Arsenal Teachers Guide Paul Kitchin

Arsenal Business Cases
Teachers Guide
Paul Kitchin London Metropolitan Business School
Contents Introduction How to use this guide book Brief Introduction to the Business of Sport Teachers Guide Organisational Structure Customer Experience and Care Market Research Operational Management Matches Optional! Finance The Marketing Mix Sponsorship Ethical Decision Making - Corporate Social Responsibility Stakeholders The External Environment 6 10 14 19 23 27 32 1 3 4
37 41 45
Acknowledgements
The authors would like to thank members of Arsenal Football Club with their assistance in the creation of this case book, in particular Alan Sefton, Angus Kinnear, Freddie Hudson, Samir Singh, Matthew Gilmore, and Tony Schneider. Thanks to the schools in Enfield and Tower Hamlets who provided input on previous versions of this document to ensure suitability for student learning needs. Thanks also to the students who participated in trialling these case studies and the valuable insights you provided. London Metropolitan University, 2009
Introduction
These business cases have been written for teachers looking to deliver interesting and engaging business topics within the curriculum. The focus on the business of sport is a method of delivering fundamental concepts of general business through an original approach but in a manner where students develop their skills of understanding and analysis through the National Curriculum. This is the supporting document to the Arsenal Case Book and is a reference for teachers delivering general business lessons or applied business through sport. The document has been tested in the classrooms in London schools and the feedback from teachers has gone into this current version. We hope that you and your students find this a useful tool for learning about the world of business and that it leads you to successful outcomes in wider business studies.
How to use this supplementary book
How to use this guide book

This page contains a range of information on where each case could possibly complement your delivery of the business curriculum. The Arsenal Case Book and this supplement are structured around an A-Level syllabus however the cases are written and have been tested by students at BTEC and staff investigating the International Baccalaureate awards. This supplement contains aims and learning outcomes of each case, the main business principles being discussed, a glossary of important terms. The case questions are organised around the Arsenal Official Memberships system designed to present an innovative, progressive approach to discussing and working through the case. Red questions are designed to get all the class involved in a discussion and can be used in all classrooms. Silver questions are designed for GCSE/BTEC level specifications. Gold questions are designed for the AS specification but can be attempted by all. Platinum questions are designed for the A2 specification but can be attempted by all. It is important to reiterate that the cases are for all levels however for A Level Business the primary focus of each of the cases are as follows:
AS Specification
Unit 1: Planning and Financing a Business The Challenges and Issues of Starting a Business Organisational Structure The Challenges and Issues of Starting a Business Customer Experience and Care Unit 2: Managing a Business Marketing Market Research Operations Management Operational Management Matches Optional!
A2 Specification
Unit 3: Strategies for Success Financial Decision Making Finance Devising Marketing Strategies Marketing Mix Devising Marketing Strategies Sponsorship Unit 4: The Business Environment and Change Ethical Decision Making Corporate Social Responsibility Ethical Decision Making Stakeholders Economic Influence on Business The External Environment
Brief introduction to the business of sport

This information can be used as the basis of one or more classes but this section serves as an introduction to the area for course instruction. A brief overview of Bob Stewart and Aaron Smith 's (1999) unique (distinguishing) features of the business of sport highlight how management techniques differ in this industry to that of traditional business operations. These features prevent the misapplication of pure business principles that do not consider factors that impact on success in the sport industry. At this stage it is important that students have an initial awareness of these unique factors that may impact on how they respond to the each cases questions. The ten distinguishing features are; G Sports fans can develop irrational passions that make them very loyal. G It engenders vicarious identification in those that support athletes, teams and leagues; not many people walk down the street with a Tesco Logoed T-Shirt on. G There are differences in how stakeholders judge performance, no two fans may see the result the same way and investors in clubs may look for other determinants of success. G The interdependent nature of relationships between sporting organisations mark it as different to many other industries, sport clubs must compete but cooperate at the same time. G Anti-competitive behaviour can exist within the industry in the form of player
Brief introduction to the business of sport
drafts, wage limits and other means which generally allows competitive balance to be spread evenly between organisations within the one league or sport. G The sport product (game or contest) is of variable quality and rarely satisfies all consumers. G Sport athletes, teams and leagues enjoy high degrees of product or brand loyalty. G Generally sports fans exhibit high degrees of optimism in organisational, or team related, competencies. G Despite athletes using technology to improve their performance the management of sport organisations are relatively reluctant to adopt new technology unless it has a strong business and financial case. G The organisation of sport leagues is deliberately held in limited supply as a management consideration to increase demand of the product. More details can be found in Hoye et al (2006) in chapter 1 or if catalogued, the original article of Stewart and Smith (1999).
Ideas for class delivery

The sessions could begin with an introduction to the management of sport by asking the class to consider what the distinguishing features of the business of sport are. The ten mentioned above are not exhaustive and students may indicate new areas. Students may feel that if they are not interested in sport they may not be able to contribute to the case however it is the business elements that should be prioritised and reinforced by the class instructor. The instructor could organise students into groups of 2-3 to discuss these points over 5 minutes and then gather feedback from the full class before presenting all of the unique features outlined above. As this is a central aspect of sport business management it would be beneficial to begin each of the cases with a brief overview of these aspects.
Sources
G Hoye et al, 2006, Sport Management: Principles and Applications, Elsevier: Oxford
Organisational Structure
Aim of Case:
To introduce students to organisational structure and the function it performs. you create a multi-layered structure or a flat structure, and why? Students should discuss the benefits and drawback of each approach in the context of running a football club. The case should now be distributed to the class for reading (5-7 minutes). What implications does the case have for their initial thoughts? The following Red questions can be posed; Describe Arsenals structure compared to what we came up with? What are the positives and negatives of such a structure?
Learning Outcomes of the Case:

G G
To explain the purpose of organisational structure.
To understand how organisational structure functions in business.
Main Business Principle:

A clear and effective organisational structure has benefits for business and their stakeholders.
Why is this information important for business?

For businesses to operate efficiently and to be able to deal with issues effectively a clear organisational structure is needed.
Introductory Red
Question 1: What are the key areas of responsibility and operations for managing a football club? Question 2: What sort of approach would you take to structuring a football club? Question 3: Would you create a multi-layered structure or a flat structure, and why? Question 4: Describe Arsenals structure compared to what we came up with? The answers to these questions are determined by the instructor on the whiteboard in the classroom, however basic details are provided in the previous section. Question 5: What are the positives and negatives of such a structure? The positives are that the flat structure allows Arsenal to be flexible in its decision making and work with as little bureaucracy as possible by not having multiple layers between the administration workers and the Board. This benefits the communication process within the organisation as a whole. The negatives are that such a formal structure will promote inter-departmentalism. This is where departments are set against each other vying for power and importance. This can be a general issue within organisations but it is the small size of Arsenal and their overriding philosophy that prevents this from occurring. Part 2: Discussion Questions in Small Groups (30 minutes 20 min answering, 10 min discussion) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.
Ideas for class delivery:

Part 1: Whole group discussion and Red Questions (20 minutes) The session should begin with a brainstorming session on the following Red question. What are the key areas of responsibility and operations for managing a football club? (It will be easier for the instructor that during the brainstorm all aspects of playing, training, developing the sport are categorised in one grouping generally this would be the playing side or team operations aspects as opposed to the administration and management aspects of the organisation as a whole). The following departments could form clusters of ideas that will develop into the actual departments such as;
G G G G G G G
stadium management, finance, ICT, supporter services, press office, commercial and community department
Nevertheless any other activities should be grouped into one of those headings and could form the basis of discussion. The instructor should discuss the concepts of multilayered and flat organisational structures. From this a discussion can then consider how the students would go about structuring the business. The following Red questions can be posed What sort of approach would you take to structuring a football club? and Would
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Entry Level Silver

