Real Madrid: Operational Environment and Business Analysis Report

This report provides a comprehensive analysis of Real Madrid, a prominent football club based in Spain. It begins with an overview of the club's strategy, financial position, and ownership structure, highlighting its founding in 1902, its financial success, and its ownership by Mr. Florentino Perez. The report then delves into the operational environment, assessing both positive and negative elements affecting the club, such as the impact of rivalry, equipment quality, coaching practices, financial constraints, and the influence of the internet. Furthermore, the report employs SWOT and PESTLE analyses to evaluate the micro and macro environmental conditions impacting Real Madrid, considering political, economic, social, technological, legal, and environmental factors. The analysis identifies key strengths, weaknesses, opportunities, and threats, as well as external factors influencing the club's performance. The report concludes with recommendations for improvement and provides a detailed reference list.

INTERNATIONAL
FOOTBALL

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview of Club Real Madrid including strategy, financial position, ownership structure......1
Overview on club’s operational environment and assessment of positive and negative elements
.....................................................................................................................................................3
Operation of Club Real Madrid and its impact on business environment through SWOT and
PESTLE analysis.........................................................................................................................6
CONCLUSION................................................................................................................................7
RECOMMENDATIONS.................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Real Madrid is one of the very famous football team playing and functioning through Spain
(Real Madrid, 2017). The report discusses the strategies, financial position and ownership
structure of the club. Further a comprehensive discussion has been made on key positive and
negative elements that are related to operational environment of Real Madrid. SWOT and
PESTLE analysis will be performed in order to assess the micro and macro environmental
condition affecting real Madrid. In the end, recommendation will be provided which can be
adopted by the team in order to improve its functioning.
Overview of Club Real Madrid including strategy, financial position, ownership structure
Real Madrid Club de Fútbol is a Spanish pronunciation and commonly known as Real
Madrid is a famous football club in Madrid, Spain. It was founded on 6th March 1902 as Madrid
Football Club. The club is having estimated worth of €3.24 billion in 2015 and in the season of
2014-15. It was the highest earning football team in that season with the annual turnover of €577
million. It is also one of the highest supported team in the world (Guilianotti, 2013).
Real Madrid is one of the founder member of La Liga on whose name the football club
was named. It is owned by Mr. Florentino Perez and has the motive to make the club as one of
the richest football club in the world. The club sold its training grounds to the city of Madrid in
2001. It also sold four corporations which was owned by it which were, Respol YPF, Mutua
Automovilistica de Madrid, Sacyr Vallehermoso and OHL. The money being initiated through
the sales helped to pay off all the debts. It further paved the way to buy the most expensive
players for its football club. They are, Zinedine Zidane, Luís Figo, Ronaldo and David Beckham.
The club had debt for €270 million and it was able to waive it off through the sale of its training
ground. It made the club financial stable which helped it in its growth and sustainability as well
(Cashmore and Cleland, 2012).
Organizational structure:
Position Staff
President Florentino Pérez
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1st Vice-president Fernando Fernández Tapias
2nd Vice-president Eduardo Fernández de Blas
Secretary of the Board Enrique Sánchez González
Director General José Ángel Sánchez
Director of the President's Office Manuel Redondo
Director of the Social Area José Luis Sánchez
Personnel in Real Madrid Club:
Position Staff
Head coach Zinedine Zidane
Assistant coach David Bettoni
Assistant coach Hamidou Msaidie
Goalkeeping coach Luis Llopis
Fitness coach Javier Mallo
Fitness coach Antonio Pintus
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Match delegate Chendo
The football club is able to achieve the highest support in the stadium as most of its
player have high fan following at social media platform. Hence, at the time of match of Madrid
most of the seats are found full. It is considered as one of the best supported team globally. The
hardcore supporters of Real Madrid are called as UltraSur supporters (Beck, 2013). A fierce
rivalry is experienced by the two strongest team of the sport in the National League. Hence, the
biggest rival of Real Madrid is La Liga. The game between Real and Madrid and Barcelona are
called as ‘The Classic.” A team is able to sustain in the markets when a high fan following is
shared by it. Championships and trophies helps in attracting large fan following which helps in
sustenance of the team as well. The marketing campaign being initiated by the teams helps them
to get larger fan following which also helps in fulfilment of the price. It creates the dominance in
the sport providing foundation and success, both to the team.
