Real Madrid -The Galacticos Era

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Case Details:

Case Code : MKTG126
Case Length : 18 Pages
Period : 2000-2006
Organization : -
Pub Date : 2006
Teaching Note : Available
Countries : Spain
Industry : Sports and Entertainment

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

In 1895, a football club called 'Football Sky' was formed in Madrid by a group of football enthusiasts. In 1900, the club split into two, 'New Football De Madrid' and 'Espanol De Madrid'. The latter split into two clubs again in 1902; one of them was called 'Madrid Futbol Club.' This later became Real Madrid.

In 1902, a 'Madrid Football Club' member proposed a cup competition to celebrate the coronation of Spanish King Alfonso XIII (Alfonso). This later evolved into the 'Copa del Rey' cup. In 1904, the club merged with two other Madrid teams, 'Moderno Amicale' and 'Moncloa'. It won its first cup at the Copa del Rey competition in 1905 and went on to win it every year till 1908...

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Florentino Perez -The Savior

On June 16, 2000, Perez was elected as President of Real Madrid by the club's members. He had unsuccessfully contested in the 1995 elections. Perez campaigned and won on the promise that he would wipe out the club's debt. When he became president, Real Madrid had a debt of 270 million euros and was on the brink of financial bankruptcy. He also promised that he would bring in Figo from arch-rival FC Barcelona.

Perez had a track record of reviving and managing a large construction company in Spain before he was elected as Real Madrid's President. He took over a troubled Spanish construction company called Actividades de Construccion & Servicios SA (ACS) and turned it into a profitable construction behemoth that had revenues of 11 billion euros with 107,000 employees as of 2004...

Beckham - 'A Sociological Phenomenon'

Sports analysts and brand management experts felt that Perez's Galactico recruitment policy had ensured that football no longer remained a sport but became a commercial opportunity to make money. Jose Maria Gay, Professor, University of Barcelona, said, "David Beckham is the best example of the new management model in football. It is no longer enough to score goals; now you have to sell jerseys.

In 1995, 50% of the income of football teams was generated from associates. Now, that represents barely 30% of revenues. The other 70% comes from advertising, merchandising, rights for televising and re-broadcasting the games. As a result, it is the players who are pulling the cart."...

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