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Chapter 1123 - Chapter 1123: Five-Year Strategy

Everyone feels that European leagues, as the core of world football, are the most commercialized, especially the Premier League.

But in fact, this is not entirely true.

Take Newcastle United, the team Leeds United just defeated.

As a traditional Premier League club, the Magpies had great ambitions after returning to the top flight. But in terms of business operations, they remained very traditional, so traditional that they basically waited for sponsors to approach them.

What was Newcastle's commercial revenue last season?

£17.1 million, not even half of Leeds United's.

And this season?

With two major sponsors, Wonga and Puma, Newcastle were expected to reach £25 million.

And beyond that?

Nothing more.

This is actually a very typical business model for a Premier League club.

By contrast, teams like Manchester United, Manchester City, Arsenal, Chelsea, Tottenham, and Leeds United are exceptions.

Is Newcastle unique?

No. Across European football, most clubs operate this way.

Even the Bundesliga, which boasts the best commercial revenues, is the same.

Most of their income still comes domestically.

Then there are clubs like Manchester City and Paris Saint-Germain, who barely need commercial development at all. Their owners ensure sponsors line up for them.

So how do the top clubs operate now?

"Positioning!"

After watching Leeds United beat Chelsea, Gao Shen returned to his office with Su Qing, Lucas, and Borrell. There, he shared what he had learned from his recent dinner with Real Madrid's commercial mastermind, José Sánchez.

"What do you mean?" Borrell asked, confused.

Gao Shen didn't answer directly but looked at Lucas. "When you set Leeds United's annual commercial plan, you must have established a positioning. What was it?"

Lucas glanced at Su Qing and Borrell, looking embarrassed. "Our original plan was to develop and become a leader in the global sports and cultural industry."

Borrell nodded. Football was, of course, part of sports and culture.

It just sounded a little boastful.

But that was normal. In commercial promotion, who doesn't exaggerate?

These days, how else do you attract business?

"But then we hired a third-party consulting firm. They said our positioning wasn't ambitious enough, so we revised it to become a leader in the global sports, entertainment, and cultural industries."

Su Qing frowned slightly at the addition of "entertainment," then quickly relaxed.

Because today's football promotion did require star creation. The media demanded it too. Clubs no longer only produced sporting content like football matches, but also churned out entertainment content, especially online.

As many people said, today's football stars were becoming more and more like pop idols.

This wasn't new. It was already an accepted fact in the United States.

Gao Shen nodded. For Leeds United to reach this stage was already commendable.

Of course, there was some boasting, but clubs like AC Milan and Juventus positioned themselves similarly.

"But do you know how Real Madrid and Manchester United position themselves now?"

Su Qing, Lucas, and Borrell all shook their heads.

"As early as 2009, when Florentino Pérez returned to Real Madrid, he launched another round of commercial reforms. Now Real Madrid positions itself as a global commercial platform. Manchester United has also adjusted its sponsorship system, moving away from hierarchical classification to regional industry division."

Su Qing and Lucas, both trained in economics, immediately grasped the difference and looked stunned.

Most European clubs still used the traditional hierarchical system.

What did that mean?

Sponsors were divided into tiers. Leeds United currently had three levels. Manchester United had five. Sponsors received benefits and access based on their tier.

Exclusivity clauses were standard in football sponsorship contracts. Only one sponsor was allowed per industry.

For example, Leeds' contract with AXA Insurance meant they could not sign with another insurer.

But Manchester United's five-level system was different. Only the top two tiers were exclusive. Lower-tier sponsors could be regional.

For instance, if United signed with Bahrain Telecom, their exclusivity might only apply in the Middle East. United could still sign with other telecoms in Asia, North America, or South America.

If Bahrain Telecom later wanted rights across Asia, they would have to pay more to upgrade.

This applied not only to telecoms but to many industries.

Under the traditional system, each industry had only one sponsor. Everyone bid, and the highest bidder won.

It sounded good, but in practice, sponsors often refused to pay too high a price.

Worse, the market kept shrinking.

With regional industry classification, the market was segmented, creating more opportunities for companies in different regions and industries. That maximized the market's size.

This was just sponsorship structure, tied to overall positioning.

If a club positioned itself as part of the sports and cultural industry, or sports, entertainment, and cultural industry, then ultimately it was positioning itself as a content creator.

But in professional football, both results and players were uncertain.

When results were good, everything thrived. When results dipped, sponsors pulled back.

That was the reality most clubs faced.

But clubs like Real Madrid and Manchester United, by positioning themselves as platforms, turned themselves into channels.

What did they provide?

Their influence and fan base worldwide.

In theory, no matter how poorly they performed, as long as their influence and fan base remained, sponsors would keep investing.

This was essentially the traffic economy.

That's why Real Madrid had thrived on star power in recent years. Manchester United too.

Before Gao Shen's transmigration, Manchester United had re-signed Cristiano Ronaldo. The club cashed in massively on his traffic. Gao Shen even thought Ronaldo returned not only for football, but also for the Champions League and the World Cup.

If by 2022 United failed in Europe and the league, would Ronaldo push to leave before the World Cup?

Why?

Because nothing generates more traffic than the World Cup.

That wave of attention could sustain both him and the club for a year or two.

And it benefited both sides.

Su Qing, Lucas, and Borrell were all surprised.

They had not expected Real Madrid and Manchester United to be this far ahead.

If this model worked, then the impact of results on commercial value would be minimized.

More importantly, it suited global sponsorship systems best.

"José Sánchez believes Leeds United's commercial value has been underestimated, especially with the impact we've made online these past two years. Even Real Madrid and Manchester United envy it."

"But he also thinks our business model is wrong. We haven't effectively converted our influence and fan base into real commercial value. Our conversion rate is far too low."

Lucas felt ashamed.

José Sánchez, a veteran with more than a decade in football, had hit the nail on the head. His vision was extraordinary. He identified Leeds' problem immediately.

As CEO, Lucas had to take responsibility.

"Don't be discouraged, Fernando. We're just getting started," Gao Shen said with a smile, trying to encourage him.

No one is born an expert. The key is to keep learning.

Lucas had been in charge of Leeds for two years and had done well. The fact that Leeds' business growth stalled was normal.

Looking around football, only Real Madrid and Manchester United had embraced this platform model. Not even Bayern had, as they focused on the German market.

Most of Bayern's revenue still came from within Germany.

But Leeds was different. With the internet's reach, Leeds could expand worldwide. As long as their business model adapted, their potential was enormous.

"I'll say it again. Leave professional matters to professionals. Use headhunters to recruit talent, work with consulting firms, and upgrade our commercial system quickly," Gao Shen instructed.

If Leeds could catch another wave of growth, they would soar.

"In addition, our league targets need adjusting. I think we should focus on finishing in the top half."

Even with an internet celebrity model, performance could not be too poor. No one would follow a weak team.

If Leeds set their goal at the top half, then the club would need to retain players and improve the salary structure.

This meant a complete upgrade.

It would not happen overnight, but once achieved, Leeds' potential would be fully unlocked.

"Five years!" Gao Shen raised his hand.

That was the timeframe he had in mind after his long talk with José Sánchez.

"In five years, we will build Leeds United into a Premier League powerhouse, and also build our own new stadium."

(To be continued.)

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