jmsb consulting - John Molson MBA International Case Competition

PARIS ST-GERMAIN
JMSB CONSULTING
ELLIOTT ALTILIA
MATTHEW BECK
SIMON FOUCHER
LYSIANE PROULX
Fans Quantity?
Fans Quality?
Team Performance?
HOW TO BOOST REVENUE TO
BE ABLE TO CREATE A
FOOTBALL CLUB CAPABLE OF
WINNING CHAMPIONS
LEAGUE WITHIN 5 YEARS?
Club Identity?
Broadcasting?
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
3-STEPS PLAN TO CONTINUOUS UEFA PRESENCE
Performance
•  Invest in the “farming model”
•  Maintain investment in facility and
players
Investment:
ä in stadium
143M €
•  ä Rev per client (boxes, corporate ticket team,
match-day revenues
tickets)
5season
YEARS
ä  brand equity
•  ä Volume (family tickets, packages,
new image
ä  attendance
marketing campaign)
Broadcasting
and Int’l
Image
•  Sport5: marketing, sponsorship, international
•  Al-Jazeera partnership
•  Mobile broadcast
revenue
770% increase in
MASSIVE RETURN FOR A COMPETITIVE FOOTBALL TEAM
KEY FINDINGS
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
MULTIPLE SOURCES OF REVENUE FOR CLUB FINANCING
Ticketing
Sponsorship
In Stadium
Media
Merchandising
SportFive
Hospitality&
Events
Advanced
Deals
Broadcasting
ALL RELIANT ON HAVING A STRONG FOOTBALL CLUB
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
THE SUPPLY OF FOOTBALL STARS IS THE BIGGEST LIMIT
7,422 Clubs in France
20 person roster
EUR284M single team spending
Current Payroll: EUR211M
PAYROLL NOW NEEDS TO BE MAINTAINED AT COMPETITIVE LEVELS
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
INCREASING MATCH DAY REVENUE WILL BE ESSENTIAL
Match Day
Revenue
10M Fans in the
area
Ticketing
No competition
Merchandising
Highest revenue
per fan EUR618
Advance
Sales
THE MARKET IS WILLING AND ABLE TO FINANCE SUCCESS
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
BROADCASTING SUCCESS IS SUPPORTED BY TWO PILLARS
Key Factors
Brand
Equity
What PSG will do
•  Very strong in Paris
•  “A great PSG or get lost”
