Business of Sport: Aston Martin's Second Century Plan

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Leading from the front: Andy Palmer has already inspired a new team spirit at Aston Martin.

For the moment, James Bond may be more synonymous with Aston Martin than Andy Palmer but if things go to plan that may well change in the not too distant future.

Palmer has a mission to put Aston back into profit, to lead the 103-year-old company into what he calls ‘The Second Century’.

He has already refinanced the company which has had several owners over the years, transformed the management structure, launched the stunning new DB11, and formed a fascinating alliance with Red Bull Formula One team to produce a hypercar, the sensational looking AM-RB 001 (below).

He took some time away from his hectic schedule to talk to Sport360° editor Steve McKenlay about the future.

How long have you been with Aston Martin now?

For just over two years. Prior to that I was chief planning officer for Nissan based in Japan. I was 23 years with Nissan, 10 years in the UK and the rest of the time overseas and I am a mechanical engineer by training.

Aston came in for me. I had a little bit of insight into Aston beforehand because at Nissan we looked at whether they would fit into our portfolio or not so I had a reasonable understanding of the challenges but the turning point for me was the five per cent shareholding with Daimler which gave Aston access to the technology it clearly needed plus assurances from the two other shareholders, Investment Dar in Kuwait and Investindustrial in Italy, that they would back my plan.

What did you see before you came into Aston Martin that persuaded you to join them and what were the main challenges you expected to face?

What I saw was a great brand which I thought I could take somewhere special. There was an emotional side of that of course in that I reached 50 years old at Nissan where I had a great job and could have continued doing that.

However, I always wanted to be the CEO of a car company and I always thought it was a huge shame that the UK has barely any of its own car industry left.

Aston is it basically, so it was a bit of bringing the head and the heart together with a sincere belief that given the right team, the right challenge and the right motivation I could at least turn Aston into the British Ferrari. I don’t mean copy Ferrari but as a stand alone manufacturer and maybe more.

Ferrari already sets the bar high. It just recently had a successful IPO (Initial Public Share Offer) and set a very high target but we can go further because we aren’t limited to only making sports cars. We can do SUVs and Lagondas.

What was your opinion of Aston Martin cars when you joined the company?

The cars are great. We can talk about the old VH (vertical/horizontal platform) architecture but it was really ahead of its time but the models are ageing and in particular the electrical architecture was starting to show its age.

So, coming in I knew I wanted to do something about the navigation system in the cars which was one of its major weaknesses and I wanted to do something about the gearbox by giving an alternative to the single-clutch gearbox and update the interior. So, on a product basis it was a case of go ahead to do it.

I did all that and that is before the new product comes. There was a whole bunch of other things I needed to do within the first two years which was a stabilisation period. I put together a corporate plan which was approved at board level, got it funded and started to put the management structure in place.

I have taken out two levels of management trying to create a large flat structure, started a cost reduction programme and regrettably had to make some redundancies – about 400 – and started a whole new quality process. That comes from my Japanese training because they are obssessive about quality.

So that sort of marked the end of the beginning and we are just starting phase two which is core rebuilding which is the new sports cars, starting with the DB11.

I came to the launch of the new DB11 in Italy and one of the things that struck me was the enthusiasm of the team you now have. Was that enthusiasm already there ready to be tapped or have you introduced it?

There is definitely a real buzz around the place now and it wasn’t there when I came. I think that fundamentally we didn’t change too many people. There was a passion for the brand.

People work at Aston because they love cars but the company was spinning its wheels. There wasn’t really any approval of products there was nobody taking brave decisions so there wasn’t a lot of celebration of how good things could be because there wasn’t any money.

They went back to a kind of feudal system with the heads of all the functions basically protecting their patch and no real teamwork so the hardest thing to start with was the cultural change, engendering a team spirit with a clear, deployable plan and a leadership that works harder than anyone else.

So I think there was a lot of frustration amongst the workforce with nothing to channel the passion into.

New models are in the pipeline for Aston Martin.

The DB11, the first Aston produced under the partnership with Daimler, has been well received so what is next?

You and I are privileged to have driven the car but we need to tell everyone the story about what we have done which is why I will personally be inspecting the first 1000 cars that leave the factory. No car goes out of the factory without my assurance that it is a good car.

What does your inspection involve?

Twenty to thirty minutes depending on whether I decide to give it a test drive or not but it is principally around gaps and flushes, making sure everything works and that there is no damage to any materials interior and exterior.

There is an obssession with getting things right. I wouldn’t put my name on it if it wasn’t right and every car goes with my email address so if there is something wrong then I will hear about it and I answer all my emails.

Have you always been that hands on?

Yes, I left school at 16 and worked on a factory floor and I prefer it like that. I have other weaknesses but I like being on the shop floor.

Tell me more about the future of Aston as you see it.

