European Basketball Advisory Group (EBAG) Business Conversations recently spoke with Jordi Bertomeu, who spent more than 22 years leading EuroLeague Basketball. In the interview, Bertomeu reflects on his career, the creation and evolution of the EuroLeague, the professionalization of European basketball, its commercial potential and the challenges facing the sport in the years ahead.
The original vision behind the EuroLeague
“Clearly the international club basketball competitions were stagnant; they were not growing from any perspective or metric that we wanted to see. FIBA tried, but without counting on the clubs, because this was their management culture at that time. Any significant change had to come from the clubs, and these were already organized into leagues in most of the relevant countries, and even the leagues of these countries had been organized in the ULEB. There were therefore the experience and the necessary knowledge to change things, dynamize them and grow. We tried to do it with FIBA, but when it was not possible, we did it on our own, under the leadership of ACB, which was, and I think still is, the most professionalized national league in Europe.
The vision was to improve the product, increase the basketball fan base and thus improve the economy. But under the government of the clubs, not of third parties. The clubs are ultimately responsible for the economic result; therefore, uniting decision and responsibility in the same hand was the logical and necessary step for change and progress to occur. And I believe that the successive evolutions of Euroleague until today have maintained these principles.”
Clubs as shareholders
“The idea on which a League is based is the management of a collective interest. Clubs have to feel that they own their product. And only in this way are they committed to its improvement and are able to renounce their individual interests for the benefit of the group, such as centralizing the commercialization of rights. The medium- and long-term vision of the whole over the short-term individual vision was the most relevant cultural improvement in European basketball in the last 50 years and also very meritorious, because 75% of the clubs did not come from countries with this tradition of management.
An obvious fact must be highlighted: the clubs were partners and competitors at the same time. In this context, prioritizing the common interest in the face of the urgency of the competition and day-to-day life requires a remarkable effort.
The Euroleague government was characterized by looking at the long term and agreeing with the shareholders/clubs, the strategy and the way to implement it. And it had to be accepted that it was never easy, since each club had its own and different sporting, economic, cultural and even religious context, so looking for formulas that respected as much as possible all sensitivities and preventing anyone from feeling excluded was essential. And I am proud that in so many years, formal votes were rarely necessary.
Not everything is perfect, and it was not. If I had to choose an issue where a collective decision has been more difficult to agree on, it would be the budgetary and financial control of the clubs. And I think that recently we have seen that even today it is a considerable difficulty.”
The professionalization of European basketball
“It is fair to say that in European sport, concern for sporting results has been the priority in the management of clubs. However, it is also fair to see a change, especially in the last 10–15 years. As you say, in Euroleague we have been implementing many initiatives aimed at improving management through professionalization and sharing knowledge.
In 2009 we created a ticketing program for clubs that was the seed to create BOCS later.
Convincing clubs that the non-sporting area should be as important or more important than the sporting area was not an easy task. But we managed to move from a situation where the non-sporting staff was reduced to two or three people who sold tickets, looked for sponsors and wrote press releases, to a situation like the current one in which business structures, without being ideal, are much more developed, sophisticated and have personal means and budget. However, the insufficient use of technology to improve management is still an obvious weakness. Solving this requires considerable economic investment aimed at providing clubs with the tools that allow them to access data, analyze, segment, create strategies and plan their commercial activity. It requires understanding that the digital area is the commercial asset on which the greatest income will be generated in the future. However, and by contrast, we see that in the sports area clubs are taking more advantage of technology.”
The commercial potential of European basketball
“Without a doubt, the potential for growth is enormous. Logically, the key is in consumption. It is essential that the Euroleague continues to give priority to protecting the product, the competition.
It is fundamental to think in the medium and long term to make investments and take decisions that facilitate the popularity of basketball, especially in markets not traditionally considered basketball, but which demographically and economically are very powerful. The rush to monetize would not help to achieve this goal.
Secondly, we must insist on the professionalization of clubs. An increasingly sophisticated business requires being up to date and not being afraid of change. It is necessary to identify the business verticals that are less exploited, analyze the causes and make decisions so that clubs can improve their commercial performance. We need talent off the court.
One of the best decisions made by Euroleague was to move to pavilions of 10,000 spectators. Now we must go further, not only in capacity, but in the quality of the experience offered to the fan and the enormous possibilities of monetization that game day offers to clubs.
Without a doubt, sponsorship and DTC are areas in which there is a lot of room for growth, and regarding media rights, the possibilities for growth are surely linked to new competition formats. We already demonstrated this in 2016 when the round-robin format was implemented, which, with some small modifications, is still in force, and UEFA has demonstrated it with its new competition model. And it is public that Euroleague is working on it.
And a transcendental issue will be the expansion and concession of new franchises. It is necessary to make the right choice of markets, the right choice of the clubs and pay close attention to their ownership and governance, since the owners have to be fully aligned with the long-term strategic vision of Euroleague. New clubs must be levers to expand the fan base and increase revenues.”
