locally or internationally over a certain period of time, the size of the supporter base, what perceived appeal a club has, the capability a club has for leveraging new fans, past, current and future revenue streams, the appeal of its players, the know-how of the club’s employees, TV ratings and internet/social media popularity.
“The vast majority of a club’s value is actually its brand. Without the brand, a club is simply a ground, training facilities and a group of players on short-term contracts,” adds Whitwell.
Arsenal’s chief commercial officer, Tom Fox, tells sportingintelligence that in his eyes, it is difficult to divorce a club’s brand from its revenue streams.
Fox says: “If a club is unable to fill its stadium or monetise its fans then it is not strong. Ultimately a club is worth what it monetises. If a club has a huge waiting list of 20,000 fans wanting to watch a game, but who can’t actually get tickets on match day – is that club successful?
“There is goodwill in a club’s brand that determines its strength and how it is monetised. Success on the pitch is important to brand strength, but there are so many factors that need to be considered when it comes to valuing a brand”.
The north London club is currently undertaking extensive consumer research – which should be ready by the end of the year – to help the club understand what its brand value is. From there, the club hopes to understand ‘in a common language’ what its brand value is and to place its brand in a framework where it can focus on some of the important elements and ignore others. The club will then begin to communicate locally and expand globally, the strengths of the Arsenal brand.
Fox concludes: “The ultimate aim for Arsenal is to be the strongest and biggest we can be. Our aim is not necessarily to be the biggest brand in football – but it is our goal to be the best.”
As we can begin to understand, brand value is a complex issue. It is calculated using current and future income flow such as sponsor contracts, season ticket sales and merchandising. But it goes beyond financial performance to include popularity, image, fan sympathy and loyalty, and a great deal of ‘expert opinion’.
Ultimately, a club’s brand is immersed in its history and the emotional and organic pull it has, its role in its community and beyond. It is an image or identity that is central to the ‘persona’ of the club and the supporters themselves… and perhaps goes far beyond what can be easily measured or valued.