Strategic Review: England’s Dortmund

Article by Tim Keech and Olivier Wicki

In our last blog we explained why clubs should undertake strategic reviews and the methodology we use to perform these.

In this article we will work through this using an imaginary (fictive) club performing at Premier League level. Any similarities to the situations of clubs, current or past, is purely coincidental.

Why strategic reviews and why so long term?

Football has a strange contradiction in that the “customers” generally commit to the club for life. Their interest is in the long term health and success of the club. Meanwhile the main decision makers are short term staff whose interest is primarily that the team succeeds whilst they are there. It is all very well selflessly laying the foundation for other’s success but that generally doesn’t get you glory or better paying jobs. 

Where alignment should exist is between the ownership and the fans. They both want the club to improve year on year, the owner should make a better financial return if he sells a club with everything in place to succeed.

A strategic review should therefore always focus on the long term success of the club and build in the necessary infrastructure and processes to get the club into the best possible position to succeed.

So many clubs, even after reviewing their strategy, still end up with short term staff making decisions for short term benefit. The idea of having a strategy is that you have a framework for making decisions and do not fall into the temptation of short term “sugar highs”.

This is why, in our view, strategy decisions should be made by the owners and then implemented by employees who are judged on their ability to implement the plans, not by immediate outcomes.

Starting Point

A mid-table Premier League club with a proud history but very little recent success.

They have an unbalanced, ageing squad with a few players with very high value but the majority would not attract transfer interest.

Their facilities are good but they lack a playing identity and are regularly changing coaches.

The Process

We start with a workshop where we draw together research about the direction of football (at their level) and work out the implications for our future actions through “and so” statements.

Football thesis

Financial regulation will make it harder for challenger clubs to run large annual deficits and so we need to move towards a break even model of running the club.

Economic outlook will make it harder to increase stadium generated revenue and so we need to increase revenue from other streams.

TV income will increase, potential for the Premier League to offer its own streaming service and so we need to ensure we remain a competitive PL side and grow our global support.

Commercial income will concentrate at individual club, or even player level and so we need to become attractive for new fans and commercial partners..

Transfer income is likely to be concentrated on elite and emerging elite talent and so we need to be developing elite talent and identifying it better than our rivals.

Strategic direction

Before a football club’s management can decide on its future strategic direction, it must first conduct a thorough analysis of the club’s current environment. They take the findings from the football thesis and combine them with an analysis of the internal and external environments, as well as a look at trends that will shape the future. A club can add high value to this strategic analysis by including an external perspective (e.g. from a consultancy) alongside the internal strategic board’s perspective. 

To continue, we will summarize the internal environment of a fictive Premier League club, including a strength and weakness analysis.

With all the knowledge and findings combined the strategy board can now go ahead and define the strategic direction.

Examples: 

Vision for the club

In 2030 the club will be regarded as the best producer and developer of talent in the Premier League. Reputationally the club will be regarded as innovative, taking calculated risks to maximise their resources. Revenue from player trading and commercial income growth will increase the sustainable budget allowing the club to compete for the biggest trophies.

Mission of the club

To be at the forefront of global football through innovation, culture, and skill. 

Values

Proudly represent the city and support local communities.

Provide opportunities for young people to thrive.

To always strive to get better in every area.

Football Strategy

A problem companies in general but also football clubs in particular encounter is the social side of strategy. As Peter Ducker famously said, culture eats strategy for breakfast. Most clubs continue to struggle with going beyond what they have done in the past. Egos, confirmation bias, groupthink, and risk aversion all work against bold visions and big ideas. Add to that the tendency of most strategy boards to distribute resources evenly across departments, and this year’s strategy often looks a lot like last year’s. So, what does our fictive club do differently?

Our club has decided to set a bold strategic direction and now acts accordingly.  As we have seen in the football thesis, the competitive landscape will become more intense in the future. The matchday revenue stream will not increase significantly as disposable income is not forecast to rise. Furthermore, TV, commercial, and transfer income will be highly volatile and dependent on the club’s on pitch success.

It is the first time that our club is aware of the environment and can devise a strategy based on analysis, trends, facts, and figures. There was no strategy in place prior to this point. Players were primarily scouted and recruited based on recommendations and reactive situations, the playing philosophy changed with the arrival of a new coach, and a large amount of money was invested in the youth academy without the possibility of receiving a return on investment as there was no clear transition path. To summarize, the old (non-existent) strategy is completely different from how they want to run the club from now on.

Let us start this exciting strategic journey. One of the first strategic pillars a club must establish is its playing philosophy, as it serves as the foundation for almost all subsequent pillars. The following graph is a possible way of how it can be done.