•  62% attendance
Stadium
Attendance •  10M fan market
Hooliganism
Leverage
Al-Jazeera
Connections
Build a competitive
team with new
structure
Increase competiveness
and price will reduce it
A COMPETITIVE TEAM WILL ALLOW FOR COMPETITIVE BROADCASTING
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
PSG HAS 2 PILLARS COVERED
Supportive
Fans
Team
Spending
Player
acquisition
system
No
competition
Media
Connections
Financial
Revenue
Market is ready to
support an elite
team
Spending and
sources of
revenue are there
Will need to be
improved to retain
competitive
NOW IS THE TIME BUILD A LONG-TERM FOUNDATION
FINANCIALS
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
AVERAGE ATTENDANCE IS 62%
LOSC
Montpellier FC
Toulouse FC
Stade Renais
FC Girondais
AS St Etienne
PSG FC
Racing Club Lens
Olympique Lyonais
Olympique Marseille
91%
50%
53%
75%
72%
70%
62%
76%
86%
85%
0% 20% 40% 60% 80% 100%
FILL THE STADIUM BEFORE SPENDING 80M € TO EXPAND IT
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
10M PEOPLE, PARIS HAS HIGH POTENTIAL INTERNATIONAL
Share of league revenues
14.0%
12.4%
12.0%
10.0%
9.1%
10.0%
8.0%
6.1%
6.0%
6.8%
4.0%
2.0%
0.0%
Total
Commercials
Revenues
Ticketing
Share of revenue
Sponserships Broadcasting
Average target
NOT YET AT PAR WITH THE LEAGUE
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
REVENUE PER FAN AT € 618
€ 700
€ 600
€ 500
€ 400
€ 300
€ 200
€ 100
€-
€ 501 € 536
€ 591 € 618
€ 235
€ 335
€ 304 € 269
€ 218
€ 116
# 1 IN THE LEAGUE!
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
MATCH DAY REVENUES (M € )
Chart Title
€ 30
€ 25
€ 20
€ 15
€ 10
€5
€-
€ 26
€ 19 € 19 € 18
€6
€8
€6
€2
€4
STILL HAVE ROOM TO GROW TO BE #1 IN THE LEAGUE
€6
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
MATCH DAY REVENUES – 5-7 X TOO SMALL
Match Day Rev (M EUR)
€ 140
€ 129
€ 122
€ 120
€ 115
€ 98
€ 100
€ 80
€ 60
€ 40
€ 18
€ 20
€Real Madrid
Manchester United
Arsenal
Barcelona
NOT YET COMPETING WITH THE ELITE
PSG FC
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
REVENUES PER FAN (RPF) 3.5 X SMALLER THAN ELITE TEAMS
RPF
€ 2,500
€ 2,152
€ 2,040
€ 2,000
€ 1,639
€ 1,500
€ 1,223
€ 1,000
€ 618
€ 500
€Real Madrid
Manchester United
Arsenal
Barcelona
STILL HAVE POTENTIAL TO GROW RPF BY 350%
PSG FC
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
DETAILS ON REVENUES PER FAN
Avg Season RPF €618 Games per season 19 Avg RPF / Game €33 €8
€5
Ticket
€ 20
Concession
Merchandize
POTENTIAL TO INCREASE TICKET PRICES AND CONSUMPTION
ALTERNATIVES
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
SITUATIONAL SYNOPSIS
Strategy
High team performance
Core Competency
Loyal Fan Base
Huge Potential Market
Market
Broadcasting Revenues
Increasing
Popularity of Soccer
Growing Internationally
Mobile & Online Growing
PSG HAS POTENTIAL TO BECOME INTERNATIONAL SOCCER POWER
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
SITUATIONAL SYNOPSIS
Fill Stadium
Long-Term
Farm System
Investment
New Immediate
Performance
Base Approach
Competitiveness
Maintain
Long-Term
Increase
International Star
Broadcasting
Trends
Increases Slightly
Long-Term
Maintain
Local &
International
Match Day
Revenues
Maintains
Long-Term
Maintain
Increase
Immediately
Fan
Acceptance
No Change
Long-Term
Growth
New & Old
Time
No Change
Too Slow
Immediate
Decision Criteria
UEFA
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
RISKS & MITIGATIONS
Risks
Mitigations
Contingencies
Poor Team
Performance
Maintain Payroll and
Acquire new Talent
Farm System &
Acquisition of French
Amateur Team
Corporate
Sales too
Slow
Break Corporate
Suites & Auction Seats
Lower Prices and Sell
in Bulk
New Prices
Alienates
Fans
Marketing Plan
Geared Towards Fan
Loyalty
Focus on Growing
International Fans
Sell Tickets to
Competitor Fan Base
IMPLEMENTATION
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
5 YEAR TIMELINE
Image &
Broadcast
Stadium Rev
Performance
June 2012
June 2013
June 2014
June 2015
June 2016
Sustain Performance
Invest in farm system
Maintain training facility & elites players
New Stadium Project
ä  Corporate & boxes sales (new sales teams)
Adjust
Prices
ä  Brand Positioning
Sport5
Adjust Seat
Prices
Intl Team PR campaign
Renew Sponsorship
Mobile partnership
PSG CAN BECOME A TOP BRAND & UEFA COMPETITOR IN 5 YEARS
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
SUSTAIN TEAM PERFORMANCE
Invest in scouting, on
par with top EU clubs
Maintain training and
team player standards
Follow the FC
Barcelona Model
“farm system”
Offer premium
training environment
and staff to players
30 scouts in major
international footbal
Maintain salary at
competitive level
Consider buying
promising amateur
teams
THE TEAM PERFORMANCE IS AT THE CORE OF LONG-TERM SUCCESS
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
INCREASE STADIUM REVENUES
ä Prices for 20 to 30€ for regular tickets
ä Revenue per
client
Hire larger corporate sales team and heavily promote
hospitality boxes (30 corporate boxes) and season tickets
ä In Stadium
revenues
Launch 10€ family tickets
(Promote peaceful stadium policy)
ä Client volume
Promote pre-paid “subway + ticket + food packages”
Promote PSG Brand – May 2012 Campaign
THE REVENUE MIX RELIES ON PREMIUM CLIENTS AND LOYAL FANS
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
ADJUST BRAND POSITIONING
Target Market Pre-2012
Loyal Paris Fans
One-time visitors
New Owner
New Sporting Dir.