Question 1: Why do you think the playing side is kept separate on the organisational structure? What operational benefits could this provide the playing side? Imagine if the playing side where subordinate to the other departments. The players would be continually making appearances for the commercial and community departments, guest speaking at corporate hospitality events and doing many things around the Club that would clearly be benefiting to the Clubs operations. But when would they train? How popular would they be for these departments if they spent all their time working on the business side and the on-field side suffered? These are some reasons why the playing side are kept separate, other more logical reasons might be so they can concentrate on the most important activity the Club undertakes, which is playing elite football at the very highest level. This makes operational sense as most of Arsenals revenue generating activities rely on this success. Question 2: The Chairperson is generally a high profile person at professional football clubs, how does the Chairs role differ to that of the Chief Executive Officer? The Chair of an organisation is responsible for leading the Board who are in turn responsible for the strategic direction of the Club. The strategic direction is where the business is aiming to be in 3-5 years time. This is why some members of the Board are involved in player acquisition, as these players are valuable assets able to contribute in the long-term. When the Club moved from Highbury to Emirates Stadium the Board were constantly involved in the management and supervision of the project. The Chief Executive Officer also sits on the Board and is involved in duties like player acquisitions but his main duties are to manage the dayto-day operations of the Club, therefore the departmental heads answer directly to him. With this power comes responsibility, he is therefore accountable for the Board for the achievements of his managers and staff.
level of authority between the department heads and the managing director. This allows communication to flow faster through the organisation and allows the departments to also realise the benefits listed above. To answer this question demonstrating the communication and speed of decision benefits of a multi-layered and a flat structure should be presented through an appropriate example. A discussion of the benefits of a clear organisational chart is that it provides employees with a conceptual picture of the business. It allows the employees to see their role in the organisation and how the business works. This can have morale benefits on employees as they see what advancement opportunities exist and the significance of their role in fulfilling the businesses objectives. Question 2: The case states that the organisational structure is both well organised and flexible. Explain what this means and provide an example to highlight the statement. Students should be directed to the final paragraph of the case where the statement is made. The example provided here should allow students to demonstrate an understanding of one of two examples from the text. The first is how the organisational structure made it easier for Arsenal to handle the large increase in customers and staff with the move from Highbury to Emirates Stadium. The second is how the customer service contact details were merged into one consistent phone number that made it easier for customers to get in communication with the Club. Further marks should be awarded for application if students can provide an alternate example drawn from a logical idea or another area of the Arsenal Case Book.
Advanced Platinum
Question 1: Why is it important for Arsenal to separate the playing department from the other business departments? To demonstrate an understanding of the business it should be made clear that the core business of Arsenal Football Club is the success of the team on the field. The difference in structuring the organisation this way is that it creates simplicity for the playing staff to maintain focus on their activities. Football players and coaching staff are very high profile individuals who have specialised skills. By operating in their own department these staff can focus on what they do best. The other areas can operate as a coordinated system in the knowledge that their work provides support or generates good will for the playing side and the business as whole. With regards to the non-playing side the 7 other departments can offer a greater level of service to customers and other stakeholders by combining their efforts. This is vitally important considering the growth
Intermediate Gold
Question 1: Explain the reasons why it is so important for large businesses to have a clear organisational structure, with clear lines of authority? Students should demonstrate an understanding that a multi-layered structure allows for clarity in large organisations. It establishes hierarchies through its layers of management and is vital for keeping control of disparate and sometimes very separate operating units. Judgement can be demonstrated by deeming that this structure is too formal for a business such as Arsenal. In the football industry the ability to act innovatively and sometimes instinctively requires a different type of structure. A flat structure is still formal but has only one
Organisational Structure continued
in membership numbers given the move from Highbury to Emirates Stadium, in every sense a team effort was required. Integration with information from other cases, for instance the information in Box 1 in the marketing mix case would be a good demonstration of application. Question 2: Where would customer service fit into the organisational structure at Arsenal? Who would be responsible for it? Where would you place responsibility for customer service if you where Chair? This is a fairly open question that could be left up to the students to answer in a variety of ways. What markers should be looking for is a demonstration of understanding the structure of Arsenal and how certain roles are divided. What is not clear for the students is that customer service (see case on Customer Experience and Care) is managed by a set of standards that all the business departments must adhere to; therefore it is implicit rather than requiring its own department. Students who demonstrate this point are showing an analysis of the implications of a flat structure that is moderately formal. To have a separate customer service department would make it more formal and probably less flexible. Judgement can be demonstrated at a basic level by where they decide to place the structure if they were acting as Chair. Part 3: Additional Task (15 minutes) The students can assess a scenario analysis concerning a developmental opportunity for the Club. This scenario can be a new sponsor, new player, new business area, change of government policy initiative etc. Students could role-play the ease of communicating an idea through either structure. In the multi-layered structure an idea (to be chosen by the students) should be relayed from a junior staffer to their section head to the department head to the management board meeting, then onto the board. This should highlight that the process is considered and slow (although checks and balances are assumed at each stage). Or alternatively the idea goes from a junior staffer to the department manager to the managing director to demonstrate the speed of the flat structure (although with less control over decisions). Demonstrating this with mock emails could be another visual way of representing the communication activities required in each structure. Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
Glossary:
Economies of scale increasing production yet reducing costs per unit through efficiency. Hierarchy the organisation of people in a ranking system within an administrative body. Shallow Hierarchy an organisational structure where there are very few levels between the departments and the executive board. Organisational structure the way in which an organisations departments/ divisions/ employees are ranked and relate to one another. Formal Structure an agreed system of structure that determines reporting, communication and accountability relationships within the organisation. The Board is responsible for the strategic direction of the company and consists of the Chair, Directors and the CEO who acts as a Director. Chairman (Chair) the head director of the board and therefore the organisation. The chair is responsible for directing the Board and providing strategic leadership for the Club. Chief Executive Officer is a member of the Board but primarily is the lead manager who runs the day-today operations of the organisation. Customer Service the principle goal of providing an organisation that serves its customers and other stakeholders through the provision of customer focused actions. Empower to allow subordinates to develop through the setting of goals and priorities and allowing them to achieve with little undue interference.
Additional Reading:
The cases of marketing mix, customer experience and care, provide relevant inputs into this discussion. The appendices in the case book contains an article on Board Director Danny Fiszman. In his article he talks about his roles at the Club.
Organisational Structure Case Question Sheet

This page can be photocopied and distributed to the students
Introductory Red
Question 1: What are the key areas of responsibility and operations for managing a football club? Question 2: What sort of approach would you take to structuring a football club? Question 3: Would you create a multi-layered structure or a flat structure, and why? Question 4: Describe Arsenals structure compared to what we came up with? Question 5: What are the positives and negatives of such a structure?
Entry Level Silver

Question 1: Why do you think the playing side is kept separate on the organisational structure? What operational benefits could this provide the playing side? Question 2: The Chairperson is generally a high profile person at professional football clubs, how does the Chairs role differ to that of the Chief Executive Officer?
Intermediate Gold
Question 1: Explain the reasons why it is so important for large businesses to have a clear organisational structure, with clear lines of authority? Question 2: The case states that the organisational structure is both well organised and flexible. Explain what this means and provide an example to highlight the statement.
Advanced Platinum
Question 1: Why is it important for Arsenal to separate the playing department from the other business departments? Question 2: Where would customer service fit into the organisational structure at Arsenal? Who would be responsible for it? Where would you place responsibility for customer service if you where Chair?
Customer Experience and Care

Aim of Case:
To introduce students to the concepts of customer experience and care. that highlights the best possible picture of the organisation. The work of the community department might take place away from the stadium but they are still important ambassadors for the Club.

G
To explain the concepts of customer experience and care. To identify the relationship between customer experience and care to business success.
Introductory Red
Question 1: What is different about customers of professional sport and customers for more traditional businesses? Customers of traditional, non-sporting businesses can be characterised as transaction-focused whereas customers of professional sport organisations can be members of the Club. This membership approach entails a greater level of relationship between the Club and their fans. Fans display heightened awareness of the goings-on and activities of their Club as the nature of the product is available for public consumption, i.e. how they perform on the pitch is highly visible. Sport customers are very loyal and have no problem identifying themselves as belonging to the group, some go as far to walk around their workplaces and communities dressed in their Club colours and wearing merchandise. However similarities can be seen with these actions and the actions of those customers who adorn particular brands of clothing and accessories. Question 2: Why should organisations care about their customers? All organisations should care about their customers as their support is generally the lifeblood of their business. The key difference here between the customers of professional sport and those of consumer brands (question 1) is that brands are designed for specific target groups. This means that there are certain brands that feel certain types of individuals are not suited to their brand, may it convey a less than positive image on the brand. In professional sport this logic is not suited, sporting clubs like Arsenal are all embracing; anyone is able to become a member or support the team. Hence if an organisation like Arsenal is able to demonstrate that they care about their customers this could reap positive benefits for the Club. It is also important that since the move to Emirates Stadium Arsenal ensure that all of its newer customers are treated with similar care to its existing ones. From the case it can be seen that the Club is introducing new technology to provide better services for all customers. Part 2: Discussion Questions (25 minutes) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver

A well-executed strategy of customer experience and care is important for all types of businesses, as customer retention is vital.

For businesses to be successful the needs of their customers must be met. Arsenal for example does not solely rely on their performance on the pitch to satisfy their customers expectations. One of the most important revenue streams for Arsenal is gate takings and memberships. Hence it is vital that customer retention is a business goal.

Part 1: Whole group discussion and Red Questions (15 minutes) The instructor could start the class with a discussion on the unique features of sport. Present the following Red question What is different about customers of professional sport and customers for more traditional businesses? If the instructor chooses items 1, 2 and 6 of the unique features they can get students as a whole group to brainstorm the differences between the customers of sport and the customers of normal business. Following this a Red question can be presented to the whole group Why should organisations care about their customers? The discussion can then move onto why sports customers are different. It could be argued that sports customers are more loyal than other companies customers so we could assume they will keep coming back to watch. If they keep coming back we could debate whether we need to put resources into customer care. The case should now be distributed to the class for reading (5-7 minutes). Instructors should emphasise how it is every staff members responsibility to treat customers in a fashion
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and then progress and the A2 and AS level start at the Gold questions.
Intermediate Gold
Question 1: Consider the reasons for why Arsenal should continue to strive to improve their customer care? Although football is a unique business area two of the most important sources of income for the club are gate revenues and corporate hospitality. These revenue streams rely on customers and effective revenue management. To ensure this occurs it is easier for the club to keep their existing customers than spend money on attracting new ones. As customers become more expectant of a level of service it is important that Arsenal ensures customer care is always progressing. To provide effective and satisfying levels of care it is important for the club to create enjoyable experiences. For instance when a customer arrives at the stadium the trip through the entrance past security should be efficient, courteous and friendly. When dealing with the ushers any requests for information should be dealt with enthusiastically. When this is supported by an exciting football match these experiences then start to offer customers a unique experience that they will realise cannot be substituted by any other leisure activity. Question 2: Why is important for a Club with as many stakeholders as Arsenal to develop a Club Charter? The Charter acts as a form of communication for the many stakeholders by allowing them access to the Clubs official stance on issues referring to customer service and quality. A Club Charter allows the Club to provide consistent levels of service across a wide range of operational areas. The variety of stakeholders that Arsenal deal with means that the Club can field many service related queries from paying customers and external individuals and groups. The Charter assists in providing a first contact point for these enquirers. Another benefit of having a Charter is that it allows staff who are dealing with customer queries a reference point to ensure that all responses are consistent. Much management planning goes into training staff to deal with many situations that could arise and preparing a strategy for dealing with each of them. Consistency in customer service delivery is very important as it assists in managing customer expectations.
Entry Level Silver