The turnaround plan it is to make the most beautiful automotive art in the world from a great British car company. There are six pillars of the turnaround plan starting with the luxury products and not just cars – boats for example.

The second is making sure we have got a sales network which is capable of growing to, in the first instance, 7000 cars a year, and then double that; the third is about unrivalled quality; fourth is about great processes; fifth is about passionate, professional people the most important asset in the company and the sixth is having the finance and the discipline there which means we never have to go back to the begging bowl.

How difficult was it to fund your plan?

There were plenty of cynics for sure but the plan is extremely cohesive and my management team has credibility within the investment community and for the last seven quarters in a row I have bettered the budget we had set and that gives confidence to the financial community.

What new cars are next?

In terms of products the next is the new Vantage and then the Vanquish and that covers the next phase of the plan.

Are you going to replace all your models including the Rapide?

The Rapide will become electric. It fulfills two needs. I have obviously run electric car programmes before and I know how hard it is and I know that you need to concentrate on just the things that you are changing ie so it allows us to address that issue of understanding the technology.

It also allows us to meet emission regulations around the world and I think there is room for a luxury brand above Tesla so eventually the Rapide will become our vanguard of the electric car. Then we have the SUV code-named DBX and the Lagonda.

Motorsport has always been important to Aston. Have you considered entering Formula E which is now attracting all the major manufacturers?

Yes, and we will continue to consider it but we won’t be entering until the technology allows a race to be done on one battery.

If you want to be the first electric luxury car company it is a way of showcasing that so it is definitely on the agenda but I think having to change the battery by changing cars half way through the race is just reinforcing people’s perception that electric cars have a range issue.

That will change and I believe that 25 per cent of new car sales will be electric by 2025.

Aston does a lot of limited special edition cars and has just announced a hypercar in a partnership with Red Bull. How important is this business to Aston Martin?

In 103 years Aston has made just 80,000 cars and within a couple of years we are going to be making 7000 cars a year and then 10,000 plus so it’s suddenly a different sort of exclusivity. So in order to preserve the sort of exclusivity to get with a DB5 I want to make every year, two sets of low volume specials.

It also transforms the way people view our product line because we are selling out with significant over subscriptions on every one of these special series that we are doing.

So you are creating a head of steam with people who want to get close to the company and so they also get close to the core range and we now have more than 4000 orders for the DB11.

So, is the association with James Bond still part of your turnaround plan?

We are not Ferrari looking for that fraction of a second more speed, we are not Rolls-Royce and we are not the average of the two.

We position ourselves around the love of beauty and beautiful cars and we have to put it into the minds of the customers that the reason the fictional James Bond will drive that car is because of its beauty, its athleticism; because it suits what he is. He is one of the tools, like racing, that we use to market our brand. So yes, he is still important.

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How Du Tough Mudder went global

Jay Asser 6/12/2016
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Strength in numbers: The event breeds camaraderie and teamwork.

Rolling in mud, being submerged in ice water and enduring electric shocks may sound like a miserable time to many, but for a segment of the fitness world, it’s another way to exercise.

The fitness industry is ever-expanding and far-reaching, with alternative forms becoming more and more mainstream. Obstacle course events are no different and their popularity has surged over recent years to now rival more traditional races like marathons and triathlons.

Arguably the leading name in obstacle course and endurance events is Tough Mudder, which has grown exponentially since starting in 2010. The brand has had more than 2.5 million participants across three continents to date and will finish this year with more than 120 events staged in 10 countries.

Dubai will be the latest city to host the experience as the du Tough Mudder makes its debut in the emirate at Hamdan Sports Complex this weekend on December 9-10. The UAE is no stranger to obstacle course and endurance events, but Tough Mudder CEO Will Dean believes the appetite for the concept is as big as ever.

“I think the younger generation sees experience as being the new luxury good,” he told Sport360.

“What kind of watch we have or what kind of car we drive is less important than the memories we share. Our memories appreciate in value and our iPhones are quickly replaced with something better.

“Secondly, I think fitness has changed. Functional fitness is much bigger now than it used to be. I’m not against marathons or triathlons, but if you only run or bike, you’re not going to be in the best shape you can be. You need to have that functional fitness and that’s what Tough Mudder is about.”

Dean, who is a native of Great Britain, came up with the idea as a second-year MBA candidate at Harvard Business School in Boston. Again, he wasn’t the first person to imagine the obstacle course, but by refining the obstacles, upping the challenge and focusing on values like personal achievement and teamwork, Tough Mudder has thrived.

Tough Mudder now includes its standard 10-12 mile series of military-style obstacle courses, a five-mile version called the Tough Mudder Half, a course created by women for women called Mudderella, an event for children aged seven to 12 called Fruit Shoot Mini Mudder and its signature 24-hour endurance competition, the World’s Toughest Mudder.

