Despite a global pandemic, with spectators locked out of stadiums for the foreseeable future, there is still a lot of interest in club football from investors.

There are of course many different types of football club owners; fans of the club fulfilling a childhood dream, very rich people having fun with no thoughts of financial gain, national wealth funds who see football as a way of reaching the world, and ownership groups looking to generate returns for investors.

The first three groups of owners are buying a club with an eye to creating moments of joy rather than a pure financial return. However, I’d argue they are best served by still following a similar game plan to the financial investors. The better the club is run, the better the results will be in the long term.

But how do new owners ensure they don’t repeat the pattern of doom that many new owners enter into.

The pattern of doom:

  1. Buy a club
  2. Appoint a high profile manager
  3. Back them with large amounts of money to buy new players
  4. When this doesn’t immediately improve results return to step 2

There are so many examples of clubs where owners burn through hundreds of millions for no real benefit. 

ROI in football for most owners

Of course there are smart individual owners and groups, people who have done the research, and put the necessary structures in place for success.

This is easiest of course with significant funds available to invest up front, you can quickly make the changes required and plug any gaps in the squad with properly researched signings who fill a specific need. 

One of the concepts we use when assessing clubs is a very simple process where we rank players against their current wage, contract length, and our perception of whether they are likely to be regular players in the next season. This gives us a good idea of how much of a squad overhaul will be required and how long it will take to work a legacy of poor signings off the books.

Example of our Squad Score output, an overall score of 100 is sustainable.

Often the most poorly constructed squads are those who have had investment from first time owners. Overspending based on poor advice can have long term consequences. 

Football is a strange business in that most of the market entrants have minimal sports experience yet purchase complex projects. No new entrant to the construction industry would take on a 100 room hotel that had stood empty for 20 years. Yet in football clubs that need to be fundamentally reconstructed are purchased by owners with little direct experience of what needs to be done. 

You can of course hire in expertise but how do you know if someone is an expert or not? Even a track record of success doesn’t tell you a lot. Separating an individual’s actions from a collective success is very difficult. 

I think perhaps too the complexity of football is underestimated. Yes, fundamentally it is a simple business, you want to get the best players you can afford onto the pitch, trained by the best coach. Do that well all the time and crowds, success, and money will follow. But that is what everyone else is doing, what makes your club unique and how do you ensure losing key personnel doesn’t stop the project succeeding?

The key is how to find the strategies that will give you access to better talent, both in playing and coaching personnel, at better prices than the competition.

And the key question is where is the best place to develop these strategies? You don’t learn to drive in a Ferrari so why would you learn how to run a football club in a hugely competitive league against the world’s best?

How transferable are the skills needed to run a club? 

Again I start with the caveat that it is really hard to judge individual performance in isolation. The circumstances you are operating in make a huge difference to performance. 

But if we look at the sporting directors people consider to be the best in the business we’d probably consider Michael Edwards, Luis Campos, Michael Zorc, Txiki Bergiristain, Monchi and Ralph Rangnick to be in that group.

Luis Campos

The immediate problem is that there is no clear pathway for success. We have a mixture of backgrounds. Zorc and Bergiristain were elite players for the clubs they started their role at. Campos and Rangnick entered Sporting Directorship jobs after long coaching careers. Edwards and Monchi were given increasing power and responsibility after joining the club rather than being appointed initially as Sporting Directors.

Ownership groups need to consider the question as to whether the skills of the best sporting directors are rare (and therefore it is worth paying lots of money to acquire said skills) or whether these capabilities are more common and can be significantly aided by the culture created by the owners. 

I’d say (whilst balancing carefully on the fence) it is probably a bit of both. There are some really talented people running clubs, good communicators who are capable of creating a culture. I think some equally capable people are probably victims of circumstances. However good you are (like Monchi at Sevilla) if you are put into a different environment without the same level of control, or time to embed processes (Monchi at Roma?) you aren’t going to be able to repeat the same outcomes. 

Prototyping

This is where prototyping can help. 

A prototype is a preliminary version of an object from which future versions are developed.

If you are a car manufacturer thinking of building a new model there are some specifics you need to consider before spending £500m on factories, tooling, marketing, and materials.

What type of car do you want to build? The end product is still a “car” but you need to know from the start if it is going to be a sports car, an off-roader, a family car or something entirely new.

A car built without prototyping

So you gather together your design team and work through the ideas. You spend a few million on ensuring that the product you are building is going to be good. The last thing you want to do is to invest £500m then realise your product isn’t good enough to succeed.  