Question 1: Discuss the ways in which technology assists Arsenals customer service capabilities. Arsenal uses technological advancement to enable better customer service; the following are taken from the case.
G
Smart cards which have data electronically added to them (including the tickets for individual matches); these are being issued to each member of the Club and reduce the likelihood of issues such as tickets getting lost in the post and falling into the wrong hands as they can simply be deactivated by the club in these circumstances. Towards the end of the 05/06 season new software was introduced which allows employees to enter customers issues electronically in terms of type/estimate, response time and resolution time. By using technology the margin for error can be reduced and types of issues can be better understood due to the ability to report on the data.
As customers are becoming more technology savvy these systems demonstrate to them that the Club is also progressing and seeking new ways to assist the customer receive a better experience. Question 2: How would staff training differ for someone working gold membership catering than the training for someone working Diamond Club catering? As customers differ in terms of ability to pay so too do they differ in their level of expectation about a given service. Members of the Diamond Club who pay significant fees to belong to the group (see Finance case for exact figures) have not only gained access to an exclusive area but gained access to much higher levels of quality in the process. Quality service can be planned and one of the key ingredients of this is staff training. The training level of the staff in this area is very high. Specific staff handle parking, catering, security and general member services for the Diamond Club and the training is handled not only by Delaware North Companies (see operational management case) but also by Arsenal itself. The training requirements for a staff member at the general concession stand are realistically much less as their role and interaction with their customers is much more transactional and fast paced. The staff in this type of area still maintain high levels of courtesy and friendliness, however customers using these services have different expectations to the Diamond Club. In the general concession area it is the efficiency of the staff (while providing good levels of courtesy) that is more highly regarded as these members may be wishing to return to their seats as soon as possible.
Advanced Platinum
Question 1: Explain what is meant by customer experience? Provide two examples to elucidate this concept. The customer experience is a catch all term for the entire customer interaction with the Club. Customer experience management is an emerging marketing term that attempts to manage the myriad interactions customers have when engaging the services of a company. For instance this can include ensuring that
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Customer Experience and Care continued
websites, retail stores and stadiums are accessible and well maintained, that staff are informative and provide quality service and ensuring that customers have access to the latest technology to assist them accessing their seats and ordering food and beverages. Examples of the customer experience can also be slightly beyond the control of the organisation also. Travelling to and from the event can impact on the customers perception of the experience; if it is difficult to get to or return from this may affect their evaluation. The organisation can ensure their customers have accurate and timely information on these aspects to ensure a heightened overall experience. Question 2: Discuss why it is important that a professional football club places importance on the customer experience? The importance of fans and customers to professional sporting clubs cannot be understated. The fans are the most important part of the Club. In the professional sporting industry, particularly European football, stadium revenue is very important. The greater the levels of revenue the more the Club can invest in playing and coaching staff which in turn could win them more trophies, which then equates to further revenue. The Club cannot directly influence the outcome of the match however they can ensure that the goods and services that augment the match are designed to provide a memorable experience. Additionally the customers at Emirates Stadium are spending quite significant sums of money on attending a sporting event and therefore require something more than a seat and a football match. They have their time and money invested in Arsenal and the management believe in ensuring that they receive a service that is commensurate with this commitment. Part 3: Additional Tasks (15 minutes if required) If time permits students should be referred to the appendices of the case book to read the article In the Club. In small groups students could identify the key market segments of this section of the stadium. What are the benefits that the club thinks will appeal to each of these sections? Present this information in a table. Finally instructors should focus on the use of technology and how it is increasing organisational knowledge on each customer and offer the customers added value. Students can then consider the cost of this sort of technology and the benefits that can arise through customer retention. Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
Glossary:
Customer Care an organisations activities designed to achieve their customers satisfaction. Customer Experience incorporates all interactions between a business and its customers and intended to be positive in all situations. Club Charter a document outlining the principles and functions of the club. Customer Service the principle goal of providing an organisation that serves its customers and other stakeholders through the provision of customer focused actions. Independent Arbitrator an independent and neutral third party with the role of settling disputes by considering both sides arguments and then reaching a final decision. Members and Registered Supporters these are fans and customers that are known to the Club, either through previous custom or registration with the Clubs departments. Margin of Error most operational procedures are not perfect, realising this managers set levels of performance that allow for some mistakes to be made, reducing this level is a priority of quality management.
Additional Reading:
The case on Organisational Structure can also assist with understanding of how the departments pull together to ensure customer care is advanced. The case on marketing mix and marketing research will assist in the completion of the additional task. For the additional task the article In the Club from the Arsenal Case Book will be required.
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Customer Experience and Care Case Question Sheet

Introductory Red
Question 1: What is different about customers of professional sport and customers for more traditional businesses? Question 2: Why should organisations care about their customers?
Entry Level Silver

Question 1: Discuss the ways in which technology assists Arsenals customer service capabilities. Question 2: How would staff training differ for someone working gold membership catering than the training for someone working Diamond Club catering?
Intermediate Gold
Question 1: Consider the reasons for why Arsenal should continue to strive to improve their customer care? Question 2: Why is it important for a Club with as many stakeholders as Arsenal to develop a Club Charter?
Advanced Platinum
Question 1: Explain what is meant by customer experience? Provide two examples to elucidate this concept. Question 2: Discuss why it is important that a professional football club places importance on the customer experience?
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Market Research
Aim of Case:
To allow students to understand how data collection through market research improves business effectiveness and efficiency. most fans of each side will feel different to their opponents. To build on this thought the instructor can proposition the class to see if they feel that every supporter that goes for the team would feel the same way about a 1-0 win! This should lead into a discussion on the differences between goods and services which will prepare them well for the silver questions. There is also a substantial glossary in this case and it would be wise for instructors to address the key concepts to ensure students are aware of the key terms.
Learning Outcomes of Case:

G
To introduce students to the concept of market research in an applied business setting. For students to understand the need for continually researching the market to improve product offerings. For students to apply market research concepts to an applied business setting.
Introductory Red
Question 1: If a business is doing well why is it important for businesses to understand the marketplace? It is vital that every business is able to focus on the marketplace and the external environment (for more detail see External Environment case). The marketplace is continually changing and organisations must keep abreast of these changes. This can be done by ensuring that the organisation stores and collects all the information they receive about the market in a central and well organised area, such as through the CRM system at Arsenal. Question 2: How do we obtain information from the market? We can use a variety of primary and secondary sources of information. Primary sources are collected by the following data collection tools;
G

That market research is a planned and systematic approach to solving organisational issues and improving the marketing mix in light of customer feedback.

Market research is an important business concept for all organisations, this case highlights how an ad-hoc system was strengthened by CRM and now leads decision making when going to market.

Part 1: Whole group discussion and Red Questions (15 minutes) Instructors should start by posing the following Red question; If a business is doing well why is it important for businesses to understand the marketplace? This will lead to a discussion of the importance of market research as a continual process for keeping in touch with customer tastes and preferences. Other Red questions should ask How do we obtain information from the market? How will we store and manage it once collected so it is ready when we need it again? The case should now be distributed to the class for reading (5-7 minutes). An additional initial discussion point could be to focus on the unique factor (see introduction) that states that the sport product is often variable in quality. Compare a match of football to a burger from McDonalds. One is standardised and consistent every time a burger is made then it should be the same, however a football match (or any other sporting match) is rarely always the same, it varies in quality. The instructor can add to this the fact that two different spectators can go to a match and see the outcome very differently on a basic level you can say if one team loses and the other team wins
Survey Questionnaire G Validated scale of closed questionnaire items for quantitative precision G A mixture of qualitative and quantitative data collected through open and closed questions that generally have less precision than a validated scale. Interview G Direct one to one G Structured where a set list of questions is asked to each interviewee, there is little flexibility in this approach. G Semi-structured where a list of questions is present but the interviewer and interviewee can move off the topic if they so wish. G Open where there are very few questions and the interviewee may talk about a range of ideas. G Focus Group these involves a researcher
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Market Research
discussing an issue with a small group (generally 4-7 people) using one of the interview methods above. Both of these methods generally acquire qualitative responses.
analysis of sales patterns in the retail store focusing more on quantitative analysis as opposed to the mixture of quantitative and qualitative data they currently use. The use of customer focus groups and open forums could still be used however within these meetings the research would be limited to product testing, and therefore limited on service principles. This would allow Arsenal to see how the customers interacted with their products in a closed environment. As this does not occur and Arsenal have a wide range of services on offer then this observation is harder to record. Therefore the key difference is the use of a lot more qualitative data collection tools given the service nature of their operations. Question 2: How has the CRM system allowed Arsenal to understand the market more effectively? The CRM system has allowed Arsenal to use a central storage point for all market and consumer information that the company keep and provides three key benefits to the organisation.
G
Participant Observation this is where researchers will observe customers as they interact with the organisation or the organisational environment. For instance a researcher may observe a small group of customers interacting with the concession stand to examine ways of improving customer service.
This data can be very rich in nature and its accuracy can be increased by approaching data collection through systematic procedures. It can be tailored very specifically to address the market research issues and challenges that organisations face. However it can also be costly and require quite technical skills to carry out successfully. Secondary sources can be obtained by both purchasing reports and transactional data and using it as the focus of the research data or including the data into the CRM system to assist primary data already collected. This can be a cost-effective way of getting information fast but it should be used with caution, the validity of data depends on how and when it was collected. Question 3: How will we store and manage it once collected so it is ready when we need it again? There are no concrete rules about data storage but the golden rule is it has to be accessible. The use of CRM systems can provide a one-stop-shop for the storage of market research information. Research that is collected and bound in volumes on managers shelves is not accessible and cannot be used to its full potential. A CRM system like the one Arsenal use can provide this focal point and if correctly managed it can save the organisation time and money. Part 2: Discussion Questions (25 minutes) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.
First this centralised system has provided a one stop repository and allowed staff from all departments within the organisation access to timely and accurate information. Second the use of the CRM system avoids departmentalisation - this is where the departments do not communicate effectively with one another and there is competition within the organisation over resources. This situation leads to a negative result for the organisation as a whole. This situation generally occurs in organisations much bigger than Arsenal however the use of a central data store that all departments have access to avoids these issues. The final key benefit of this system is that it provides a more complex decision making tool that allows the organisation to understand the market better.
Intermediate Gold
Question 1: What do you feel are the best data collection tools available to a professional football club like Arsenal?
G
Entry Level Silver