A football team is said to be successful, if it is able to achieve success in the following
three areas, its standing in the league, its progress in domestic tournaments or cups and progress
it has made in continental tournament. The legacy of Real Madrid was established with Copa Del
Ray when first cup was won by them in 1905. The4 club was able to won its first consecutive
cups. In 1917, It was able to win fifth Copa Del Rey. It also won ten regional championships in
the first two decades. It helped the club to gain higher amount of praise and appreciation all
around the world. It also became one of the strongest football club in the world having large fan
following (Hopkins, 2013).
Overview on club’s operational environment and assessment of positive and negative elements
Operational environment is the combinations of circumstances, conditions and influences
which can help in determining and implementing better decision making. The game of football
also has direct impact on the functioning, creating and implementation of the strategies so that
the team can survive for the longer period of time. The key element of any football team is
winning trophies and its expansion can help in increasing the investors, funds and confidence of
the team as well.
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A football club is way different from any other business entity. The main stakeholders of
this type of business are the fans. They tend to support their team and help in generating finance
based upon the amount that has been raised through selling tickets. It is important to have
effective policies in order to make the team sustain and run a successful business by generating
income as well. The four basic principles of operations include the following:
 Managing the duties for effective outcomes
 Develop, plan and implement the strategies that have been prepared for the team.
 The income that has been generated by the club must be used in paying the players
fairly and on time. Further, pay all the bill that is generated on the name of Real
Madrid, on time (Biscaia and et.al., 2014).
 Last, but not the least, generation of income and assets that make the functioning of the
team easy and effective.
The above four mentioned operational principles help in effective functioning of the team.
Compliance of these principles helps unsuccessful planning and implementation of the strategies
being framed by the managers. The income gathered can then further reinvested in the team with
the aim to gather more profits.
The football associations of Spain ensure that the team members are fit enough to play.
To fulfil the requirement, ‘fit and proper person’s test is performed by the association.
The real Madrid club is a part of football sport representing Madrid Spain while playing
national and international level of championships. It is difficult to live up to the expectations of
fans and requires to make and alter strategies as and when required by the sport. However, there
are various positive aspects that are related to the functioning of Real Madrid. Assessment of
positive and negative aspects in its can be made in the following manner:
 Impact of Rivalry: The team has rivalry to various other teams, since, it is on the top
position. It affects the match and planning of it as well. It can also heave direct impact
on operations of the team as well (Biscaia and et.al., 2012).
 Availability of effective equipment: Real Madrid is involved in giving effective
performance by keeping its players protected from any injury, In order to perform this
functions, high quality equipment are used in order to keep the players of the tea
protected and safe from any injury that may occur while playing. Usage of high quality
products can be sued to perform that functions.
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 High quality coaching practices: Real Madrid is able to get effective coaching and
training from the coach. Rigorous practice sessions and adequate amount of strategies
being made by the coach has helped the team to grow and reach to effective level. It
has helped the team to win various matches.
 Financial constraints: majority of the football teams have to face financial constraints
due to ineffective regulations regarding wages and investment prevailing in the
country. It has led real Madrid to sell its assets in order to have adequate amount of
funds to be invested in core activities of Real Madrid. The highest amount of
investment is made in marketing the match so that maximum number of viewers can
visit the football ground. It is the core area through which a team can gather funds for
investment (Pawlowski and Budzinski, 2013).
 Demand for high salary: Demand of player for higher salary have a large amount of
impact on the financial stability of the team. It is difficult to pay high salary when it do
not have adequate amount of funds with it. Wages and salaries have direct impact on
contractual agreement between the player and the club. In order to serve this purpose,
the club try to attract key partners so that it can help in funding process for the team.
The team gets adequate amount of funds from them so as to serve the purpose of
working capital of the team.
 Availability of competition: It is another aspect that has a great amount of negative
impact on the functions of the team. Although Real Madrid is one of the finest football
team available in the world, there are various passive effects in which the team gets
involved. The survival of the team can become difficult if any other strong team from
some random company come on the top by wining few championships. Some of the
main competitors of Real Madrid are, Liverpool, Barcelona Football Club, Inter Milan
etc.
