Introduction
Soccer in the United States is not as popular as it is in Europe. However, the growing popularity can be seen as an opportunity to be exploited. In Europe, soccer is a lucrative industry making billions of dollars per year. While most of this income is derived from broadcasting and other media deals, match days are also a critical revenue generator. Such a point is proven by the fact that the El Clasico match played in Miami’s Hard Rock Stadium was sold out and made history as likely the highest-grossing football event. The idea to bring LaLiga, Spain’s top league, to North America has been informed by such record-breaking events. The potential to make billions from the proposed International Champions Cup (ICC) has convinced the Relevent’s leadership that such a move is a wise one. This case study focuses on Relevent’s joint venture with LaLiga and seeks to present a SWOT analysis and market segmentation analysis.
Background of the Problem
Relevent wants to bring Spanish soccer to America in a deal that will see both the company and the individual clubs rake in millions of dollars from the new market. However, the efforts are not succeeding because Relevent cannot get clubs to commit to the proposal. FC Barcelona backed out even after being among those clubs supporting the proposed LaLiga matches in North America. Relevent, therefore, cannot proceed with the arrangements, at least not for the current season. The major problem, as explained by Barcelona’s leadership, is getting all stakeholders to agree. The plans are to host official matches in North America meaning that one club will be set to miss a home Match. Such an arrangement does not go well with fans, most of whom have bought season tickets. The number of bodies and organizations that need to agree on the proposal is simply too many to allow such initiatives to take place with ease.
The problem faced by the new joint venture between Relevent and LaLiga is largely a cultural one where clubs and indeed the football industry in Spain and Europe are unwilling to change their modus operandi. An example of the inflexibility of European football leagues is given with the mention of how the English Premier League rejected the ‘Game 39’ initiatives that would have seen English clubs play an additional league match in neutral venues outside of the UK. The stark cultural differences between the American and European sporting institutions is manifested by the fact that the American professional sports leagues have been undertaking such initiatives since 1990 when the NBA played its first season game in Japan. The executives at Relevent may have seen such an anomaly as an opportunity to be exploited but they might have downplayed the strong cultural factors guiding the European professional sports.
The possibility of bringing Spanish soccer to America remains among Relevent’s executives. However, such is a dream that will require a serious consideration of all stakeholders and, most importantly, the sporting culture of Europe. In the SWOT analysis and market segmentation analysis presented herein, the focus will be on the joint venture and its environmental success factors. The assumption, however, will be that besides backing out of the proposed match, Barcelona and other clubs involves are still part of the joint venture and future proposed matches. Another assumption is that once the differences are resolved the joint venture will go on operating normally and will face the same market and environmental issues as the other American professional sports organization. The main problem, therefore, is getting the clubs and the football governing bodies to agree.
SWOT Analysis
SWOT analysis is a tool used by businesses to examine the internal strengths and weaknesses and the external opportunities and threats influencing the operations of the company. Using this tool in the case of Relevent’s joint venture with LaLiga entails examining those environmental factors internal to the joint venture and external to it which affect the success or failure of the arrangement. The strengths of a firm are those internal aspects that facilitate its operations. These may be in the form of resource endowment, cost efficiencies, and other characteristics boosting its success. On the other hand, the weaknesses are those aspects that derail the firm’s success. These may be in the form of a low capital base and inefficient internal processes. In the external environment, some threats and opportunities drive or thwart the progress of the business. The opportunities, when properly exploited, help an entity grow. The threats, when not adequately addressed, have the opposite effect.
Strengths
The formation of the joint venture between Relevent and LaLiga is facilitated by what each party brings to the deal. It is stated that the deal requires LaLiga to contribute its intellectual property while Relevent serves as the commercial and marketing arm of Relevent. Specifically, Sillman states that Relevent “brings its expertise, experience and capital to the joint venture” (Elberse & Vicente, 2020, p. 7). It is argued herein that all these elements are strengths that support the success of the joint venture.
LaLiga is a powerful brand name and a lucrative intellectual property that can be exploited to yield massive financial gains. The popularity of LaLiga and Spanish leagues on the international platform may exceed that of other top European leagues, including the English Premier League and Germany’s Bundesliga. The popularity is helped by the number of international competitions won by Spanish teams who are members of LaLiga. These titles include 10 UEFA Champions League, 9 UEFA Europa League12 UEFA Super Cup, and 7 FIFA Club World Cup. In total, LaLiga clubs have won 38 international competitions with the second-best being English Premier League with only 9 titles in total (Elberse & Vicente, 2020). The capital, expertise, and experience of Relevent are major strengths because without them the joint venture will fail. The revenues generated by Relevent’s efforts in ICC reveal just how the capital can be raised and how the experience and expertise facilitate such arrangements.
Weaknesses
The major weakness working against the joint venture is that Relevent has a relatively smaller operational scale as compared to other competitors offering LaLiga better terms. Even though the availability of capital is cited above as a major strength, having less of it than the competitors means that rivals can frustrate the efforts of the joint venture. The competition is an external factor that will be discussed under threats, but they serve to illuminate the internal deficiencies suffered by Relevent. As a relatively new establishment, Relevent is yet to amass huge amounts of funds to form its capital base. Additionally, the firm is to attract investors who can bring in large sums of money to allow it to pursue lucrative deals such as LaLiga North America. Most importantly, Relevent is not a strong brand name with which the LaLiga can make the most of such a proposal. LaLiga already has profitable deals with broadcasters such as BeIN who can offer LaLiga over $1 billion per year from the broadcasting rights. Whether or not Relevent has an internal capacity to match such offers remains to be seen.