Question 1: If Arsenal was a company that only sold goods and did not provide services do you think that their marketing research strategies would differ? If so why? If the Club sold only goods then the marketing managers would focus solely on the traditional Ps and not the services marketing mix. This is because the characteristics of a good (see marketing mix case) do not traditionally require manipulation of the service mix, however this is arguable. Also when testing their goods they would probably use different data collection tools than they currently use. There would be a lot more
First students should list all the data collection tools used in the case; namely forums, focus groups, historical data analysis, and online surveys. Students can support these tools with examples from the case e.g. the use of focus groups to create a better service for the junior gunners by the establishment of three separate product offerings for the three segments identified within the product. Second other data collection tools can also be mentioned by the students, this can include customer observations, face-to-face interviews with members of the Diamond Club and Club Level, and
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Market Research continued
also large scale questionnaires that can be distributed to many gold members on match days or distributed through the post.
G
Finally it can be mentioned to students that when dealing with service offerings a mixture of qualitative and quantitative data should be collected to provide more clarity on the issues in the research. Having both types of data allows us as managers to create a more accurate picture of the situation that could not be achieved through one method alone.
Arsenal conduct the research themselves there is a chance that they may have preconceived ideas of what they want to hear. The use of external researchers can avoid this (more discussion is provided in the solution to Gold Question 2) A third issue can be raised concerns about appropriate training and practice using the CRM system and manipulating the data to solve research problems such as increasing customer retention. If staff are not adequately trained then there is a chance that they may enter the wrong calculations or attempt to define the wrong models for research purposes. This could lead to errors in the process and incorrect decisions could be made as a result. Question 2: Explain what is meant by basket spend? How does Arsenal use market research to maximise this term? What promotional ideas could you recommend to increase basket spend from Arsenal customers? Basket spend can be defined as the total amount a shopper spends on purchases while in a retail environment. This is also known in some marketing literature as wallet share. This means that Arsenal look to maximise basket spend each time a customer interacts with the online store or the range of Arsenal merchandise outlets, including the Armoury near the stadium. To maximise this spend Arsenal use their CRM system to check two things. 1. How different segments of customers purchase, what their patterns are, what the popular items are, what items are appealing at different times of the year and so on. 2. They also check secondary data on past promotions which are studied to see what impact they had on basket spend the last time they were used. Students could recommend the following promotional methods to increase basket spend.
G
Question 2: Provide an example of where Arsenal has used research to improve one of their product offerings? Could this have been done using any other methods? As mentioned in the case the Junior Gunners membership has been refined through the process of market research. The initial offering for the membership was one category for all under 16s. The problem Arsenal found with this was that there were very different and separate segments of customers who are under 16. For example, the needs of a toddler differ to those of a young person of 15; in the first case it is likely that a parent or friend of the family will be the primary purchaser of goods for toddlers while for the 15 year old they may be making their own purchase decisions. A researcher sat with small groups of junior Gunners and talked about the product with a series of questions and prompts to stimulate discussion. This method was the focus group method. Instructors may wish to mention that Arsenal used an external consultant to assist in this research. This external researcher was used as they provide a fresh opinion of the organisations products and avoids any possibility of bias. Bias is a key issue in research as it can distort the findings due to sometimes an unwillingness to confront the data if it does not agree with managers' existing perspectives. External researchers provide this unbiased data and therefore make more accurate recommendations.
Advanced Platinum
Question 1: What are some of the operational issues that Arsenal must consider in the market research process? Some of the key operational issues involve considerations for the privacy of data. When fans and customers interact with the online or retail environments at Arsenal they may give over personal information. Arsenal cannot use this information without the express permission of the individual; this is reinforced by legislation (The Data Protection Act 1998). However if the individual gives permission then Arsenal can use their information to increase the accuracy of its market research process and opt-in or out of third party communications. A second issue is the use of external researchers to avoid any bias that may enter into the research. If
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Advertising (the video for the marketing mix case can be used here) advertisements can be made for the release of the new kit, the membership packages, and the winter and summer catalogues also. Sales Promotions students could recommend a buy one get one half price in an attempt to increase sales. Personal Selling students may recommend the use of players to make appearances in kit launches and other promotional activities with the intention of convincing customers to make a purchase.
Part 3: Additional Task (15 minutes) In small groups the instructor should hand out the following focus group questions. The purpose of this activity is to allow students to work through a focus
Market Research
group situation about a business product. Instructors can develop this idea by the inclusion of their own products and their own questions. The students should be challenged to think how will they store, organise and draw conclusions from the data they have gathered. Students can be encouraged (if possible) to record the discussion on portable devices like a mobile phone. Questions for focus group: 1. How many people in the group have ever been to a professional sporting event? G This can be extended to music, youth or art event to widen the possibility of response 2. Describe how you got to the event and what you did before the match (event) began? 3. Can you describe the atmosphere at the facility where the match was played? 4. What was the most memorable moment from that day? The purpose of the focus group is to find out what was the students most memorable experience from attending a sporting (or similar) event. The whole class can then go through and discuss what conclusions they drew. Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
Data Collection Tools a series of procedures that can obtain data for research purposes. These tools can include questionnaires, interviews, and observations. Qualitative a form of data that is concerned with meanings and interpretations, is generally used to increase the understanding of certain phenomena without the need for absolute truths. Quantitative a form of data that is concerned with how much and how many. Is generally used to solve a problem to a given significance level. Focus Groups a form of data collection tool that poses questions to a small group of individuals to garner their opinion on a range of marketing ideas. Fan Forums a form of data collection employed by sporting clubs that can be used to obtain data and communicate organisational plans. Stakeholders in light of these cases a stakeholder is anyone who has a vested interest in the operations of a firm. Surveys a data collection tool that can include questionnaires or interviews aimed at gaining structured responses to a consistent procedure. Price Sensitivity the importance of price to the consumers decision making process, less price sensitive could lead to purchase or increased purchase, more price sensitive could lead to switching to alternative goods and services from another company. Historical Data simply data that has been collected over a series of time, therefore longitudinal in nature and of the ability to make predictions about future action. Basket Spend a marketing term for the total amount a shopper spends on purchases while in a retail environment (can also be called wallet share). Cross-Selling using existing customer interest in certain products lines to increase purchases in another unrelated product line. Up-Selling using existing customer intention to purchase to persuade them to purchase a higher value product that contains more features.
Glossary:
Data information gained from research methods such as surveys and interviews that can be used for analysis. Market Research the systematic process of solving market related problems and challenges through the use of data collection. Segmentation a process of dividing up a larger market into manageable and definable categories for the process of market analysis. Promotional Materials a series of communication devises that aim to increase awareness, knowledge, interest, and action in targeted segments. Goods and Services classifications of products where the former is generally tangible as opposed to the latter which is intangible. Most goods and services fit in between pure goods and pure services. Customer Relationship Management (CRM) System a technological tool that stores, categorises and systematically analyses data held by an organisation. Operating Margins an important management efficiency ratio where operating expenses are deducted from total revenues and then divided by total revenues.
Additional Reading:
The case on Marketing Mix presents an example of how a product offered by the Club has been segmented through the process of marketing research. The reading Building Arsenals Future discusses the stadium development project and mentions details of the research process that the Club performed to get the best possible solution.
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Market Research continued
Market Research Case Question Sheet

Introductory Red
Question 1: If a business is doing well why is it important for businesses to understand the marketplace? Question 2: How do we obtain information from the market? Question 3: How will we store and manage it once collected so it is ready when we need it again?
Entry Level Silver

Question 1: If Arsenal was a company that only sold goods and did not provide services do you think that their marketing research strategies would differ? If so why? Question 2: How has the CRM system allowed Arsenal to understand the market more effectively?
Intermediate Gold
Question 1: What do you feel are the best data collection tools available to a professional football club like Arsenal? Question 2: Provide an example of where Arsenal has used research to improve one of their product offerings? Could this have been done using any other methods?
Advanced Platinum
Question 1: What are some of the operational issues that Arsenal must consider in the market research process? Question 2: Explain what is meant by basket spend? How does Arsenal use market research to maximise this term? What promotional ideas could you recommend to increase basket spend from Arsenal customers?
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Operational Management
Operational Management Matches Optional!

Aim of Case:
To provide an overview of the catering provision at Emirates Stadium. The case should now be distributed to the class for reading (5-7 minutes). Students can also start to list and group together different types of paying customers to the stadium and discuss the reasons for the differences between the service levels in the premium seats and those in the general concession stands. This case can also link in with the case on Customer Experience and Care as there have been significant developments in the area given the move to the new stadium.

G G
To explain the importance of catering to businesses.
To understand the logistics of providing catering in a large stadium.

Well managed catering contracts provide substantial benefits to business.
Introductory Red
Question 1: What are the main activities of a professional football club? Students should aim to include as many activities as possible above and beyond preparing an elite team for matches. They include running community programmes, preparing facilities for sporting events, hosting non-Arsenal sporting and non-sporting events, catering for matches and non-match days and so on. (There are only 35 match-days a year out of 365, so the non-match day activity is very important). The list need not be exhaustive only enough to ensure that the students see that the operations of a professional sports team are diverse but they all assist in supporting the core product of the Club which is football operations. Question 2: Compare and contrast the differences between the catering at Highbury and at Emirates Stadium? When Highbury was designed the emphasis was not on catering and corporate hospitality. Far from it, when the stadium was built it was designed for housing spectators to watch a football match. Since Highbury was built in 1913 the business of football has developed enormously. So much so that Highbury could not provide the services that bring in revenue for modern football clubs. It was this dilemma that was one of the catalysts for the development of Emirates Stadium. Similarities
G

The successful outsourcing of the catering services has allowed Arsenal to focus on their core function football and this may be relevant to other businesses. For catering on a large scale to be successful it is not just the quality of the offering that needs to be considered but also technology/innovation/planning/service standards and that these need to coexist together.

Part 1: Whole group discussion and Red Questions (20 minutes) The instructor could start with a discussion on what activities they believe a football club does best (see Red question 1). Students can brainstorm ideas for the instructor to note down on the board. Of these activities it will be interesting to see how many put food and drink high on the list. The key point here for instructors is to lead a discussion regarding all the activities that are presented which they, and the students, feel that Arsenal would have suitable expertise in delivering. It could be assumed that given the requirements of the catering for the new stadium that the process of outsourcing is vital for quality service delivery. Hence this is the rationale behind using Delaware North for this service. This can lead into Red question 2 (See below). From a financial perspective the collection of funds in advance was also very important considering the cost of the new stadium (see Finance Case). Students could discuss when and where a football club receives its revenues. The instructor should highlight the importance of receiving revenues on non-match days as this is central to revenue accumulation for the new stadium. This also presents a shift in the determinants of success from the Highbury era and to that at The Emirates Stadium.
Concessions and corporate hospitality were provided Many fans attending matches expected these services
Differences
G
Simply a greater range of corporate hospitality and concession food and beverage options catering for a wider range of tastes and requirements Catering is of critical importance to operating
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Operational Management continued
revenues at Emirates Stadium

G
The design of the stadium makes it easier for catering services to be supplied to the many points of delivery in the stadium The sheer number of staff required for the new stadium provides many employment opportunities The customer expectations have increased with the promise of what Emirates Stadium can provide Offer exclusive non-match day banqueting and conferencing facilities
that all food and beverage locations throughout the stadium are run as efficiently and effectively as possible. As all of the fans and customers are important it might be easy to assume that some are given preference over others however the catering on offer is matched to the expectations of the customers in that area as the aim is to provide high levels of in-stadium service. The food options available in the general admission areas range from crisps and chocolate, to chips, pies and hotdogs, while beverages range from coffees, teas and hot chocolates to soft-drinks, water and alcoholic beverages. Most of this food and beverage is consumed on the concourse outside levels 1 and 4 or at the seats while the game is taking place. At the corporate hospitality area customers have access to a similar range of drinks however the food is slightly more upmarket. These areas serve buffet food and take orders from an al-a-carte menu that diners can sit in restaurants or dine within their corporate boxes. Hence there are clear differences between the areas however as can be seen in the case quality is not compromised.
Part 2: Discussion Questions in Small Groups (30 minutes 20 min answering, 10 min discussion) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.
Entry Level Silver