An 8km and 16km course will be available to those eager to get dirty in Dubai this weekend, as well as the 1.5km du Mini Mudder for aforementioned children.

Tough Mudder has also partnered with Dubai Sports Council and got IMG on board as organisers, which is one of the major factors behind Dean finally feeling it was the right time to expand into the Middle East.

“Dubai is a market we’ve been planning on coming to for several years now,” he said. “You have a large, young middle class here into health and wellness. There’s a trend around the world – it’s true here as well – more people put more emphasis on being healthy and living healthy lifestyles. But not just that, but challenging themselves and taking on new things.

“This is a part of the world that’s pioneering. People are doing new things and looking for new adventures. You also have a large expat community, so you have a lot of people that have relatively high disposable income, free time and are young enough to come do things.

“I also think Tough Mudder as a company is now sophisticated enough that we can work with third parties and actually support them in the way we need. But in IMG, you have the world’s largest sports marketing company, world-class event production skills and they’re very, very strong on the ground here in Dubai.”

Despite putting on an event for the first time in this region, Dean is confident with his target of 5,000 participants – and he has every reason to be.

As mentioned, Tough Mudder’s participation numbers are through the roof. But maybe the number that truly speaks to Tough Mudder being a movement is 5,000, as in approximately how many people have a tattoo of the Tough Mudder logo.

That dedication and passion is the result of what Tough Mudder puts people through, both physically and mentally.

Just take a look at the list of obstacles. Participants have to jump into a dumpster filled with ice water in Arctic Enema, traverse through a mud field with live wires hanging overhead in Electroshock Therapy and run up a slick quarter pipe covered in mud and grease in Everest. Those are just a few of the insane creations thought up by Tough Mudder’s research and development team, which Dean describes as “nutty professors”.

But more than just pushing your body to the limit, the obstacles are specifically designed to inspire teamwork and camaraderie, whether that’s helping fellow participants or encouraging them on the course. That’s one of the qualities that Dean believes really separates Tough Mudder from the competition.

“I really believe that the best companies out there are purpose-driven organisations, companies that exist to try and make the world a better place,” Dean said. “Maybe that sounds cliche to some but that’s what I believe and I believe Tough Mudder gets people to live happier, healthier lives.

“It gets people to spend time with their friends, it pushes them to do something they weren’t sure they can do, so people feel good about themselves. The key to building self confidence is doing things that scare you a little and Tough Mudder is a little scary. I’m proud of that and I’m proud that it’s something that forces you to turn off your smartphone for a couple of hours and actually spend time with your friends.

“If you’re the kind of person that holds the door open for somebody or helps someone with their luggage, you’re actually going to be a happier person. The brain releases endorphins when you help people and Tough Mudder is just the extreme version of that.”

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Business of Sport: A revolutionary shirt deal for Leganes

Mark Lomas 27/09/2016
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After waiting 88 years to reach Spain’s top flight, Leganes are making the most of it.

June 4, 2016, was a landmark day in the history of Club Deportivo Leganes. Pablo Insua’s winning goal not only secured a 1-0 victory against Mirandes on the final day of the season, but propelled the club into La Liga for the first time in its 88-year history.

Based on the outskirts of Madrid, with a stadium that seats just shy of 11,000 spectators, Leganes provided the only domestic bright spark for the Spanish capital in 2015/16. Although Atletico and Real met in the Champions League final, both were pipped to the Primera Division title by Barcelona, while Getafe and Rayo Vallecano were relegated to the Segunda.

Leganes may be a small team, but they have big ambitions. Handed a blueprint for survival by fellow first-timers Eibar, whose survival for the past two seasons has defied all expectation, the club has made a superb start to life in La Liga. Leganes already have two away wins under their belt, as well as a hugely creditable 0-0 draw at home to Atletico – Jose Luis Mendilibar’s side managing to nullify Antoine Griezmann & Co, something that not even Barcelona could manage in last week’s 1-1 draw at the Nou Camp.

While on the pitch performances have earned acclaim, developments off it have also begun to garner interest. In recent weeks, Leganes officials have travelled to both the UAE and China to secure international partnerships for a club looking to take full advantage of its status as a La Liga outfit.

The commercial deal struck in Dubai is particularly intriguing, given that it could revolutionise the concept of shirt sponsorship in football.

Saudi Arabian sports marketing company MBUZZ Sport bought up the rights to appear on the front of Leganes’ shirts in the 2016/17 season. It is not the first Saudi foray into La Liga shirt sponsorship, with MBUZZ Sport’s parent company MCCI, a mobile communications giant, linking up with Getafe for a brief stint towards the end of last season.

Leganes-Climb-to-the-Top-La-Liga
What makes the Leganes agreement different, however, is that MBUZZ Sport are planning to license out their shirt sponsorship to the highest bidder. It won’t be done on a season-by-season basis, but in “packages of games”, meaning Leganes will likely have multiple different names on their shirts in 2016/17.