Opportunities
The growing demand for European football content in the broadcasting media is seen here as the greatest opportunity to be exploited. Sold out stadia during such matches as the El Clasico and the millions of views in such events in North America offer the joint venture a growing market to exploit. American soccer may also be growing in demand but with LaLiga topping the list of interactional championships, it is apparent LaLiga is a better proposition in that regard. The revenue streams are also a critical opportunity to be exploited. Currently, the joint venture seeks revenues from broadcasting rights and match tickets. The five-pillar strategy suggested for the joint venture reveals that there are additional revenue streams to be considered. The always-on content in social media and other digital platforms are examples of income options available for the joint venture.
Threats
The major threat to the functioning of the joint venture is competition from the more established sports broadcasting and entertainment agencies such as BeIN Sports who already have a deal with LaLiga. Additionally, further competition from Endeavor and Wasserman who are trying to out-bid Relevent for cooperation with LaLiga. As mentioned above, these agencies have greater resource capacities than Relevent as manifested by their ability to offer LaLiga a minimum economic guarantee acting as an insurance policy for when the revenues generated are below expectations. In this case, their strengths become Relevent’s weakness in that LaLiga would easily be attracted to better offers.
Market Segmentation
Market segmentation entails identifying and dividing consumer sub-groups comprising current and prospective customers. It is a consumer-oriented process which can be applied to any market. In the LaLiga North America joint venture, an analysis of market segmentation identifies the potential markets to be served by the business. There are several ways of segmenting a consumer market with the major market segmentations, including geographic, psychographic, demographic, and behavioral segmentation. Each of these will be defined and applied to Relevent’s proposed matches and the joint venture with LaLiga.
Geographic Segmentation
Geographic segmentation can be defined as dividing markets across geographic lines. In other words, the markets are classified in terms of the locations of the customers. The variables used in geographic segmentation include natural resources, terrain, and population density among others. In the case of LaLiga North America, Relevent the location is the most important element of the segmentation. North America, specifically the United States and Canada are the two markets that the joint venture hopes to serve with the sports media content. This is expressed in the statement that Relevent will be serving as LaLiga’s “marketing and commercial arm in the US and Canada” (Elberse & Vicente, 2020, p. 7). The United States and Canada are among the markets where demand for European football content is growing, presenting Relevent and LaLiga with a potentially lucrative opportunity.
Psychographic Segmentation
Psychographic segmentation entails dividing the markets on the basis of values, personality traits, lifestyles, motives, and interests among others. A single market segment can be characterized by one or more of these elements. Different markets are known to respond differently to a marketer’s selling efforts. It is important, therefore, to pay close attention to these variables when designing a product or service to sell to markets displaying certain psychographic characteristics. The LaLiga North America joint venture’s market is hard to segment using psychographics are there lacks adequate to classify sports content consumers according to their lifestyles, values, or even traits. Using the limited information from the case study, however, it can be surmised that the North Americans’ lifestyle includes engagement in sports of different kinds, either through participating or being fans. The market can also be perceived as receptive to new ideas and new sports considering the fact that Miami’s Hard Rock Stadium was sold out for a foreign event, something that hardly happens with the local sports. Sports in North America are, therefore, part of a culture and lifestyles.
Demographic Segmentation
Among the easiest market segmentations is the demographic one that entails dividing markets based on factual and physical information. The key demographic variables include gender, age, occupation, marital status, race, religion, nationality, and family size among others. For a product like sports and entertainment content, the lines drawn across these variables may be blurred by the fact that sports entertainment usually appeals to all these segments regardless of gender, marital status, and age. However, it remains crucial that a company such as Relevent understands specifically which market segments can be targeted. The age group identified by Relevent is between 16 and 34 years where over half of them are potential consumers of soccer content. Over 25% of the people aged between 34 and 54 years and about 15% of those 54 years and older are also found to be interested in soccer. Other demographic patterns appealing to Relevent include race where Hispanic audiences are the target market to be prioritized. This is because this racial group watched 68% of soccer games with 82% of them being aired in the Spanish language.
Behavioral Segmentation
Behavioral segmentation involves segmenting the market based on individual buying behaviors. This form of market division is often conspicuous with the product benefits sought by the consumer and the buyer behavior in terms of both frequency and volume of purchase. In sports, the behavioral segmentation may include targeting the sports fans who attend match days or who watch matches over the television or other paid media. In North America, Relevent targets both of these audiences whereby hosting matches in North America brings fans to the stadia while the rest watch through broadcasting channels.
Conclusion
Relevent’s efforts to bring LaLiga to North America is a promising venture which could financially benefit all parties involved. However, it is getting harder to get things started. The SWOT and market segmentation analysis presented here reveals that LaLiga North America joint venture should begin by bringing all stakeholders on board and seeing off the still competition from financially stronger rivals. The markets targeted are general, meaning it is hard to target specific groups with specific characteristics. That, however, is the nature of sports and entertainment where demographic characteristics or geography hardly affects the consumption of related media content.
Reference
Elberse, A., & Vicente, D. (2020). Relevent and LaLiga: Bringing Spanish soccer to America. Harvard Business School.