Question 1: Why is it important that a Club like Arsenal outsource its catering operations? What would be the challenges with them doing it themselves? The benefit of outsourcing is handing over an area of importance to a partner with the skills to deliver efficiently and effectively over a wide range of operational scales. A club like Arsenal specialises in producing elite level football teams, and in some cases developing community activities (see CSR case) however they do not have competence in providing the wide range of catering and hospitality options required to service a facility the size of Emirates Stadium. This is why they outsource to the experts, and in this case that is Delaware North Companies (hereafter Delaware North). If Arsenal were to run the catering operations there could be a number of risks involved. As they lack the experience in the area (and incidentally no football club has these competencies to fit out a stadium the size of Emirates) it would require a large effort and a dramatic increase in staff. As can be seen by examining the organisational structure chart in the first case Arsenal is quite a lean organisation with a flat structure, to incorporate the staff required would be a large undertaking. Also the effort used on providing such a range of catering operations would take focus away from their core business, which as stated above is producing elite football teams. Therefore it is justifiable that Arsenal seek to outsource these requirements. Question 2: What are the key differences between the catering in general admission and the catering provision in the corporate hospitality areas? Obviously as the expectations of fans and customers increase so too should the services they receive. Nevertheless it is an important operational requirement
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Intermediate Gold
Question 1: Analyse how Arsenal manages the catering side of their business in the new stadium? Arsenal managed the development of a new facility to provide the infrastructure for these services and ensured that the facility has provision for exclusive dining areas to cater for a wide variety of tastes and preferences on match days and non-match days. Catering provision is also an area of reputation. It would have been difficult for Arsenal with their experience in football management to demonstrate competence in fine dining services. By attracting a top London chef and working with a partner with competence in the area the legitimacy of these services was assured. The key to managing the catering service is by outsourcing these activities to Delaware North who have a lot of skill in providing these services so essentially for Arsenal it becomes a question of contract management. Question 2: What benefits did Arsenal receive with Delaware North Companies managing the catering contract? The primary benefit is that Arsenal gets to offer a quality service delivered by professional staff that satisfies their customer needs. The Club is able to use Delaware Norths customer service skills and technological know-how in this area to compliment the Club. Another key benefit is that they get to maximise their catering revenue and expand their operations significantly. From the information in the Finance case it can be seen that Arsenal received a lump sum to assist during construction of Emirates Stadium and then a further funding over three years to develop the service.
Operational Management
Advanced Platinum
Question 1: Design three service standards that you feel would be appropriate for the corporate hospitality areas? This allows the students to use their judgement into what constitutes a quality service. It is clear from the case that the standards for corporate hospitality need to be high therefore the following standards could be set;
G
Part 3: Additional Task (15 minutes) In the appendices in the case book there is an article entitled Spoiling Corporate Guests. Instructors can use this as the framework for the next activity. The following tasks can be set; what are the key market segments these services are aimed at? Reflect on the role of research in designing the stadium, who was involved in this process, could anyone else have been? What are the key features of the corporate hospitality facilities that they feel will appeal most to the targeted market segments? Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
That all customers are greeted as they enter the hospitality area That each corporate box has a dedicated staff member That drinks will arrive no more than five minutes after ordering That food and drink will be served at appropriate temperatures That all staff are dressed in correct uniform That all phone conversations begin with a formal greeting and identification of the staff members speaking And so on..
G G
Glossary:
Capital Investment money paid to purchase an asset (generally a long-term asset). Contract Catering a binding legal agreement to provide catering services. Concession a right to undertake business in a specified activity (in this case the provision of food and drink). Customer Service an organisations activities aimed at enhancing customer satisfaction and repeat service. Logistics the management of business operations Outsourcing work performed for a company by an external organisation that allows for specialised services to be implemented. Service Standards targets used by businesses to evaluate their service performance. Service Quality a principle of operations management where services are provided at a consistent level and monitored by service standards.
Question 2: What are the key operational aspects of managing a modern sporting facility, which are the most important and why? There are many operational tasks for managing a modern sporting facility, some of these can be identified as;
G G G G
Managing box office and ticketing Ensuring security in key positions Ensuring that the catering provision is sourced Maintenance and cleaning the pitch changing rooms (home and away) the seating areas concourses, stairwells, lifts and entry and exit points the concession stands and outlets retail store museum And the list can effectively go on..
Additional Reading:
The case on Customer Experience and Care provides a good overview of the regulations that ensure effective service delivery in the catering area. The Case on Finance covers a range of issues relating to funding new stadium developments and the importance of Catering issues to this. The additional readings entitled Spoiling Our Corporate Guests and VIP Guests add some extra data to the case and assist in task 3 if required.
The management of these facilities depends on all the operational tasks being carried out in an effective and timely manner. Many activities are instrumental for allowing other activities to be carried out. For example if the pitch is not prepared correctly it could jeopardise the match, or if the catering resources are not sourced then service cannot be provided (imagine a football match on a cold winter day with no hot drinks!). The managers of the facility have the daunting task of ensuring that systems are in place to coordinate all the operational activities on a regular basis.
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Operational Management continued
Operational Management Case Question Sheet

Introductory Red
Question 1: What are the main activities of a professional football club? Question 2: Compare and contrast the differences between the catering at Highbury and at Emirates Stadium?
Entry Level Silver

Question 1: Why is it important that a Club like Arsenal outsource its catering operations? What would be the challenges with them doing it themselves? Question 2: What are the key differences between the catering in general admission and the catering provision in the corporate hospitality areas?
Intermediate Gold
Question 1: Analyse how Arsenal manages the catering side of their business in the new stadium? Question 2: What benefits did Arsenal receive with Delaware North Companies managing the catering contract?
Advanced Platinum
Question 1: Design three service standards that you feel would be appropriate for the corporate hospitality areas? Question 2: What are the key operational aspects of managing a modern sporting facility, which are the most important and why?
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Finance
Finance
Aim of Case:
To introduce students to the importance of a reputable financial structure to the management of professional football clubs.
The case should now be distributed to the class for reading (5-7 minutes).
Introductory Red
Question 1: What sources of finance did Arsenal use to fund the stadium? The case highlights a number of sources of finance that Arsenal used to help build the new stadium. Arsenal used a combination of debt, equity and partner investment to finance the project. The debt was secured through loans from the banks although a business case for the Club was instrumental in achieving this (see Silver question 1). Arsenal sold some equity in the business (5%) to Granada ventures for 47m which also assisted in financing the build. This could have been another major financing option if they were to extend it to 30-40% but the Board felt that their control over the Club might be jeopardised if they sold more of the equity than if they chose the bank loans. The selling off of the old stadium at Highbury to be redeveloped into a new housing complex also raised funds. Arsenals partners also entered into deals with the Club that assisted in raising finance also, the deal with Nike for 70m, then Emirates for 100m, and also 8 figure sums from Delaware North. Each of these deals involved some other form of partnership (i.e. kit deal, naming rights and hospitality provision) rather than purely an investment in the new facility however the funds were instrumental to the success of the project. What the Club did not have to do was sell playing assets such as players and coaching staff. This could have been an option but may have negatively impacted on the financial balance of the business and success of the team in competitions. This then could have affected their ability to raise future revenues through continued success. Question 2: How important is non-match day revenue to Arsenals financing model? The answer is simply, very important. However the quality of the facilities and its location (close to central London) make it an attractive venue. This in turn assists the Club generating revenue from non-footballing activities and contributes to its long-term financial health. The broader the variety of income sources the more robust the business is as less of the total revenue is dependent on playing performance. The figures presented in the case demonstrate just how lucrative consistent bookings can be for the club, by referring to Figure 1 it could be assumed that the successful increases in group turnover and profit (before exceptional items and taxation) have risen due to these increased revenue capabilities.

G
To explain the importance of raising finance to develop Emirates Stadium To identify the sources of revenue and assess their strengths and weaknesses

That funding development through obtaining debt is a desirable business decision that involves calculated assessment of organisational resources.

For students to understand that debt borrowing is a rational decision that makes the best use of the businesses available resources. To obtain debt Arsenal had to demonstrate that it operated like any other business despite the unique field of industry it operates within. Hence it needed to show where its revenue sources would come from and how effective they would be at repaying the debt.

Part 1: Whole group discussion and Red Questions (20 minutes) This case stresses the importance of adopting a business-like structure and legal framework in order to develop relationships with certain stakeholders. Instructors should begin with an introduction to the main forms of legal structure. Once presented the instructor should then ask students to determine which of these structures fits that of Arsenal. It should be made clear to the students that the structure Arsenal adopts allows it easier access to financial sources which is a key factor of business, hence Red question 1 can be posed. Before reading the case instructors can lead the class into a discussion of where an everyday business obtains its finances from. Once this is done the instructor can then lead a discussion where this information is compared to Arsenal Football Club. Arsenal had to prove to the banks that it was a credible business, students could discuss the importance of match day revenue and its relationship with team success. Students should also discuss the importance of non-match day finances to the club (Red question 2 can be posed).
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Finance continued
Part 2: Discussion Questions in Small Groups (30 minutes 20 min answering, 10 min discussion) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.
Entry Level Silver