One thing is certain – we will not be able to switch from our old playing style to our newly defined one in a single transfer window. Based on this new philosophy, the club can now conduct a thorough assessment of its current squad. Three things should be evident from the squad evaluation:

1. Which players already fit  the new playing philosophy and will form the core of the future team?
2. Which players help us in the transition phase from the old to the new playing philosophy?
3. Which players do not fit anymore and can be sold?

In particular for question 3, our club’s strength of having a high total market value is extremely beneficial. Players who are at the top of their game but no longer fit our strategy can be sold in order to increase revenue and invest in our new strategy. Our football club can now make a plan for the next few transfer periods and move forward with the transition of the squad.

Restructuring the departments to align with the strategy

The fundamental question is what do football clubs do?

Every club from the largest to the smallest has the same basic operational requirement. 

Essentially they participate in 40-70 games of football a year at first team level. To do that they need to provide facilities to host games, travel to away games, and have enough players, recruited and coached as well as possible to compete against other clubs.

The difference between levels is in the scale and scope.

At the smallest clubs all the tasks may be undertaken by a staff of 2-5 people. At larger clubs this could be 200-500. 

But what are the tasks?

Game strategy and Leadership –  First-Team Matchday

The first team coaching staff. Effectively the people in the dressing room who decide on the tactics and are responsible for coaching the players and preparing them for games.

Club culture and communication – Club Development  

Responsible for creating a good working environment. People with great communication and interpersonal skills who work with players and staff at all levels.. 

Sports Science, Analysts, and Medicine – Analysis Department

Experts in their fields who support the whole club with scientific and data insights into performance and improve on pitch performance through better player development, fitness, and availability.

Coaching below first-team level – Player Development

Responsible for coaching younger players, from community coaches to the U23 level.

Scouting / Recruitment / Loans / Disposal – Player Recruitment

Working closely with the strategy team, analysts, and coaching staff to identify and recruit players who could improve the first-team. Developing individual development plans with the player development team to maximise the player’s potential and value. Planning exit strategies for players who will not be good enough or are overpaid given their performance levels.

Finance / Commercial / Ownership / Business Support  / Facilities – Corporate

To run the commercial side of the business, supporting the sporting side by maximising income streams and ensuring the efficient operation of the whole club.

In a small club the same person may be responsible for completing the work of 3-4 of these sections. In a large club you may have teams of hundreds completing just one. 

The question for our fictive club is how can they outperform other well-resourced, well managed Premier League clubs when football is a relatively simple business in operational terms?

The first step is to actually ensure the key departments are being run both efficiently and in line with the vision the club has agreed upon.

Model club

Our Premier League club has looked around the world for clubs with similar resources, who play attractive football, and have reputations for innovation.  The clubs they have identified as suitable models are Borussia Dortmund and Ajax Amsterdam.

They buy and develop young players, compete regularly in the Champions League, and have been able to generate significant transfer profits. 

It is accepted that copying these models directly within the Premier League will be difficult. However there will be lessons that can be learned from both of these clubs for example how they imprint their particular playing style across the organisation.

Targets and benchmarking

We need to consider what success will look like, both in the next few months and in the longer term.

The best way to do that is to examine what other well-performing clubs are achieving.

We can examine clubs with a similar budget and look at:

• Their squad composition
• Their transfer track record
• Their performance data

We can then create some basic metrics we can use as baselines for what success looks like on our budget, adjusting it for local factors.

An example may be that the best performing clubs on our budget across Europe:

• Efficient squad usage with no highly paid players outside of the core playing group
• Play 3+ academy graduates per match
• Run a positive transfer balance with players signed at ~21 and sold at ~25
• Average 1.9 ppg and have an xG difference of 0.6 pg

Ppg = points per game

xG difference pg = expected goals difference per game vs opponent

When adjusted for local factors (more competitive, higher quality league) we may say that our average ppg on our budget may be 1.6 and xG difference 0.25pg.

Then we have to look at the long-term targets. In order to win trophies we need to be averaging 2.1ppg and have an xG difference of +1 pg

That is quite some gap, how do we bridge it?

Options to bridge the gap

Spend more – the club is restricted on what they can spend on the first team due to Premier League sustainability rules. The plan is also to run the club at break even level so selling players who do not fit in with the new philosophy may be a sensible idea. However there are areas where the club can invest that are outside of the sustainability spending rules that can potentially increase the capacity of the club to compete in the future. 

Run more effectively – is the club run as well as possible in every department? The answer is always no, even at the best clubs, so make sure the processes are as good as possible, the culture is great, and that staff are producing results.

Innovate – it is easy to say “innovate” but what does this mean? As we have seen football is a simple business,  you have to field a team for a game 40-70 times a season. Our club is aiming to win trophies so the ultimate goal has to be getting a team on the pitch that is capable of that. Therefore our innovation has to centre around getting elite players onto the pitch.

