Business of Sport: Nike’s Denis Dekovic on his football boot for the future

Andy Lewis 19/05/2014
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Four years ago Andres Iniesta scored one of the most important goals in football history as his solitary strike at Soccer City in Johannesburg won the World Cup for Spain.

He scored it wearing Nike boots. That last fact may not mean much to the casual observer, but at the World Cup the competition by no means starts and finishes on the pitch.

According to FIFA, 300 million people play the beautiful game and a billion watch it. The World Cup is the sport’s zenith and also the football industry’s plumpest cash cow.

Nike is the largest sportswear company on the planet with a projected $27.5 billion (Dh101bn) in revenue for 2014 and a 17 per cent market share.

Despite that, they still trail chief rivals adidas when it comes to realm of football – but the gap is closing.

The American giants only really began taking ‘soccer’ seriously in the 1990s, yet brought in $1.93bn (Dh6.9bn) in football revenue in 2013, a steady four per cent increase from $1.86bn (Dh6.6bn) in 2012.

A sizeable chunk of that is made up by the sale of boots, and this summer Nike believe they have a product which will permanently alter landscape in that particular market.

The new Magista goes on sale in the UAE this Friday, May 23, and will be worn at the World Cup by several leading stars, including Barcelona and Spain icon Iniesta.

It has taken four years to develop – with the Brazil tournament in mind – and the man who pioneered it, Nike design guru Denis Dekovic, believes it will single-handedly entrench the US firm as the market leader when it comes to boots.

He said: “I think the Magista will have the same effect on the football industry as the 1998 Nike Mercurial (famously worn by Brazil’s Ronaldo). If you look at all the boots post-Mercurial you could trace them back to that boot.

“I think Magista is the beginning of the next chapter for football boots and in the future you will see how the whole industry will evolve from here.

“The global football boot market is strong and Nike is extremely committed to it.

“We have a team of 80 people working just on that at our world HQ, we have an innovation team in Italy, development teams across Asia; and you can see with our investment in clubs and players that we are 100 per cent committed to this.

“And when Nike is committed to something, then it is to be the leaders.”

In breaking down how the Magista changes the game, it is hard to know where to start. Disregard any conventional wisdom you have about football boots. They have laces and studs, that’s where the similarity ends.

Essentially it is one large sock, which stems from players, including Iniesta, saying they feel most in control and their touch most subtle when barefoot.

This is where Nike brought in Flyknit, a pliable woven mesh previously used for running shoes. The other iconoclastic design feature is that the sock searches upwards and envelops the ankle.

The notion may sound encumbering, but as Iniesta succinctly points out: “Magista boots are like wearing gloves on your feet.”

Dekovic believes the mould has been broken and that both the shape of the boot and its fabric constitution will become the norm for all boots.

“The process (of producing the Magista) started in 2010, and pretty early on we knew we had to break some rules to elevate performance,” he explained. “That’s when we started playing with Flyknit, to see if there was any potential for football.

“We soon realised with knit we could elevate the bar a lot higher than we could with traditional materials.

“The initial idea was ambitious – we started with an ambitious dream and ended up with an amazing reality. That’s what the four years were for, making sure the Flyknit works perfectly for them. The players have had a big influence. Some of them are very good articulating what they want and what they need from a boot. Some are creative and offer ideas.

“We have spent a lot of time with the players – in the hotels before games, watching them train – it is about spending quality time with them and listening to what they have to say.

“You get all that feedback and it makes such a difference.

“With Magista they were very specific about ball feel. What they said was that they control the ball best when they are barefoot.

“Obviously they cannot play barefooted but we have tried to get as close to that feeling as possible and that is what inspired Magista.”

One thing is certain. The Magista, in an outlandish colourway Nike call volt/hyper punch, will not be missed. And Nike firmly believe it will deliver a knockout blow in the marketplace. 

Factfile: 
– Denis Dekovic, aged 39, was born and raised in Croatia, and has 18 years of experience in footwear design.
– As part of his expansive design career, he has lived and worked in Italy, Holland and now the United States.
– Dekovic joined Nike in 2005 and, prior to his work in global football, he worked in the women’s training division.
– Since joining Nike, Dekovic has helped design the Zoom Essential Trainer and the air Max Trainer, as well as creating the revolutionary multidirectional Diamond Flex.
– Specifically in football, Dekovic designed the Mercurial 9, the Tiempo 5 and the Hypervenom along with his team.

The Nike Magista goes on sale at Nike shops throughout the UAE on Friday, May 23, priced Dh1,499.

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Business of Sport: Yas Marina GM Cedric Le Rest on hosting an F1 Grand Prix

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Laying foundations: Le Rest is looking beyond F1 in a bid to improve the Marina.

What started as a playground for the rich and the famous, is now becoming one of Abu Dhabi’s top family destinations.

Yas Marina is no longer just a place to berth your superyacht and indulge your friends during the Abu Dhabi F1 Grand Prix.

Although the F1 race remains Yas Marina’s greatest calling card, this enchanting property on Yas Island has widened its appeal and is attracting crowds during the other 51 weeks as well.