New Players
Larger Target Market
Loyal Fans
Families
Premium Client
International Audience
Stadium Safety
60M € Repositioning Campaign
CAMPAIGN THEME
Paris Saint-Germain is ready to move into the Elite class of super clubs
“Dream bigger with Paris Saint-Germain”
THE TIMING IS OPTIMAL TO ADJUST POSITIONING
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
INTEGRATED MARKETING CAMPAIGN TO ADJUST POSITIONING
60M € Campaign
targeting both loyal fans, new fans and premium clients
TRADITIONAL
ONLINE
FIELD
•  Billboards
•  Radio & TV Ads
•  Corporate Packages
•  Digital marketing plan
•  Mobile broadcasting
•  Guerilla Marketing
•  Jersey Distribution
•  Corpo events with new players
THE TIMING IS OPTIMAL TO ADJUST POSITIONING
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
INTERNATIONAL IMAGE AND BROADCASTING IS KEY
Leverage Sport5 for marketing, broadcasting and
international development (International PR campaign)
Invest in paid mobile app and online for fan base, in
partnership with broadcasters
Leverage Al-Jazeera connection to increase
international fanbase and broadcasting opportunities
Renegotiate jersey sponsorship with Nike and Fly
Emirates, leveraging improved brand
MEDIUM-TERM REVENUES OPPORTUNITY
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
THE 3-PILLAR STRATEGY
Investment:
$143M €
PERFORMANCE
5
YEARS
770% increase
in
match-day
revenues
ä  brand
equity
ä  attendance
PSG
IN-STADIUM
REVENUES
INTERNATIONAL
VISIBILITY &
BROADCASTING
PSG HAS THE POTENTIAL TO BECOME AN ELITE TEAM
FINANCIAL PROJECTION
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
DETAILS ON SPENDING
Spend (M €) Farm System €
3 New Stadium €
80 Brand Positionning €
20 PR Campaign €
20 Mobile Platform
Development €
20 Total Spend €
143 143M € INVESTMENT
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
ITEMIZED INCREMENTAL REVENUES
Before
After
Cost
Qty
Revenue/Game
Cost
Qty
Revenue/Game
Avg Ticket Price € 20
29,317 € 586,340 € 30
48,600 € 1,458,000
Concession
€ 5
29,317 € 146,585 € 10
48,600 € 486,000
Merchandize
€ 8
29,317 € 219,878 € 15
48,600 € 729,000
Corp Box
€ -­‐
€ -­‐
€ 900
30 € 27,000
Mobile App
€ -­‐
€ -­‐
€ 5
1,000,000 € 5,000,000
TOTAL
€ 952,803
TOTAL
€ 7,700,000
INCREASE OF 770% IN TERMS OF REVENUES/GAME
RECOMMENDATION
ANALYSIS
FINANCIALS
ALTERNATIVES
IMPLEMENTATION
IMPACT ON REVENUE PER FAN (RPF)
Before Revenue/Game €952,803 After €5,200,000 Season
Revenues €18,103,248 €98,800,000 RPF €618 €2,033 POTENTIAL TO MATCHUP WITH THE ELITE TEAMS
FOLLOWING THE 3-STEP PLAN,
THE BIG DREAM OF PSG FANS
WILL BECOME REALITY