 Presence of internet: Internet is considered as one of the significant source of
marketing in the era of football (Hunt and et.al., 2013). It is easy for a particular person
to gather the information regarding football matches, schedules of the fixtures,
statistics of the sport, injuries happened to any player, purchase and sales of the players
by one team or the other, football politics etc. It helps in keeping the fans updated
about what is going on in the world of football. It has played a vital role in developing
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the interest of people towards this game. It is also one of the important aspect through
which the team has been able to gather high amount of finance for itself.
 Irrecoverable failures: Any failure in some championship can have direct impact on
the fan following of the team. It can also reduce the investments from the side of
sponsors which can have direct impact on then functioning of Real Madrid. It has been
assessed that at that time, the club is not able to manage its working capital as well
degrading the quality and performance of the players in matches as well.
The above mentioned positive and negative elements have direct impact on the functioning
of the team. It is important to strengthen the positive aspects and weakens the negative
aspects of the teams. It can further help in growth as well.
Operation of Club Real Madrid and its impact on business environment through SWOT and
PESTLE analysis
The operation of Club real Madrid are effective enough in order to cope up with the current
conditions faced by the country. However, it can have direct impact on its functioning if any
change is experienced by the country. Hence, in order to make the assessment, PESTLE analysis
for Real Madrid can be performed in the following manner:
 Political factors: It is one of the most influential factor that can have direct impact on
the functioning of the team. Hence, some of the common political influences are as
follows:
 Change in taxation policies can have direct impact on the overall attractiveness of the
team. There can be a significant decrease in remuneration packages of the players
which can further leave them unsatisfied (Benkwitz and Molnar, 2012).
 Changes in the current employment law can bring adequate changes in the contractual
agreements of the players as well. It can have significant impact on the work permits
of the players as well.
 Economic factors: There is an improvement in the recession of the country and hence it
has helped in lifting up the situation of football players. Economic development is the
nation have open up new potential areas of development. It shows that the team can also
expand its merchandise to earn some extra input of finance from the sales and enhance
its investments.
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 Social factors: Increasing world population have given access to the internet to large
amount of people which have made them access through the football leagues happening
in the world. It has led to increase in the global audience for the team which in urn have
led to large amount of access to investment. Since, a direct influence is received from
friends and family in order to follow the same team, it helps in increasing the audience
base during matches (Giulianotti and Robertson, 2012). Further, the personal disposable
income of people have risen up which is giving great amount of access to football
matches and following it religiously. A higher impact of changing demographics must be
considered by the team while initiating marketing campaign so that every individual can
be accommodated through the advertisements.
 Technological factors: Advancement in the technologies has allowed Real Madrid to
develop brand image within the audience. Some of the methods used by them includes,
TV channels which are broadcasted in maximum number of countries. Further, increase
in the usage of mobile phones have increased the connectivity with the help of 4G
communication network. It helps in delivering high quality content and greater
interactivity with the audience of Real Madrid. Moreover, development in the
infrastructure in order to support broadcasting and communications platform has helped
the team to create brand image to a great extent (Brown, 2013).
 Legal factors: Any change in the regulations of the government in the country can have
direct impact on the functioning of the team. It can lead to changes in the policies and
procedures being followed by real Madrid in its functioning.
 Environmental factors: There is an increase in the energy cost which is associated
to stadium operations. It has led to increase in the requirement to develop energy
efficient technology. It can help in saving the capital cost involved in the organizing
a match (Tamir, 2014). Further, it can also lead to decrease in carbon footprints as
well. The team has to travel for matches and promotional tours which an
unavoidable energy cost associated to the team.
Strength
Real Madrid have well known brand name
and it is its major strength. Usually when any
program is organized tikets are sold to those
Weakness
One of main weakness of football club is that
there is hesavy burden of debt in its venture
and it need to pay large debt amount along
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people who intend to view football match.
Rial madrid receive some portion of these
football matches. Just by listening name of
Rial Madrid large number of people buy
tickets and due to ths reason it earn huge
amount of revenue from football match.
