The football transfer market illustrates the transformation economy

Pine & Gilmore’s (1999) bestselling book “The Experience Economy – work is theater & every business a stage” marked the concept’s (i.e. experience economy) rapid blossoming. Following the development of economic offerings, which ranges from the economization of 1) commodities (in the agrarian economy), 2) goods (in the industrial economy), 3) services (in the service economy) to the economization of experiences (in the experience economy), Pine & Gilmore concluded that a fifth economic offering will start to flourish in the years to come. This economic offering, i.e. the economization of transformation (in the transformation economy), is shaped when the staging of convincing and captivating experiences leads and guides the customer base (and other relevant stakeholder groups with direct ties to an industry’s business model) to vibrant transformations. So in that sense, Pine & Gilmore highlight what they propose to be a distinct fifth economic offering in the ‘progression of economic value’.

So why is this knowledge important in this forum? Personally, I like the thoughts, ideas and experiences proposed by Pine & Gilmore and how they have sought to revolutionize business offerings in ways that blend the importance of having fun with innovation and an aspect of commercialization and ‘bottom-line thinking’. That is KEY for any business aiming to thrive in a harsh economic climate. From a professional standpoint, I follow the sports industry as a practitioner (and football/soccer elite coach) and an academic researcher and that has given me the indication that sports entities often drift between strategic and unconscious levels of the transformation economy. In that sense, the sports industry and all its actors have a stimulating ability to drive ‘transformations’ and to evoke the ‘curiosity of change’ among various groups of stakeholders. This process seems to be characterized by a situation where stakeholders share a similar ‘value proposition’, which is linked to the willingness to accept and crave positive change. All in all, the sports industry is a very dynamic phenomenon where ‘change’ is a natural element. That element of dynamism influences the intersection between the sports industry and transformation economy in the way that sports entities should acknowledge that change is a process, which requires time and thus correlates with the willingness and the resource-based capabilities to change.

In football, I have come to love what goes on in the ‘transfer windows’. Back in August, 2013, I wrote a post on this blog where I elaborated on how football’s transfer spectacle links to business and how the event adds dynamism and excitement to the football industry. Leagues and especially individual clubs have found an interesting path to highlight and stage the charm of the ‘unpredictable X-factor’ of the ‘transfer window’, which underscores the professional football world’s process of continual economization and capitalization of transformation. Players are also involved in this process in the sense that they aim to find a good of blend of sporting ambitions, playing time, personal development and MONEY. The media and corporate sponsors may also have shares in this process as the media always look for new thrilling content and revenue from advertisers while sponsors (and or advertisers) aims to monetize from the audiences and distribution potential of being associated with the popularity of top football. For that reason, these actors seem to reveal what the transformation economy is all about, i.e. positive change but also ‘meaning’ and ‘engagement’. This refers to how football leagues or clubs may be positively transformed by acquiring new promising talents and huge stars as reflected in the hype that followed Gareth Bale’s and Neymar’s transfer deals this past summer.

According to a report conducted by the prominent consulting group McKinsey (2009) and referenced by the consulting agency Arts & Business in London, the modern consumers are increasing their participatory roles. The report states that “consumers will therefore choose a product or service not only according to how closely it matches their likes or their ways of thinking (political, social and moral inclinations)”. So the portrayal of the ‘transfer window’ in the media and the new technologies related to ‘mediated sports’ and hence the new consumer roles help to stage ‘higher engagement levels’ concerning the exciting transformation potential of football’s ‘transfer window’. When football clubs go about and creatively stage ‘presentation of new players’ or when they strategize the communication that goes with the ‘transfer window’, the clubs go beyond the experiential aspect of the situation into a transformation process where they can tie up with the desire and interest that the audience (e.g. fans) may associate with the club (maintaining and) reaching a strong position in the domestic league and in international competitions. For instance, the German Bundesliga had an interest in the fact that two German teams (Bayern Munich and Borussia Dortmund) made it to this year’s UEFA Champions League Final. Bayern Munich has an interest in the fact that the recruitment of Guardiola as the new head coach and recruitment of players, e.g. Mario Götze, affect results positively and so do the fans, sponsors and other stakeholders of the club.

In professional sport, the transformation economy correlates with optimization as a form of capitalization on talent and potential, e.g. when Gareth Bale lands a huge contract with Real Madrid or when Inter Milan some years ago signed Mourinho as a coach and ended up winning the UEFA Champions League. These scenarios are also preferable ‘change’ when you look at things from the perspective of fans and/or sponsors of a club or a player. Thus, stakeholders’ subjective interpretations of the experience and its change potential constitutes an economic aspect related to the production of what is acknowledged to be of value for the stakeholders, i.e. a mental and emotional change process takes place, in which the individual stakeholder (e.g. fan, sponsor) finds value. This relates to the business model of professional football and how the ‘transfer window’ is a step in the process of generating future revenue streams. From that standpoint, the stakeholders also serve as important actors since the associated hype acts as supplemental revenue streams and indicators that it is not the staged experience (e.g. a presentation of a player) itself but merely the result of the experience (e.g. the transformation) that generates the ‘economic exchange’ between the involved parties. The same goes for the business of football’s talent academies where the brand promise seems to be the transformation of young talented players into celebrated super stars, i.e. it is not the experience of being at the academy but purely the ‘transformation’ of the player into the next Lionel Messi og Cristiano Ronaldo that guides the business process.

Pine & Gilmore (1999, p. 172-173) mention that “with transformation, the economic offering of the company is the individual or the company changed as a result of what that company does. With transformation the customer is the product! The individual buyer of the transformation essentially says: ‘Change me.’ The company’s economic offering is neither the material it uses nor the physical things it makes. It’s neither the process it executes nor the encounters it orchestrates. When a company guides transformations, the offering is the individual.” Adapting that notion to the football business and more specifically to the ‘transfer window’, it becomes clear to me that clubs and players engage so deeply in these activities that they become products of change and to an even higher extent emphasize their roles as the purpose of the unfolding of the transfer event. Just consider how Real Madrid’s transfer policies and behavior changed the identity of the club in its modern era after president Perez’ implementation of the Galacticos strategy. Or how Napoli’s purchase of Diego Maradona changed the identity of the club in the 1980s or how the impact of billionaires in clubs like Chelsea or Manchester City has changed the clubs’ transfer activities and status in the football landscape. The fact that the offering is individual has to do with the fact that two individuals will not undergo the exact same transformation and it is a common theme in football that other clubs want to copy ‘good performances’, i.e. FC Barcelona’s tiki taka style of play or the accusations that have flown from Borussia Dortmund to Bayern Munich and vice versa regarding transfer activities. My point is that you will not obtain the exact same transformation although you try to copy another individual player or club! Earlier this year, Dortmund coach Jürgen Klopp and (at the time) Bayern coach Heynckes had public arguments as Klopp said that Bayern wanted to copy Dortmund’s success while Heynckes responded by stressing that “Bayern have been round a bit longer than Jürgen Klopp has been a coach and we have always had our own style of play”, see more.

Sources:

Gilmore, J., & Pine, J. (1999). The Experience Economy: work is theatre and every business a stage.

The McKinsey Quarterly, Rebuilding corporate reputations, June 2009.