Digital transformation - a beautiful game for soccer clubs with revenue goals to score

Profile picture for user slauchlan By Stuart Lauchlan September 21, 2015
Summary:
Two major UK soccer clubs have turned to Indian outsourcers to drive digital transformation. They're not the only ones with ambitious goals.
chelsea fc
Chelsea and Wipro

The Beautiful Game - that’s football of the UK variety for the benefit of US readers - has always been big business, but a couple of recent moves by major teams indicate that it’s increasingly big digital business.

Earlier this month, Manchester United and Chelsea each made major signings with Indian outsourcing giants, HCL and Wipro respectively, to assist them in digital transformation and e-commerce plays.

There’s a lot at stake with both deals as the football clubs seek new ways of engaging with - and tapping into the wallets of - their millions of followers.

At Chelsea, Wipro will be working to:

create experiences for millions of fans that span not only the in-stadium, game-day experience but also their digital experience, anytime and anywhere.

Chelsea FC Managing Director Christian Purslow says:

We plan on using this partnership to truly enhance the fan experience for millions of Chelsea supporters worldwide. Wipro’s expertise will help sustain our position as the digital leader in global sport.

Chelsea, owned by Russian billionaire Romanov Abramovich, already engages with its fans through Chelsea TV that airs live shows online, on-demand video, digital magazine and match audio commentary, but there's room for expansion here .

Wipro Digital head Rajan Kohli told The Economic Times that:

There will be two specific areas we will be working in. Firstly, Chelsea is very keen to increase the quality of fan experience in the stadium. You call it connected stadium, you call it digital experience -and that's key to them. And we will be working to enhance that. Secondly, they are very keen to stay engaged with their fans when they are not in the stadium.

There are similar ambitions at Manchester United, with the club intending to build a state-of-the-art United Xperience Lab with the assistance of HCL, now ordained as Official Digital Transformation Partner for the team.

The resulting lab will be housed within the iconic Old Trafford football stadium in Manchester. This will be the seventh such lab HCL has created for clients around the world, but the first in the sporting sector.

Goal!

The exact nature of what the firm will be doing for Manchester United as part of its three year deal hasn’t been revealed yet, but according to the official launch statement, the goal is that:

Within the lab, HCL and Manchester United will explore revolutionary ways in which the club uses technology to create a unified fan experience for supporters; and in the process set a new engagement benchmark in the world of sport.

Or as Manchester United's group managing director, Richard Arnold, put it in the official press release:

With the introduction of the United Xperience lab at Old Trafford, we hope to demonstrate best practices within the industry to generate new ideas that leverage the latest technology available in the evolving digital landscape.

Through digital transformation we hope to change the way in which our fans experience and interact with Manchester United.

Edward Woodward, Manchester United’s Executive Vice-Chairman, gives some clue to as to what to expect from the HCL relationship:

by collaborating with them, we have to transform the way in which we interact with our fans around the world, and improve the overall fan experience of those who engage with us, whether they visit Old Trafford, our website, or through our social media channels.

In collaboration with HCL, we’ll be working on a new scalable club app, a new website, and other digital solutions to engage with our fans and further boost our digital presence.

Woodward offers an interesting definition of the nature of the relationship:

It’s a sponsorship deal, but there are business-related interactions between the businesses.

He adds:

They’re going to benefit from the association, they have that designation and they obviously will have the ability to use the inventory that you would typically see associated on any sort of normal global deal. And beyond that, we’re also getting obviously a leading IT services provider to assist us with building an app.

HCL
Manchester United and HCL

According to Manchester United’s own numbers, the club has some 659 million supporters around the globe, the overwhelming majority of which aren’t even in the UK, let alone Manchester itself. The challenge therefore is how to engage with such a geographically-dispersed community of followers, most of whom - 95 percent is an estimate  - will never even set foot in Old Trafford in their lifetimes.

Not only that, but that engagement needs to provide a unified experience across 200 countries and 27 languages, but must also provide personalized content and culturally-relevant delivery at the same time.

This is obviously vital from a revenue standpoint as well. According to research by consultancy Brand Finance, Manchester United is the world’s most lucrative football brand, worth an estimated $1.2 billion in 2015, leaving Bayern Munich trailing behind in the league table on $933 million.

But it’s not all good news. For full year 2015, Manchester United’s revenues were down 8.8 percent to £395.2 million, while profit was down from 2014’s £28.7 million to £3.7 million. Meanwhile mobile and content revenue declined £5.6 million, although this is in large part a result of letting partnerships expire as the club shifts to its wider digital media strategy.

For his part, Woodward confidently predicts that the club will bring revenues in excess of £500 million in the coming year. Nonetheless, there’s a clear need to see more money coming in via digital channels.

Digital presence

There is already a digital footprint at play here. The club reckons to have digital engagement with around 100 million fans already. It points to its 6 million Twitter followers and the 66 million people liking its Facebook presence, for example.

While attention has focused on the HCL signing, there are other non-tech partners that have already assisted in expanding the Manchester United digital footprint, most notably August’s announcement of a new ten year partnership with Adidas. The launch of that tie-up resulted in some interesting digital up-tick. Woodward explains:

There were 212 million impressions of kit launch related content across the club’s website and social media channels during the first 10 days of the launch. It was the biggest Manchester United kit launch buzz with 10 times higher online mentions in three years ago. It was the biggest Adidas kit launch of the season so far, as the different hashtag mentions were four-to-five times greater with Manchester United than when used for other major football kit launches. Additionally, our e-commerce site United Direct saw equally high demand, up four times on the previous record kit launch.

It’s a mutually beneficial relationship with digital now at its heart. Or as Adidas CEO Herbert Hainer puts it:

The Adidas brand is experiencing unprecedented demand in both our own stores and e-comm channels and our wholesale partners experienced the biggest ever launch day [with the Manchester United announcement]. This success confirms again that Man United is not just a football club. With its more than 650 million fans globally, it is, without doubt, one of the world’s most supported sports symbols. This special club has not only a rich history, but also a reputation for success and the unexpected.

My take

The digitalisation of football is a clear trend. Aside from the two deals mentioned above, you can point Bayern Munich’s tie-up with SAP last year - UK team Manchester City has similar deal in place - or Real Madrid’s planned digital platform to be developed with Microsoft.

The direction of travel here is self-evident. With already-engaged communities of interest, the potential to use digital tech to glue them ever closer to the brand - and open up their wallets - is a lucrative opportunity for both football clubs and IT and services providers alike. The challenge now is to find the right formation to ensure that both sides score their goals.