Question 1: Why did Arsenal have to demonstrate it was a normal business for the banks? Generally, banks were sceptical of the football business. This was due to the financial issues that surrounded clubs like Leeds United and Lazio of Italy, and the inability of club share prices to consistently return consistent earnings. They could see how some other clubs were able to achieve high levels of turnover only to result in unsustainable losses. Nevertheless for Arsenal to construct their stadium it was vital that they could demonstrate that they could operate as such and obtain appropriate revenues. After extensive negotiation with local planners, the creation of a legal structure for the group the Club and its partners performed a feasibility study. This study revealed the revenue potential of the new stadium. Once these studies were undertaken the results were used to improve the investment grade of the business. Question 2: What are the key financial difference between Highbury and Emirates Stadium? It is stated in the case that match day revenue has contributed a rise of 20% to overall funds by the switch to the new stadium. The most striking difference would be in capacity terms, from table 1 it can be seen that the total licensed capacity is 60,432 compared with 38,000 at Highbury. This then includes a greater variety of seating options, increased numbers of corporate boxes and as mentioned in red question 2 increased levels of non-match-day revenues. In one sense this was the benefit of moving into a new facility. Highbury had arisen through an evolutionary development since 1913. In that time they did not have corporate boxes or premium seating and it is only since the increasing commercialisation of the sport that these facilities have become operating requirements. Therefore Arsenal was able to design, from scratch a facility that sought to capture increased levels of revenue.
whereby success off-the pitch in business generates finance to be invested into resources for performance, success on the pitch creates additional resources through prize money, increased sponsorship fees and broadcasting fees which are then re-invested into the business to continue the cycle further. Clubs with inadequate levels of stadium capacity and non-match day revenues are effectively losing money each match under sold and non-match day event not booked. This revenue could be generated by their competitors who are also investing in the virtuous circle of football finance and effectively leaving them behind. Question 2: Calculate the total yearly revenue on matchday seating at Emirates Stadium from the data contained in Table 1
G
Use the following figures as proxies; average corporate box = 90,000, average upper tier ticket 1,400 Do not include Diamond Club joining fee in the calculations
Table 1: Total Yearly Revenue (Master Ticketing) Tickets 84 Diamond Club 150 Corporate Boxes 1,060 Club Level 3,500 Club Level 3,250 Club Level 2,500 Club Level 28,000 Upper Tier 6,700 Lower Tier 16,300 Lower Tier Price () 25,000 90,000 4,750 1,352 1,776 2,520 1,400 990 885 Total 2,100,000 13,500,000 5,035,000 4,732,000 5,772,000 6,300,000 39,200,000 6,630,000 1,442,500
Grand total 84,714,500
Advanced Platinum
Question 1: What lessons from the Arsenal Emirates funding case can be proposed to other sports clubs wanting to expand their stadium? The main lesson that arises from this case are that sport businesses need to ensure that they can withstand periods of hardship and in the sporting business this generally means through periods of mediocre success. Banks will not lend if there are doubts over the future of the business. Arsenal managed three main components of their financial strategy that could be examined by other sporting clubs; 1. Devising a new legal structure, 2. Negotiating with local authority planners, and;
Intermediate Gold
Question 1: Why is stadium revenue so important to a sporting club like Arsenal? Stadium revenue is important to professional sports clubs like Arsenal because there is a link between the revenue made through operations and the quality of the playing and coaching resources the Club can employ. Grundy calls this the virtuous circle of football finance
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Finance
3. Having a feasibility study carried out on the potential for revenue creation at the new stadium. Question 2: Discuss the financial charts in figure 1;
G
Glossary:
Debt a financing option where funds are borrowed from a third-party. Feasibility a study investigating the future state of affairs for certain initiatives. Revenue the financial return from the application of firm assets. Non-Match Day operations at the facility and club that occurs when there is no football scheduled at Emirates Stadium. Relegation a system whereby a club is demoted from the league to one below. Receivership a system whereby a business is placed in control of a trustee in order to prevent liquidation. Risky venture a business opportunity that has an unsound financial platform from which to operate as a going concern. Acquisitions to purchase custody of a business or component asset. Feasibility Study a procedure that investigates the financial viability of a future event occurring Liquid Business to have enough cash in a business to, if necessary sell all the assets to pay off the liabilities and distribute the remainder to shareholders before closing the business. Legal Structure a series of forms of business that determine tax liability, forms of reporting, ways the business can make money and the way it can make decisions about its operations.
What event caused the hike in turnover and costs in 2004?
This question might be one for the Arsenal fans in the classroom but season 2003/04 was the year of Arsenals invincibles when they went through the entire season unbeaten and won the Premiership. This was one of the factors that raised revenues for that season students can be directed to the Premier League website (www.premierleague.com) to see how much prize money a team wins for winning the Premiership. Nevertheless this also has a knock-on effect of increasing payments to players and coaching staff as a result of the victorious season. Therefore it can be seen that wage costs also rose in 2004 before falling slightly in 2005. This is due to bonuses paid to these key stakeholders for their success on the field. It could be argued that Arsenals success on the pitch in 2003/04 contributed greatly to demonstrating the business case of the Club to the banks.
G
What has been the outcome of the move to the new stadium in financial terms between 2004 and 2007?
It can be seen that the financial charts in figure 1 highlight dramatic results across the board. All the figures (notably wage costs) have risen in relation to the opening of the new facility. Students could enter the data into a table to highlight the percentage increases and then discuss what the results mean. Increases in Figure 1 with move to Emirates Stadium Aspect Group Turnover Group Profit* Wage Costs Cumulative Investment in Emirates m 166 200 10 28 70 90 166 410 % increase 20.5 180 28.5 246
*before exceptional items and taxation
Part 3: Additional Task (5 minutes) A question that can be posed to the class is in the hypothetical situation of the banks taking control of the club; What would have occurred to the playing side if the Club has been bought out by the banks? Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
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Finance continued
Finance Case Question Sheet

Introductory Red
Question 1: What sources of finance did Arsenal use to fund the stadium? Question 2: How important is non-match day revenue to Arsenals financing model?
Entry Level Silver

Question 1: Why did Arsenal have to demonstrate it was a normal business for the banks? Question 2: What are the key financial difference between Highbury and Emirates Stadium?
Intermediate Gold
Question 1: Why is stadium revenue so important to a sporting club like Arsenal? Question 2: Calculate the total yearly revenue on match-day seating at The Emirates Stadium from the data contained in Table 1
G
Use the following figures as proxies; average corporate box = 90,000, average upper tier ticket 1,400 (do not include Diamond Club joining fee)
Advanced Platinum
Question 1: What lessons from the Arsenal Emirates funding case can be proposed to other sports clubs wanting to expand their stadium? Question 2: Discuss the financial charts in figure 1;
G G
What event caused the hike in turnover and costs in 2004? What has been the outcome of the move to the new stadium in financial terms between 2004 and 2007?
26
The Marketing Mix
The Marketing Mix

Aim of Case:
To introduce students to the marketing mix and how it aides the positioning of the product range in the mind of the consumer. Club Level customers and it could also be discussed whether the Club would seek to attract Diamond Club members (see Finance case) through advertising like this.

G
Introductory Red
Question 1: How do we as consumers differentiate between different products and what considerations do we use to make our decisions? The instructor should lead the class in a discussion into the determinants of their decision making as consumers;
G
To understand the difference between goods and services To understand the difference between the traditional marketing mix and the services marketing mix To define the services marketing mix elements To apply the mix elements to the membership options at Arsenal Football Club
G G

The marketing mix is used in business to position products in the minds of the consumer and attracts different market segments to the organisation.
G
How do they decide if a product is good value or otherwise? What attributes are important to us as customers?
These can include aspects such as price, quality, benefits sought, level of need, desire, and so on. For a simple discussion they can be presented as a way of positioning products in the minds of consumers. For instance see figure 1. With this figure we can rank a range of products in a similar range (not just sport but traditional consumer goods). The black dot can represent a Rolex watch, very highly priced but high in quality. The red dot could represent a Seiko watch, of moderate price and good quality, and finally the blue dot could represent a low cost watch of basic quality. The dots can be substituted for any range of consumer goods (even professional sports) but the idea is to stress the way our attributes we assign products assist in their positioning. Finally it is important to note that individual consumers may see product position differently. Figure 1: Product Attribute Scale

By positioning products to specific market segments the organisation can increase sales through effective communications (which are tailored by the mix). The services marketing mix allows increased sales by ensuring that products are sold through correct procedures, by well trained people and in a pleasant atmosphere.

Part 1: Whole group discussion and Red Questions (20 minutes) Instructors should start with the following Red question to generate a discussion. How do we as consumers differentiate between different products and what considerations do we use to make our decisions? Instructors should try to add student feedback on the board using a list or mind map if appropriate. The case should now be distributed to the class for reading (5-7 minutes).
Quality Show the video on membership (it goes for approximately 1 minute) from the website http://tv.arsenal.com1. The second Red question can now be posed, this could lead to interesting suggestions as to how the students would adapt an advertisement to suit different demographics. The images, music track and style of the advertisement would be modified for the
Price
1 The video is available free through this address. Instructors should prepare this before the lesson by downloading the license to operate the video on the classroom computer. The video reference is 23-08-2007 THE CLUB: Arsenal Membership video
27
The Marketing Mix continued
Question 2: Who is this advertisement on the video aimed at? Can you see any clear consumer segments in this advert? It is arguably aimed at Junior Gunners and potential Gold membership customers. The instructor could ask the class how they would change the style, graphics of the case in order to advertise to another membership level like Club Level. Instructors could set the task of getting students to create their own targeted adverts for the Club. Part 2: Discussion Questions in Small Groups (30 minutes 20 min answering, 10 min discussion) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.
Separable means that we can distance the production of the service from the consumption of the service. With goods we can make them in a factory and then ship them to retail however this is not possible with services.
This is an important factor for the goods and services offered at Arsenal as most of them can be placed on a scale between pure good (winter jacket from casual wear) and pure service (the match itself). The more the product is located at the service end of the scale the more it relies on the service mix and not the traditional mix. Question 2: Throughout this case the terms fans and customers have been mentioned. What is the difference between these two groups of stakeholders? To present an economic approach the key difference between a fan and a customer depends on how they interact with the Club. A fan can support the club by following the Club in the newspaper, on television or on-line. A fan does not have to attend the match which is quite handy if you do not live in the United Kingdom or even live outside Europe. A customer however is generally someone who has purchased at least one of the goods and services offered by the Club. Another perspective on this is while a fan supports the club the club cannot turn this into economic support until the fan becomes a customer. Hence it is important that the club looks to convert fans into customers in some sense. As we have seen in the Finance case economic matters are important for professional football clubs as clubs and the sport have developed over the past twenty years.
Entry Level Silver