There have been a series of enhancement and expansion activities carried out at Yas Marina, and under the guidance of General Manager Cedric Le Rest, who has been with the property from its preopening stage, it boasts several F&B and entertainment areas to suit all age categories.

Le Rest, who first came to the UAE in 1998, spoke to Joy Chakravarty on what prompted the change of business plan for Yas Marina, the importance of the F1 week, and where they are heading in the future.

Q A lot of activity has taken place in the past couple of years at Yas Marina. Tell us about what’s going on?
In 2011, Camper and Nicholsons took over the management of the property on behalf of the marina owners and from there on, Yas Marina has evolved every year. In 2013, we decided to make a few changes – first to our pricing structure, because compared to the other marinas, our rates were too high.

So, we dropped the rates and we worked on the occupancy rate. This worked very well between 2012 and 2013 as we went pretty much from 19 boats to 100 boats within a year. For us, it was an excellent upward curve.

We then decided to focus on an actual planned facility, including restaurants and the outside area and so on. We worked for almost six months on the enhancement of the property and we reopened the Marina in mid-October last year, just before the F1, and we now have seven licensed restaurants, from a sports bar to a Spanish bar, to Thai seafood, Lebanese and an Italian restaurant, as well as a French-German bakery.

Apart from the restaurants, we have a kids area, a dancing fountain, 200 meters of promenade, and events area we have become a destination in Abu Dhabi not only for people who own boats, but also for people who want to spend some quality family time together.

It’s a buzzing area now.

We have been delighted with the results so far after we reopened. It feels like Abu Dhabi was waiting for something like this.

As a business, is that a new route you are taking?
Absolutely. A marina, by itself, is not sustainable. That’s why we have to do all these things around the marina.

We have the F&B areas, and we organise quite a lot of events. We have weekly events like dedicated ladies day, we have kids movie evening on Fridays, and on Saturdays, we have the market.

Then we have signature watersport events like introducing people to wakeboard, paddleboard etc. We had the dragonboat and paddleboard events.

We needed to expand our customer base, and we have managed to do that.

How important is the Abu Dhabi F1 Grand Prix to your business?
F1 obviously is the main event for us, certainly for the whole of the island, as well as for Abu Dhabi city.

We have been very pleased with the way the occupancy went up during the F1 week. There has been a steady increase, even during the difficult years like 2010. I must admit that 2013 was an amazing year for us, probably because of the enhancement to the property.

What has helped is that Yas Marina is open to the public even during the race week. You can’t have a view of the race, but you can surely get a feel of the atmosphere. On a very safe estimate, we had about 16,000 people at Yas Marina on the Sunday of the race.

The entire team did a great job, especially during the race.

There are a lot of logistics involved and the eyes of the entire industry are on you. You’ve got to be ready for 220 boats in the marina and for 16,000 people coming to your property on one day.

When you look at the big picture, we are a very small stakeholder, but we like to believe we have played a small but significant part in the success of the Abu Dhabi F1 Grand Prix.

Of course, it is a very important week, but we have to take care of the 51 other weeks as well. We have to make sure that our level of service remains of that class for the rest of the year too.

What is the capacity of the marina now?
We have now got 192 berths, up from 143 when we started the extensions. Yas Marina is unique because we have got a wide range of berths. That was not the case two years ago, when we had a range from 15 metres up to 150m. But we quickly realised that a lot of small boat owners (six to 10 metres) wanted to have a berth.

It wasn’t making sense in terms of operations. So, we decided to have an extension in 2012, and then another second extension last year. We increased the capacity of the marina, which again is a great sign that the industry is doing well now after a few rough years.

You have done a lot in the past couple of years. But what are your future plans?
We have just now come out of an expansion phase and are now focusing on maintaining worldclass service to our customers.

The only thing we do not have on site is maintenance. We do it through third party agreements in Abu Dhabi. So, having our own maintenance area is something that we will look at in the future, but not at the moment.

What happens during the F1 week to your annual members?
Well, the annual berth includes the F1. That obviously is one of the selling points for the marina. When you look at our rates, they are quite competitive with the other marinas in the region, but the F1 is a big bonus that only we can offer.

What would it cost if someone wants to book space at Yas Marina during the F1 week?
We started the pre-booking during the Dubai International Boat Show and the response has been very good. If you book now, we put you on a list and then start contacting people around August.

There has been a huge demand, and while for smaller boats, it is not that much of an issue, for those that are 25m and above, and who want to be closer to the track and see the cars race by, those berths are very limited.

Our rates start from Dh11,435 for the week, and you receive a certain number of passes with that, which gives you access not only to the marina, but also to the concerts and the pit walk.

You said you had 192 berths, but you hosted 220 boats during the F1. How was that done?
It can be done. Especially that week, because once the boats come in, they do not go out for the whole time. So, we can plan ahead and make additional space depending on their sizes. With good planning, you can actually increase a marina’s capacity by 10-15 per cent.

