Business of Sport: Marka's deal with Real Madrid

Hiba Khan - Writer 11:48 13/02/2017
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  • In the world of sport, Real Madrid are as a big a name as they come. And in a football-crazed country like the UAE, they are expectedly adored and supported by scores.

    The reigning Champions League title holders have established their moniker in the edifice of the sport as one of the most lucrative brands that businesses all over the world are vying to associate with – an opportunity that UAE retail group Marka have managed to score.

    Marka are merely walking down a path that has been traversed by major establishments from the region, be it Real Madrid’s longstanding partnership with Emirates or the recent tie-up with the National Bank of Abu Dhabi.

    The retail giants managed to grab a huge slice of the Real Madrid cake after winning the exclusive rights to manufacture, distribute and sell Real Madrid products in all GCC countries.

    As per the terms of the agreement, Marka have the right to manufacture a wide range of products including T-shirts, swimwear, polo shirts etc and the list will only get bigger in the future. As UAE’s first public joint stock company, Marka – with a capital of Dh500 million – are focusing on growing the retail sector in the region.

    Dreaming big: Bruce Bowman, COO of Marka with Khalid Al Mheiri (r), vice-chairman and chief executive of Marka.

    COO of Marka with Khalid Al Mheiri (r), vice-chairman and chief executive of Marka.

    Their tie-up with one the most successful clubs in football’s history is expected to generate revenue of Dh200 million over the next five years that is not only beneficial for them, but the retail sector of the UAE in general.

    The tie-up had reportedly been in talks for almost two years before finally being materialised in January 2017 for a period of five years. Even though Real Madrid have made valuable business connections with big brands from the region, this is the first tie-up Marka have garnered with a leading football club.

    According to Marka, this move is the first of many to come in the future.

    “As part of our growth strategy, Marka is always on the lookout for partnerships with exciting and world-renowned brands,” said Khalid Al Mheiri, vice-chairman and chief executive of Marka.

    The five-year deal does not allow Marka to manufacture the official football kits for the 11-time European champions, but winning the exclusive rights to produce consumer goods for the club opens a world of opportunities for various retail groups and paves way for more partnerships with major entities from the Gulf region.

    Real Madrid In Numbers

    • 1.74 - billion dollars, the estimated net worth of Madrid president Florentino Perez
    • 3.65 - billion dollars, Real Madrid were valued at last year by Forbes
    • 106 - million pounds a year deal kit-sponsorship deal with adidas for 10 years
    • 620.1 - million euros, Real Madrid’s revenue in 2015-16, 7.4% higher than the previous financial year

    The move was preceded by Marka’s launch of the world’s first UEFA Champions League Experience – an immersive concept store destination that showcases the very best of the competition in Abu Dhabi’s Yas Mall.

    Marka brought the much-coveted UEFA Champion’s League trophy for a two-day display at the outlet for fans to take photos with a prize that all mainstream clubs are going to be vying for this season. The agreement comes after the retail sector across the region suffered a blow as a result of the slump in oil prices and a hike in US dollar exchange rate that kept most of the avid shoppers away from malls and popular stores.

    The situation was further aggravated by a sudden surge in the e-commerce sector. Real Madrid and Marka’s partnership, therefore, could not have come at a more opportune time. The deal is set to open new doors of opportunities for Marka in the region and will help the GCC to be recognised for their undying love for football.

    “While Marka cannot comment on behalf of Real Madrid, we can confirm that the agreement is part of the company’s long-term strategy to secure partnerships with renowned brands and provide our customer with the very best products in the UAE and wider GCC region,” said Al Mheiri.

    Hence, as their partnership with Los Blancos kicks off, it has given Marka a much-needed opportunity to counter the drop in consumerism and the rise of e-commerce by tapping into the region’s huge football fan base.

    By bringing Real Madrid-branded clothing and accessories in their retail outlets, it is also a good opportunity to boost the retail sector by enticing football fans to show their support for the club.

    The Real Madrid-branded clothing will be following street style trends and to add a bit of innovation in the design, Marka has decided to approach home-grown talents for the job, who are currently enrolled in various design schools all across the UAE.

    “As part of its philosophy of developing and nurturing young talent, Marka has selected a team of 10 young designers that includes five young Emiratis, who are going to work on product designs,” said Al Mheiri.

    “Instead of approaching an established designer for the clothes and accessories, the students, who are all under the age of 25, have been hand-picked by us as a way to keep our brand and designs fresh.”

    Real Madrid In Numbers

    • 85.3 - million pound fee for Gareth Bale in 2013, Real Madrid’s most expensive purchase
    • 161.1 - million - combined followers on Facebook, Twitter and Instagram; only Barca have more (161.3m)
    • 69,736 - average attendance in 2015-16 season at the Santiago Bernabeu

    The students will be working with Marka on a freelance basis and the team of designers will be changed every two months to prevent the products from being counterfeited and protect the exclusivity of the design at the same time.

    The new clothing manufactured for Marka will be quality controlled and authorised by the La Liga giants, but will not be available at the club’s megastore at the Santiago Bernabeu. The exact merchandising strategy has yet to be finalised but Marka will be distributing the products across several retail outlets, starting in the UAE.

    The products will first be distributed through Marka’s retail outlet Modell’s Sporting Goods and in the future they might include other retailing outlets for distribution. The year 2016 was not the best for the retail sector, however the tie-up with Marka seems auspicious and has been welcomed with great optimism.

    The company’s vice-chairman refused to disclose the amount of investment involved in this partnership or comment on the percentage of growth that the partnership is expected to generate.

    “As a company listed on the Dubai Financial Market, we cannot provide growth forecasts. Real Madrid is a highly celebrated and successful football club that is eagerly supported by fans across the region, and we therefore anticipate strong demand for the products,” added Al Mheiri.

    “Overall we believe this strategic partnership will yield positive results for Marka due to its unique nature.”

    Marka is still on the prowl to get more of these clubs to jump on their business bandwagon in order to expand the retail sector and bring more of these big names in the sporting world to the UAE. But in Real Madrid, they seem to have scored a winner.