France, Germany and the challenge of the UK
“As you say, Euroleague has always had the clear idea that basketball should go beyond the traditional markets. Even we were unsuccessful, we must remember that in the first two seasons we had a team in London. Later we incorporated Turkey into the group of top-tier markets and shortly after I went to invite Bayern Munich before they were promoted to the German first division. France always had tradition, although without sports results at the club level.
But I agree with the analysis. Progress has been made in France and Germany, but not in the UK. Nor in the Scandinavian countries. And Italy does not have the weight it always had in European basketball.
The causes depend on each country, but it is clear that the UK is a very saturated market and requires an ad hoc strategy, with a clear vision in the medium and long term, and an action and investment plan that places Euroleague within the entertainment offer for the British. The fact that there is no relevant local competition undoubtedly adds difficulty. A joint strategy could be something to consider.
It is obvious that the most powerful brands in sports benefit basketball when we manage to incorporate them. Bayern Munich is a clear example of how it helps the growth of basketball in Germany. As Fenerbahçe was in Turkey previously. Replicating this model in the UK was tried years ago, but we were unlucky. It is the brand, its huge social base that transcends its natural territory, the diversity it brings. In short, there are many benefits to this partnership.”
The changing investment landscape
“The current scenario is radically different from the one that existed at the beginning of the decade. At that time, financial resources were sought, regardless of the way in which they were structured, aimed at improving a very specific area: the digital area. I have already mentioned the weakness of clubs in this area, and I would now add that it is difficult to improve if we do not act from the collective, from the Euroleague, because the clubs cannot in many cases access the necessary resources to face this effort.
Today there is talk of ownership, of the clubs and even of the League. There is talk of commercial platforms that are structured to accommodate financial partners in the hope that this alliance will help generate more resources for the clubs, even if they have to share them with their partners. I think the idea is valid if some conditions are met. The first is that the investment is used to generate new resources or to improve current ones. The second is that the governance of the League guarantees the absence of any type of conflict of interest, so that the competition is fully shielded. Here it will be argued that there are sporting decisions that have an impact on the business. It is obvious. This has been the case from 2000 until today. But the integrity of the competition has never been discussed or questioned.”
The value behind billion-dollar valuations
“In my opinion, valuations of the level you mention do not correspond to the reality of basketball in Europe. If it were feasible, the first consequence would be an almost general replacement of the current owners of the clubs by new owners, the investors. It is obvious that the current clubs do not have the capacity to assume those valuations. And it remains to be seen whether football clubs are willing to make investments of this level for the basketball sections.
If the answer is that the investment will be profitable in the very long term, we must remember that sport is very dynamic and the sports industry also changes easily, so making forecasts for such a long period involves a lot of unpredictability.”
Responsibility for the wider basketball ecosystem
“We must be clear on this point. Clubs already have an enormous responsibility in the development of basketball. In Europe, the vast majority of players come from clubs and mainly from clubs consolidated in the European national leagues. The enormous work they have been doing for decades is not recognized.
That said, the Federations are the main responsible for these areas. Some are actively working to create the optimal conditions to generate good players, coaches and referees. And in my opinion, the professional leagues should collaborate with the Federations, based on programs that have clear objectives, and an action and budget plan that covers the needs and is managed with total transparency.”
What makes European basketball unique
“Definitely, the fans. Identification with colors and a symbol has a unique emotional charge. As is the way it is manifested. The experience of attending a Euroleague game is indescribable by sport lovers, regardless of what happens on the court.
Secondly, the game. Based on a non-negotiable collective principle, which does not exclude; on the contrary, it promotes its stars.
And thirdly, the technical excellence of the players. The work of generations of coaches focused on individual technique, understanding the game and tactical deployment are three elements that have made up a unique style of basketball. Passion, team, excellence, are three arguments to build a storytelling of a commercial campaign.”
Protecting European basketball’s identity
“I am not unaware that it can be a risk. But this should not prevent us from looking forward. Basketball was a niche sport for decades in the last century. The changes and the risks associated with the changes have led it to be global. What must be done is to ensure that the European basketball “brand” is protected, as all brands are.”
The next five years
“I think it’s very difficult to make predictions. Or at least to make them without confusing it with your own desires. There are many challenges, as you say. Euroleague was disruptive 26 years ago and now no one questions it. Basketball has adapted to the new reality generated by Euroleague and its unthinkable changes in years before, such as not accessing the competition from national competitions.
The future will bring us the same situation, but first we will have to find a solution to the training of talent, today at obvious risk. And something more is required than saying “those who leave will come back.” The problem is not that they return, but the problem is that if no one leaves anymore because production has stopped.
I don’t think we can go backwards in globalization. The NBA promoted it a long time ago and today we live with it, knowing that the markets are global. And perhaps this has led to the NBA Europe project; it is its natural evolution. In any case, it seems to me not very feasible today and under the conditions described.
I believe and hope that Euroleague will continue to grow, that it will be present in more countries, that it will increase its fan base, that it will continue to generate sporting talent and improve the competition, that the business will grow based on management where talent and professionalization are the priority and, in this way, achieve the sustainability of the clubs. And in this context, that the largest basketball organizations worldwide cooperate would be great news.”
Commenta
Visualizza commenti