What are you expecting this year during the F1 week?
Definitely more than 220 boats this year. This year’s race is quite amazing because Abu Dhabi is the last race of the season, double points and so on, and you can already feel that the interest is huge.

We say it every year, but 2014 is surely going to be our biggest year yet.

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Business of Sport: IPL COO dismisses financial concerns of owners

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Happy days: Mumbai Indians celebrate their IPL win last year but franchise owners are decidedly less pleased with the economic breakdown of IPL 7.

Sundar Raman, the Chief Operating Officer of Indian Premier League (IPL), has dismissed suggestions from some of the franchise owners that they have been unable to get the kind of economic benefits expected when the event was announced.

At the beginning of the seventh edition, the first 20 matches of which were successfully hosted in the UAE, a player auction was held which also seems to be the major bone of contention.

The new rules – especially the retention of five players – generated a lot of argument.

Given the general elections in India, the 2014 edition should be considered as an exception to the norm, with the schedule announced late, as was the decision to host the first leg in the UAE.

Some owners have complained that they haven’t been able to form an effective marketing and sponsorship strategy because of the lack of time, but that is the kind of risk every business has to face every now and then.

One senior team official said the legal issues involving BCCI chief N Srinivasan, and the fixing controversies that have dragged on from the previous edition, have not helped either.

“It’s been difficult to secure sponsorships this year. One of the reasons is the flux situation that we have had with the venue and dates, and the clash with the elections, but we have also felt that some of the potential sponsors we approached were wary of what was happening with the legal issues that IPL faces back home,” the official said on condition of anonymity.

In Dubai, Mohit Burman, co-owner of Kings XI Punjab, said in an interview that he felt the seven-week duration of the IPL was too short a window to make business plans around it, especially with most teams having to change players every three years.

However, speaking in Dubai last week, Raman, was categorical that the league’s business model remains a robust one for all stakeholders, including the franchises.

“It is an incorrect perception. The business model is pretty robust. It’s possibly a better business model than any other franchise-operating leagues, where there is a commitment on minimum revenue from the board at the top of the season,” said Raman.

“The franchises are owned in perpetuity. It’s not a 10-year term. What it means is at the end of the 10th year, you stop paying the franchise fee. Thereafter, you only share a percentage of the revenue you earn. So, the bulkhead of the expense doesn’t exist in your profit and loss account after that.”

“I can’t think of another league which delivers 42 of the 50 days it is played as the most watched TV show in its country, or the percentage of the salary that is being paid is arrived at as a percentage of the central revenue. There is a method to the madness. It is classical business planning.”

Raman was referring to the centralised IPL revenue that is shared with the franchise each season.

While they pay one-tenth of the value at which they brought the team in 2008, they also earn a share of the revenue that the IPL generates through television rights and tournament sponsorship (like Pepsi’s title sponsorship and Kingfisher’s umpire sponsorship).

In Punjab’s case, the team was purchased for $76 million, which means they have to pay $7.6m to the IPL each year for 10 years as a franchise fee and nothing after 2017.

Apart from the central revenue, the franchise owners also earn everything from their own team sponsorships (like Etihad’s deal with Mumbai Indians), a major portion of ticketing revenue, merchandise sales, corporate hospitality and in-stadia advertising.

On the change of auction rules this year, Raman insisted it was the only way to make sure there was a parity in all participating teams as far as quality was concerned.

“The four-player retention in 2011 was done because two new teams were coming in. They needed a bouquet of players to pick from. The current regulation is after feedback from the franchises. But every franchise will think about their team, not the league,” said Raman.

“The reason why extensive discussion was done – it was because of cores of the team. People get confused at the start of the season because they don’t know who is playing for whom. So, allowing them to retain five players helps build the loyalty for teams.”

As for the salary cap for this year’s auction, it was set at Rs 60 crores (Dh36.7 million, appx $10m). The IPL decided to move to rupee-based salary, which was another step to cut cost for the team owners by taking out the fluctuations in currency market.

The rupee has weakened almost 40 per cent compared to the US dollar since 2008. So, if it goes down further, the owners won’t have to pay the difference.

In an effort to ensure that some teams do not become too strong, a percentage of salary was deducted from the maximum allowed if they were retaining some of their star players.

In case a franchise decided to retain the maximum allowed five players, 65 per cent of their salary was deducted. Thus, they were left with Rs 21 crores ($3.5m) to build up the rest of their team.

“The percentage of deduction is based on extensive data analysis, and we have sound logic for the salary cap being set. It makes all teams even,” added Raman.

“Also, the salary cap has been set only for the IPL. So, the teams that don’t qualify for Champions League T20, don’t incur a cost. And teams that qualify, will only incur a 10 per cent cost for players they pick.”

In conclusion, Raman added: “As far as the league is concerned, we are working tirelessly to ensure the game in the middle is as interesting and exciting as possible – salary caps, retention… everything is taken care of.

“What I know is that most teams are doing well to very well, though I don’t know the exact details. 

“Why the teams are in the business, what their evaluations are, is for them to answer. But we see the valuations of the teams increasing because the business plan will only get stronger and stronger.”

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