Being a public article we cannot give away too many specific details that we would recommend for paying customers. However the following articles detail some pathways clubs could follow to source and improve elite players with little competition:

Game Changing Investments – Coaches as surgeons

Buying the Vineyards – Player development in multi-club networks.

Game Changing Investments – African Leagues

What can football learn from the dot com bubble?

Based on the strategic direction, we will look at three key strategic pillars for this client-  youth development, innovation, and scouting & recruitment.

Youth development

Despite making some bad decisions in the past, our club has consistently invested in and developed its infrastructure. As a result, we do not need to invest heavily in youth infrastructure but only need to make some minor adjustments. Where our club needs to become more effective and efficient is in the youth sporting development programme and transition pathway to the first team. Objectives for the youth department:

• Having the best local  as well as some aspiring international talents in our academy
• Developing a sporting and educational programme for each age group based on most recent scientific finding
• The teams u16 and upwards play in the same style as the first team
• Dramastically reduce the youth players turnover at the end of each season and have player for at least X years in our academy
• Having X squad spots in the first team for youth academy graduates
• Having a team of specialists with diverse functions to coach each team
• Ensuring the first team head coach selects and believes in using young players
• Ensuring the first team head coach knows he will always be supported in selecting youth

From here, the club must develop an innovation strategy and revise the scouting and recruitment departments.

Innovation department

The innovation department, related processes, and functions need to be developed from scratch. The first thing is to define the objectives of the innovation department – how does it support the sporting and business side of the club. 

• Fostering interdisciplinary exchange to find new solutions
• Opening the football club toward external ideas
• Having clear objectives, process, functions, culture

The development of a youth sporting and educational program is one example of how the innovation department can add value. In order to develop a state of the art programme, the interdisciplinary team incorporates the most recent scientific findings, experiences, and best practices.

The group must think big, what can the club do to recruit and retain better players than anyone else, on less money? It is key that the people in this department can make the arguments for doing things differently and that the new Football Strategy Board listen to them.

Scouting & recruitment department

With the goal of producing and developing the best Premier League talent, we must revise our scouting and recruitment department. First, our club needs to understand what talent is and how it can be detected at a young age. The department of innovation and data science can assist us in answering this question. Once we have determined what we are looking for in young talent, we must define the process to efficiently scout and recruit young talent.

We must also increase the pool of talent available to us (see links earlier in the article) by establishing partnerships with talent developing clubs in key locations.

Reputationally it is vital that the club becomes known as the place for young talent to thrive. Talent always has options. The next Jude Bellingham or Jadon Sancho must identify this club as the place they want to play.

In addition, we want to improve scouting and recruitment for the first team. According to our football thesis, transfer income will be concentrated on elite and emerging talent. Next to finding the best youth academy players, we must be able to find the elite talent for our first team squad in order to be competitive in the Premier League. For this reason, our club has decided to establish a data-driven scouting and recruitment department that can spot undervalued talent more efficiently than our competitors.

• The scouting and recruitment department is deeply embedded in  the decisions of the sporting director.  
• The Football Strategy Board oversees the process and ensures the individual processes are aligned with the mission and vision of the club.
• The system is monitored, benchmarked for success, and consistently reviewed to ensure it is performing at elite levels.

Strategy implementation

With a clear strategy in place, the operational level can now develop policies and programs to put the strategy into action. They design efficient processes and identify the functions  required to put the strategy into action.

Because our club is a stable mid-table Premier League team, we have sufficient resources to make this transition into a competitive team with a break-even business model. The implementation of the strategy will be successful only if the board of directors makes the bold decision to distribute the budget accordingly – in our case, favoring the youth, innovation, and scouting & recruitment departments. Once a vision is in place it needs to be backed, change management will be needed.

The strategy implementation is vital. This is where the vision gets turned into people’s daily work.

Every action within the footballing department should be based around making the club fulfill the long term vision for success. 

Processes should be efficient, effective and reviewed regularly to ensure they remain relevant and are adding value to the project.

Job descriptions should fit into a clear structure,  with every daily activity meaningful and linked to the sporting success of the club. Staff should be free to innovate and discuss improvements to processes regularly. 

Monitoring and reviewing

Simply wanting to be  the “English Dortmund” is not enough.

It will be a multi-year process with thousands of individual contributing tasks requiring completion.

Football is a business like any other, your competitors are not standing still, you need to have a better plan and execute it better than them to succeed.

In our view the best way for a club to achieve this is to partner with an organisation (like ourselves) who can provide the support and market knowledge to know what the standards are in the industry.

The clubs we work with are successful because they have good internal processes,  strategic thinkers on the staff, and also are open to outside advice. This can range from  simply supporting and adding capacity to key functions such as analytics and scouting, or to advice above Sporting Director level working with ownership groups to set out the vision for club networks. 

Whatever route clubs take the most important thing they can do is to have a vision, and a strategy to make it a reality.