Question 1: What is the difference between a good and a service? Is it a factor at Arsenal? The difference between a good and a service varies quite considerably and is an interesting starting point to demonstrating the difference between the traditional marketing mix and the services marketing mix. There are 4 key elements that can differ between a good and a service; Table 1: Goods and Services Goods homogeneous tangible durable separable
G
Services heterogeneous intangible perishable inseparable
Intermediate Gold
Question 1: What are the implications for managers in dealing with services marketing mix over and above what is expected through the traditional marketing mix? Managers dealing with services generally have to coordinate a larger series of tasks than those who manage actual goods. A service involves arguably many more aspects to deliver the service to the customer. If a customer walks into the stadium they pass security, ushers, concession stand operators more ushers and then sit in an environment that they can easily assess for its quality of cleanliness and state of repair. Essentially the manager has to coordinate all of these services to augment the ticket that has been sold. It could be argued however that purchasing a good in the Armoury (the retail store) still requires an appropriate level of service when the customer enquires about prices, fittings or checks out the store. Question 2: Explain the difference between the services provision for a Gold membership and that for a member of the Club Level.
The first characteristic relates to the standardisation of the product. Physical goods can be produced to be very similar in all characteristics and hence we term them homogenous, when they vary greatly between services, they are termed heterogeneous. Tangible products are generally those you can see, touch, taste, and feel. They clearly have a physical form, for instance you can stack them on top of each other and sell them in a retail store, with service they are intangible and generally we have to be present at the point of production to experience them. Third, goods are generally durable; they may last for a long time once they have been purchased. Generally speaking services are perishable they need to be consumed as they are produced so there is no possibility to stock-pile them for later.
28
The Marketing Mix
Element Product
Definition This is the tangible and intangible elements that a customer is interested in. This is the tangible and intangible elements that a customer is interested in.
Gold Membership Season ticket primarily, increased availability, range of locations with access to additional augmented services at extra cost 41,000 seats in total 28,000 @ 1,060 1,825 6,700 @ 990 16,300 @ 885
Club Level Season ticket primarily, reduced availability, range of locations and augmented services some complimentary some at extra cost 6,708 seats in total 1060 @ 4,750 1352 @ 3,500 1776 @ 3,250 2520 @ 2,500
Price
Place
This is the distribution General admission variety of location at ground Separate Club Level area with designated method of how the product level (lower tier) or upper tier entrances and catering areas reaches the end user. Targeted through red and silver membership schemes advertising through main website. Not specified in case but likely to be more targeted at Business markets and higher end consumers hence promotional strategies would complement this. Numerous, special area security (although process consistent throughout all membership offerings), ushers trained with increased knowledge.
Promotion These are further elements to communicate the features of the product. Process These are the operational elements that manage the inputs that constitute the product.
Numerous, general area security (although process consistent throughout all membership offerings), ushers, food and drink concessions for general admission areas. Communication with club through mail and online for updated news and information General level of training in customer service, first aid, security procedures managed by Delaware North
People
This is the organisational resource that aides in the delivery of the product through the provision of augmented services. These are the intangible elements that support the product offering.
General level of training in first aid, security procedures. Advanced levels of training in customer service, catering etc managed by Delaware North Companies Inclusion of separate entrances and tiers for seating, catering facilities and free half-time drinks add to exclusive nature of product.
Physical Evidence
Waiting list reinforces scarcity and increases value. Promotional strategy reinforces excitement, scarcity of watching matches at Emirates Stadium.
Table 2: Services Marketing Mix and Arsenals Membership Options: Example
Students should be directed to table 2 in the case and use table 1 to highlight how the two levels of product could differ, examples can be placed into the above table;
Advanced Platinum
Question 1: Explain the concept of physical evidence. What examples will you produce to provide support to your explanation? Physical Evidence can be defined as the intangible elements that support the product offering. Some examples of physical evidence are testimonials which are statements from customers reinforcing the offer of the services delivered by the organisation that support the promise made by the marketing and promotional communications. It can also include the atmospherics of the stadium design especially in the areas of Club and Diamond level where their level of exclusivity is reinforced by these conditions. However physical evidence should be seen as a necessary addition to the service but cannot be the
29
The Marketing Mix continued
defining point, it is a compliment only. For instance you can sit in the most comfortable seat with a very good view but if the staff are rude it will clearly not lead to a very good evaluation of the service. Question 2: Draw two simple systems diagrams (inputs, processes and outputs) for two different membership categories. How would the models differ in complexity? A systems diagram represents diagrammatically the inputs, processes and outputs that represents the operations of the organisation, for example;
website at www.arsenal.com and click on the link to the Arsenal store. Students should choose one good and one service and then design a promotional strategy for achieving greater sales aimed at a particular target group. With the service be sure to include the services mix elements and say how they would support the promotion. Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
Feedback Loop
Inputs
Processes
Outputs
Inputs are the resources that the organisation acquires in order to provide its goods and services. This can include but is not limited to materials and equipment, playing staff, coaching staff, administration staff, operational staff, food and drink, Processes are the management procedures that turn the organisational inputs into quality outcomes. This can include but is not limited to staff training (in separate areas of responsibility), coaching strategy, organisational culture, leadership and motivation of employees, safety standards, risk management procedures, operational plans, first-aid routines and so on. Outputs are the outcomes of the processes and are heavily dependent on the quality of inputs the organisation seeks. Nevertheless it is important to note that processes need to be managed well if outputs are to be satisfactory as an organisation can spend much on the quality of inputs but if managed incorrectly they will not produce the desired outcomes. Feedback Loop a systems diagram generally has a system of feedback to ensure the model is working effectively and if anything is not up to standard there is a procedure to rectify the situation. The feedback loop reports on the quality of inputs and at the processes level. Students can identify how their two modes differ as the quality of inputs and the level of processes differ between products of lower and higher value (if we assume value, quality and price are linked which at Arsenal they are). Part 3: Additional Task (15 minutes) If computer facilities are available instructors could allow students to do the following task. Go to Arsenals
Glossary:
Product Range is the complete collection of product offerings available to the market. Marketing Mix a cluster of factors that assist in positioning products within the product range. Services Marketing Mix an applied marketing mix that includes service related aspects. For further definitions of mix components see table 1. Distribution a system of channelling goods and services from the supplier to the consumer. Augmented Services a number of complimentary services designed to enhance a product offering.
Additional Reading:
The case on market research provides some interesting insights into the determination of the marketing mix. Students can be directed to that case if queries arise on how prices are determined. The reading in the appendices for this case is Saturday Shopping and discusses the retail experience for the Armoury customers.
30
The Marketing Mix
The Marketing Mix Case Question Sheet

Introductory Red
Question 1: How do we as consumers differentiate between different products and what considerations do we use to make our decisions? Question 2: Who is this advertisement on the video aimed at? Can you see any clear consumer segments in this advert?
Entry Level Silver

Question 1: What is the difference between a good and a service? Is it a factor at Arsenal? Question 2: Throughout this case the terms fans and customers have been mentioned. What is the difference between these two groups of stakeholders?
Intermediate Gold
Question 1: What are the implications for managers in dealing with services marketing mix over and above what is expected through the traditional marketing mix? Question 2: Explain the difference between the services provision for a Gold membership and that for a member of the Club level.
Advanced Platinum
Question 1: Explain the concept of physical evidence. What examples will you produce to provide support to your explanation? Question 2: Draw two simple systems diagrams (inputs, processes and outputs) for two difference membership categories. How would the models differ in complexity?
31
Sponsorship
The sponsors discussed within this case were current for the 2008/09 season. While the sponsors may have changed the business principles behind these partnerships remains the same. Follow this discussion up by asking students the first Red question What do these symbols mean and what relationship do they think they have with the club? Central to this discussion is allowing students to realise that these are not just supporters of the club (in a goodwill sense) but they are essentially business partners. As they are business partners and not just fans students should start to brainstorm why these companies want to be involved with the club, what do they aim to get from the relationship, and what value does the club hold for them? The case should now be distributed to the class for reading (5-7 minutes). Instructors should move onto a discussion of communications through sponsorship. The key aspects here are that clear communication enables brands to communicate effectively with their target markets. Other options are available to brands, such as direct mail, advertising and public relations however well managed sponsorship enables the brand to cut through the clutter that can be experienced through these alternative communication forms (for instance explain what direct mail must compete for space in peoples mail box. Alternatively ask students what they do when an advert comes on television (hopefully some answers will relate to channel surfing which can then lead to a discussion of the issue of effective communications). Therefore at the stadium and on the website the commercial environment is controlled to ensure that the partners communication strategies are most effective. If students query that a certain sponsor does not relate to them and their interests it should be explained that the club has a wide range of customers. Furthermore explain also how sponsors acquire benefits not just from consumers but also from other businesses so there is careful use of the corporate hospitality facilities for business entertainment purposes. After students read the case a discussion on the range of objectives is important to highlight this point.
Aim of Case:
To introduce students to the concept of sponsorship as a communications and partnership tool for brands and Arsenal Football Club.

G
To explain the benefits of effective sponsorship management To identify the rationale for a tiered structure to sponsorships

Well-managed sponsorship creates benefits for the sport and the brand through a mutually beneficial relationship.

As a general rule too many sponsors for one sporting organisations (property) causes communications clutter. While the inclusion of more sponsors may be seen as a way of increasing revenues generally the clearer the communication the more effective it is and hence more valuable. Hence a less is more approach is applied by many organisations when managing sponsors.