Why is this not standard practise in football? There are so many examples of owners buying into top five leagues, spending hugely, churning staff, and adding next to no value to the process.

You end up with Homer Simpson’s car design in football club format.

Why not perfect the product then scale it?

How do you prototype a football club?

The basics of football are the same everywhere.

You want to find people who can identify talented players (identifiers), people who create an environment where talent wants to join and remain (persuaders), and people who maximise the talent (improvers).

These three basic processes are the same at the lowest and highest professional levels. 

Talent identification

All clubs have scouts to identify players and decision makers who ultimately choose who gets a contract.

As a company we identify talent for clubs who can pay players £20k a year, and clubs who can pay multiples of that a week. The process is exactly the same regardless of level.  

However with a larger budget there are strategies available to add to that process. 

By prototyping this at a smaller club you can refine the processes and test your network before looking at trading in more expensive players.

We can help with talent identification

Recruitment and retention

Once a talented player or coach has been identified you need to persuade them to join your club. This is an underappreciated aspect. Talent always has options. Once recruited you have to retain the player. Again, talent always has options.

Multi-club networks can play a huge role in this process. Players want to play. By operating across multiple territories and multiple levels players within the group will always have an option to play at the best level for their current ability.

When prototyping the network it is important to consider the next steps good players take out of the league you are operating in. For example not many players go straight from minor leagues to the Premier League, the interim step of Belgium or Ligue 2 is the next level required for “proof” of ability.

Retention is about creating an atmosphere where people thrive. With a network it is important that the people in the “lower” tier clubs feel a part of the success at the highest level and vice versa. This is easiest with geographic clustering of clubs so you can co-locate facilities and create a “one club” atmosphere even when competing in different competitions.

Improvers

The improvers aren’t just the coaching staff. This includes medical personnel, fitness staff, sport scientists, the analysis teams. Anyone whose job involves making the team on the pitch better in some way. 

Again this is an area where the evidence we have shows that elite coaches can be developed. 

Look at the 8 coaches who reached the Champions League and Europe League semi-finals last season.

Hansi Flick

Thomas Tuchel

Rudi Garcia

Julian Nagelsmann

Julen Lopetegui

Ole Gunnar Solksjaer

Antonio Conte

Luis Castro  

What do they have in common? 

On the face of it not a lot. 

Some never played professional football, some were elite players. 

Some are very experienced, some very young.

The youngest have, so far, only known success, others have taken a long path to the top with failures along the way

Perhaps the common thread is that all but Conte have had significant periods of time coaching in youth or non-elite football.

Hansi Flick had not coached a team above the 3rd division in Germany before winning the treble.

Hansi Flick won the Champions League, but before becoming the Bayern head coach his only club experience was in the German third tier. He did have significant experience however in youth development and technical roles with the German national team.

Julen Lopetegui won the Europa League, but before becoming a head coach had spent 10 years working in the Real Madrid and Spanish national team youth systems.  

If we look at the Red Bull group they have produced an in-house coaching system, recently picking coaches from within the network to lead their teams. By having a single style of football played across all clubs they have the ability to offer the opportunity for coaches to develop the ability to communicate their playing principles to players. Those who are able to coach it best are given the opportunity to manage their teams. The likes of Marco Rose, Adi Hutter, Roger Schmidt, Peter Ziedler, Jesse Marsch, and Gerhard Struber have all developed in their network.

Marco Rose winning the UEFA youth league with Salzburg, next step was first team manager, then the German Bundesliga.

This is why to get the maximum benefits from the future scaling of a prototype club the “house style” of football should be embedded from the start.  You can start developing coaching talent and critically coaching experience from the start. Find your Ralf Rangnick equivalent and allow them to introduce a group philosophy and when the expensive investments are made you will have a ready made production line of coaching, and playing, talent ready to go. 

The big purchase

As with our car analogy when you have the prototype tested, functioning, and tweaked you can scale up the operation.

Buy the major club when you are satisfied you have a model that works. A scouting team who knows exactly the type of player you need, a recruitment team who can attract those players, a coaching team with proven ability to communicate their ideas, and people throughout the organisation who are committed to success.

By starting from the smallest clubs in the network you are building a solid foundation for the success of the larger purchases.

For more details on our advisory services for potential club owners please contact us at: contact@mrktinsights.com 

Categories: MRKT Insights

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