Second, big strength of the Rial Madrid is its
sponsers as it can be observed that large
number of firms sponser its football matches
and due to this reason it receive huge amount
of money from its sponsers. Hence, it can be
said that from sponsers also it receive good
amount of money and it is big strength.
Large fan following is another important
strength of the football club as it can be
observed that fan following is increasing at
fast rate and hence it is one of the largest
football club in the world.
with interest. In case in future if interest rate
get increased then it may face problem in
paying it.
Opportunity
One of the main opportunity that any Rial
Madrid have is that it can expand its branch in
Asian nations like India where football is not
so popular but an attempt is made to make it
common game among people. Hence, it can
be said that there are ample opportunity that
need to be explored in the Indian market.
Mentioned market is yet unexplored and there
are local footbal clubs like Mohan began etc
while are not able to compete with Rial
Madrid and are not able to give it tough
competition. Hence, it can be said that there
Threat
One of the main threat that Rial Madrid face
is that it have stable faces and much chances
are not given to new faces. One day these old
players will retire or it is possible that same
failed to perform well. In such kind of
situation image of Rial Madrid may fed
among football lovers and it may receive less
number of sponsers. Thus, it is one big threat
to which football club is exposed.
Second threat is that if in any case majority of
members of management shift to another
football club then it may negatively affect
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are ample oportunity for the firm in Indian
market.
mentioned football club.
CONCLUSION
Based on the above report, it can be concluded that, real Madrid have been able to develop
its strong brand image in the environment. The team is able to gather its finances through
investors and sponsors, Moreo0ver, a certain percentage of profit is also earned based upon
number of tickets being sold during the match. Further, it was outlined that any change in micro
and macro environmental factors can attract the club towards changes in its operational strategies
as well.
RECOMMENDATIONS
Based upon the analysis performed above, following recommendation can be given to real
Madrid:
 To increase the investment and sponsorships so that requirements of the funds can be
effectively met.
 To bring adequate amount of change in the operational strategies for its sustenance.
 To invest in digital marketing in order to attract large amount of audience towards it
 To have adequate amount of working capital so that if any match is lost by the team, the
cost can be recovered easily.
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REFERENCES
Books and journals
Guilianotti, R. ed., 2013. Football, violence and social identity. Routledge.
Cashmore, E. and Cleland, J., 2012. Fans, homophobia and masculinities in association football:
Evidence of a more inclusive environment. The British journal of sociology. 63(2).
pp.370-387.
Beck, P. J., 2013. Scoring for Britain: international football and international politics, 1900-
1939. Routledge.
Hopkins, J. L., 2013. Engaging Australian Rules Football fans with social media: A case
study. International Journal of Sport Management and Marketing. 13(1-2). pp.104-121.
Biscaia, R. and et.al., 2014. Sponsorship effectiveness in professional sport: an examination of
recall and recognition among football fans. International Journal of Sports Marketing and
Sponsorship. 16(1). pp.2-18.
Biscaia, R. and et.al., 2012. The effects of emotions on football spectators' satisfaction and
behavioural intentions. European Sport Management Quarterly. 12(3). pp.227-242.
Pawlowski, T. and Budzinski, O., 2013. The monetary value of competitive balance for sport
consumers: A stated preference approach to european professional football. International
Journal of Sport Finance. 8(2). p.112.
Hunt, K. and et.al., 2013. “You've got to walk before you run”: Positive evaluations of a walking
program as part of a gender-sensitized, weight-management program delivered to men
through professional football clubs. Health Psychology. 32(1). p.57.
Benkwitz, A. and Molnar, G., 2012. Interpreting and exploring football fan rivalries: an
overview. Soccer & Society, 13(4), pp.479-494.
Giulianotti, R. and Robertson, R., 2012. Mapping the global football field: a sociological model
of transnational forces within the world game. The British journal of sociology. 63(2).
pp.216-240.
Brown, S., 2013. Football fans around the world: From supporters to fanatics. Routledge.
Tamir, I., 2014. The decline of nationalism among football fans. Television & New Media. 15(8).
pp.741-745.
Online
Real Madrid. 2017. [Online]. Available through <http://www.realmadrid.com/en>.
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