“The idea is to give small and medium sized companies a chance to get exposure in La Liga for the first time,” CEO of MBUZZ Sport Youssef Abdellaoui told Sport360.

“The cost of sponsoring shirts for the season is certainly prohibitive to many so instead of giving them one season, we’ll give them a third of the season, maybe even just three or four games. They get to see the value added to that brand or sponsorship and then maybe next year you might have them for the full season.

“It’s going to be up to the customer. If they want only one match, we will advise them, okay, maybe the exposure would be better with two or three matches or more. But maybe they just want to feature against Real Madrid or Barcelona. If that’s what they want, they can get it.”

It’s not a unique idea. In 2010, during Tottenham’s first foray into the Champions League, asset management firm Investec sponsored the club’s shirts in Europe while software company Autonomy appeared in the Premier League.

The appeal certainly seemed a little less obvious with Leganes. So why did MBUZZ take a punt on a newly promoted La Liga side?

“Leganes I see it like Leicester,” Abdellaoui explained. “No-one would have ever thought Leicester could win the Premier League but this is the beauty of football. Leganes have been managed extremely well and, despite not having much money, have managed to get to La Liga. I was at the Atletico game and they showed how good they can be. They have what it takes to stay in La Liga. They are fighters.

“The big clubs are the big clubs. Everybody knows about Barcelona and Real Madrid but five years ago no-one was talking about Atletico. They weren’t considered one of the biggest teams and certainly weren’t one of the riches teams. Now it is a completely different story. Why can’t Leganes be a part of that as well? Why not any other team?

“We find comfort with Leganes. They have shown they are ready and keen to promote themselves and the GCC, especially in the Saudi market. Our objectives aren’t just related to the team’s performance, though if they stay in the La Liga and do well, that’s a good thing for them and that is of course what we want.

“But it is also about the infrastructure of the club, the academy, the relationship with the community. These are things that are important.”

Indeed, the scope of the partnership goes beyond shirt sponsorship. MBUZZ’s parent company MCCI is installing Wi-Fi at the club’s Estadio Municipal de Butarque home, while Leganes will send coaches and potentially players to work and play in the Saudi Pro League.

For Leganes vice president Felipe Moreno, it is the opportunity to expose the name of Leganes to a new audience that is one of the most appealing aspects of the deal.

“The economic side is the least important right now,” Moreno said. “We don’t just want to take money from the Arab world, we want to create a pathway between football in Spain and the Arab world. We want to lead the way in this collaboration. We will also invite coaches from Saudi Arabia to see the way we work, see the team in the best league in the world. In both Spain and the Middle East, we want to help create young men that are very competitive and understand the value of respect.”

The aspirations of Leganes don’t end there. Moreno revealed officials are pressing ahead with a proposal to change the club name to Club Deportivo Leganes Madrid in time for next season, with hopes that a closer association with the capital will make the team even more marketable. However, he concedes that there are no plans to sell off naming rights to the stadium, which is named after exalted local patron Nuestra Senora de Butarque.

“I don’t think we could ever change the name of Estadio Butarque,” Moreno said. “The whole city is named after Butarque and the fans would not like it. But the name of the club, it is just a minor adjustment that could make a big difference.

“We want to have our name on the map of the world so rather than being Leganes CD we want to be Leganes Madrid. We are in Madrid, a suburb of Madrid, and we want this to happen. It’s about exposing the club to the outside world.”

Arabian adventure: MBUZZ with their sponsorship.

Arabian adventure: MBUZZ with their sponsorship.

La Liga’s exposure in Saudi Arabia is certainly increasing all the time and Saudi involvement in European football is only going to get bigger given the division’s popularity continues to rise among the Gulf state’s fans and businesses continues to grow.

However, Jon Long, MENA managing director of sports analytics company Nielsen, believes that while Saudi investment is on the up, the Saudi Pro League still provides excellent sponsorship opportunities thanks to its enduring popularity.

“The Middle East continues to play a big role in European football sponsorship. Traditionally it has been the UAE and Qatar which have dominated that investment, most notably the major airlines, Emirates, Etihad and Qatar Airways,” Long said.

“The role of Saudi Arabian brands is less well documented but there is now around $20m (Dh73m) per year being invested by Saudi-based companies in European football sponsorship with STC leading the way through long-term partnerships with both Manchester United and Real Madrid that focus on marketing rights other than shirt sponsorship.

“Saudi brands have to weigh up such activities against the opportunities in the local league, which attracts big domestic television audiences in its own right,” added Long. MBUZZ Sport has opted to turn outwards from the Middle East with the Leganes agreement, though the company is adamant that there will be tangible benefits domestically given the depth of the deal with regards to coaching.

For Leganes, meanwhile, it is all about making the most of their time in the spotlight.

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