Part 1: Whole group discussion and Red Questions (20 minutes) There are three alternative starts to this lesson the instructor should feel to choose which ever one feels more appropriate: 1) To begin the class the instructor could open the www.arsenal.com webpage and scroll down to the foot of the page (or if no internet access is present print off the homepage and distribute to students, it is best if they have not read the case at this stage). At the foot of the page are listed Arsenals partners and sponsors. 2) Another start to the lesson could use images of the stadium sponsor logos appearing on signage and the discussion can develop from there. 3) Another focus (if the internet is accessible) is to go directly to the websites of the sponsors/partners and discuss their business and why they would be interested in working with Arsenal.
Introductory Red
Question 1: What do these symbols (at the foot of the page www.arsenal.com/home) mean and what relationship do they think they have with the club? These are the logos of Arsenals sponsor and partners. As seen in the case Arsenals sponsors are partners that assist the Club in developing the sport and business side of their operations. The instructor should ask the
32
Sponsorship
students to see if they recognise any of the logos at the foot of the page most will likely recognise the logos for Nike, Lucozade and O2 as they are brands that partially aim at teenage demographics. Ask the students why they would be a sponsor of the Club, and what is the key attraction for them. It would be interesting to see if any stated that they would not as the Club does not always win. This is a good starting point for discussion as a team does not have to win all of the time to be attractive to sponsors, there are many other benefits that sponsors seek. Question 2: What is the difference between sponsorship and advertising? This is a good question for discussion as many sponsorship deals are still seen purely as advertising. If the instructor compares advertising on television with the sponsorship of the facility the difference can become clearer. Advertising is interested in one-way communication and has a clear message to get across, generally in a limited time (the time it takes for an advert break or to drive past a billboard). Sponsorship is a much more complex communication tool as it attempts to build relationships and not simply get a message across. These relationships are formed between sponsoring organisations, those that are sponsored (termed properties in marketing jargon) and the stakeholders of the sponsored property, such as fans, local communities, and staff amongst others. Part 2: Discussion Questions in Small Groups (30 minutes 20 min answering, 10 min discussion) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.
Question 2: If sponsors can bring a club like Arsenal potentially vast financial resources then why shouldnt management sign as many sponsors as possible? If Arsenal were to sign lots of sponsors for their domestic and/or international markets then the revenues from each sponsor would start to drop. Why would this occur? A brand would not want to pay a high fee if one of their competitive rivals were also sponsoring the club. When too many sponsors are signed it creates communications clutter. Hence the benefits of sponsorship were that it cuts through the clutter of other communications tools. This would mean that when Arsenals fans go to the stadium there would be too much in-stadium advertising that would bombard the fan and cheapen the overall experience. By maintaining a well managed, tiered system the club can maximise its sponsorship value and therefore the value it can offer to its partners/sponsors.
Intermediate Gold
Question 1: What is the difference for a sponsor between customer markets and business markets? A common mistake when considering sponsorship deals are when consumers cannot see how a sponsor and a property meet each others requirements. Not all sponsorships are about communicating with an organisations customers. Many sponsors approach companies because of their links to other businesses, markets and opportunities. In marketing these different areas are termed B2C and B2B markets. The former refers to the business to consumer market where organisations focus communications on individuals and groups of consumers. The latter refers to business to business markets where organisations focus on communicating with other organisations. This latter market is one of the drivers of corporate hospitality and entertainment. Many companies are interested in specific customer or business markets, while others use sponsorship to communicate with both simultaneously. Question 2: What implications does this have for the setting of sponsorship objectives? The objectives can be applied to both market types to allow for multiple goals to be realised at the same time. For instance a particular sponsor may link with Arsenal to demonstrate its competence in providing services (such as publishing programmes), or the link may be to compliment the needs of the Club (such as EDF and energy provision) and so on. Each sponsor has different objectives (corporate, product-related and public relations) and therefore will attempt to activate and evaluate their sponsorships differently. Arsenals interest lies in providing mutually beneficial relationships for the sponsor, the Club and the Clubs stakeholders. The Club is committed to avoiding shortterm transactional sponsor deals and all deals are based on an appropriate business plan that clearly identifies objectives before the contract is signed.
Entry Level Silver

Question 1: Examine figure 1 in the case. Are there any sponsors in the portfolio that you feel dont make sense as a football Club partner? This question depends on the perspective of the student however it may lead to questions about the suitability of some sponsors. Hopefully one of the students will query why EDF a utility company is a sponsor of a sporting club. This should result in a good discussion on the choice of partners that a professional sporting club has when operating a significantly large stadium. EDF as an energy supplier could assist Arsenal in reducing their energy bills and thus saving the company a tremendous amount of money. Also the reduction in energy consumptions and the advice provided by such a supplier would assist the Club in achieving relevant environmental goals. With current focus on renewable energy the sponsor could consult the club on strategies to respond to these environmental considerations.
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Sponsorship continued
Advanced Platinum
Question 1: What is the significance of a tiered structure to sponsors and partners? By implementing a tiered structure Arsenal can offer their sponsors and partners a clear communication channel with the brands target markets. The top tier sponsors of Nike and Emirates can provide essential services for the club. Clearly the equipment needs of the club can be satisfied by Nike who not only provide clothing and equipment but also a global distribution chain that allows Arsenal merchandise to be sold in every country that Nike operates in. Subsequently it also means that their main rival Adidas cannot associate with the Club through any official partnership. Emirates, who are the naming rights sponsor, can ensure that no other airline will be involved with the Club. As Emirates is still relatively new in the airline business the general awareness created by the sponsorship can boost its profile in a number of markets (including UK and Europe). Even for partners that are not top tier the structure allows their sponsor to provide the Club with valuable services. As many football fans are very passionate about their Club they are likely to travel around Europe to watch them play. Thomas Cook handles the travel concerns of the Club and its supporters. It benefits from an official association and the lower level partnership dictates that Thomas Cook does not have to pay the sponsorship fees as do higher order partners. Nevertheless when it comes to travel packages the company is the number one choice for Arsenal. Question 2: Why is the naming rights deal to the stadium so important for both Emirates Airlines and Arsenal Football Club? For stadium naming rights deals in the UK sports market place the Emirates Stadium deal is one the highest profile deals of the new millennium. Each party is able to gain benefits from this association. Some of these benefits are as follows:
Emirates Airlines High profile deal
Arsenal Football Club Funds (solid resource as Emirates is owned by the Royal Family of the UAE so less prone to economic concerns) Access to global transport network at special rates (for staff and other stakeholders) Links to Mid East region to support existing soccer school and other development opportunities Reputable shirt sponsor (not gaming or alcohol company)
In stadium advertising and name recognition
Access to corporate hospitality and entertainment in a leading world city Conference facilities at special rates if required Strategic advantage over other airline competitors
Part 3: Additional Task (15 minutes) If the facilities are available instructors should advise students to go on the web and compare and contrast Arsenals sponsorship platform to another Premiership Club and a club from the Football League 1 or 2. The contrast should allow them to reflect on the fact that generally speaking the Premiership Clubs are more desirable properties that can command higher sponsorship values. This can sometimes mean they have a more structured sponsorship platform than lower league clubs. Lower league clubs tend to have much smaller sponsors so the managers of those clubs tend to focus less on sponsorship structures and more on just getting the partnership. Additionally the instructor could guide students to carry out the following research task which falls outside the Arsenal case: Look up the International Olympic Committee and examine how they structure their sponsorship platform. How do they avoid clutter with the cities that are going to host the Games (i.e. London)? The differences between the 1976 Montreal and 1984 Los Angeles Olympics are a very good examples of how to, and how not to manage a sponsorship portfolio. The 1976 Olympics had many sponsors and the communications benefits did not work. The 1984 Olympics used this tiered system which resulted in greater benefits for the sponsors and a less cluttered environment for the sports and their fans. To this day the IOC uses what is called The Olympic Partnership (TOP) and it is a tiered structure that gives primacy to
34
Sponsorship
certain international sponsors. It works with Local Games Organisers (like London) to ensure that the sponsors the city signs do not clash with the TOP sponsors. Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
Glossary:
Stakeholders in light of these cases a stakeholder is anyone who has a vested interest in the operations of a firm. Sponsorship a business communications practice based on mutual exchange. Partnership a business-to-business agreement between organisations for mutual goal achievement. Value-in-Kind the provision of services, skills, and expertise to the value of a partnership deal. Business Property organisations involved in sponsorable activities are generally seen as properties that corporations wish to work with. Corporate Level Objectives goals by which the corporate image is developed. Product Related Objectives goals by which an increase in awareness, recall or sales of organisational products and services. Public Relations Objectives goals by which an organisation communicates with its various range of stakeholders and interest groups about its brand, its products or its activities. Naming Right Sponsor a category of sponsorship that sees a corporations name on the building/facility/stadium that hosts a professional sporting team. More common in the U.S. Shirt Sponsor a category of sponsorship that sees a corporations name on the playing shirt or other kit of a professional sporting team.
Additional Reading:
Students should also be directed to the article Name of the Game in the appendices of the Arsenal Business Case Book. It contains additional information about the range of benefits the Emirates naming rights and shirt sponsorship deal has for all the parties involved. The article Commercial Sense discusses the myriad of commercial dealings that the Club deals with, from serving the fan base to sponsorship management.
35
Sponsorship continued
Sponsorship Case Question Sheet

Introductory Red
Question 1: What do these symbols (at the foot of the page www.arsenal.com/home) mean and what relationship do they think they have with the club? Question 2: What is the difference between sponsorship and advertising?
Entry Level Silver

Question 1: Examine figure 1 in the case. Are there any sponsors in the portfolio that you feel dont make sense as a football Club partner? Question 2: If sponsors can bring a club like Arsenal potentially vast financial resources then why shouldnt management sign as many sponsors as possible?
Intermediate Gold
Question 1: What is the difference for a sponsor between customer markets and business markets? Question 2: What implications does this have for the setting of sponsorship objectives?
Advanced Platinum
Question 1: What is the significance of a tiered structure to sponsors and partners? Question 2: Why is the naming rights deal to the stadium so important for both Emirates Airlines and Arsenal Football Club?
36
Ethical Decision Making
Ethical Decision Making Corporate Social Responsibility

Aim of Case:
To consider Corporate Social Responsibility as an important aspect of business for a professional sporting club. should also focus upon the relationships they build with the young people and also the other organisations that work with them in the project. After this discussion the instructor should also show the video advertising the Teenage Cancer Trust and use this as a starting point for a discussion of the benefits the TCT charity receives out of the deal. Also discuss what the ethical benefits are for Arsenal in following this course of action.

G
To understand what is meant by the term ethical decision making To detail a range of programmes where an organisation acts with others to provide benefits for the wider area To explain the benefits to the organisation for an ethical stance
Introductory Red
Question 1: What are some of the reasons the programme run at Elthorne Park is so successful? From the information contained in box 1 it can be seen that the Kickz programme is successful because they use football as a way of engaging young people (as can be seen on the video clip). This is an important point as football can provide a vehicle by which young people can interact with a sport at a variety of levels from beginner to advanced and use this participation to engage in mainstream organisations and services. These services are provided by the programme partners such as the Metropolitan Police who are able to work with Arsenal and young people in a non-traditional policing role. The work of partners operating around a football programme hopefully reinforces to young people the team focused approach that many local organisations take in these tasks. Task 2: Go through the glossary and identify any terms the students are unclear on. There are only 6 key terms in the glossary but each can lead to an interesting discussion. Instructors could ask the class what it means to be socially responsible and how an organisation can achieve this. This could lead to many viewpoints dependent on the values that each student holds. Part 2: Discussion Questions in Small Groups (30 minutes 20 min answering, 10 min discussion) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.

Corporate Social Responsibility can take many forms but a clear strategy to its delivery is important to all businesses as it guides their actions and makes effective use of organisational resources.

Organisations should take an active role in the community through the provision of programmes that assist in delivering outcomes stakeholders can benefit from. From a human resources perspective ethical companies generally have higher levels of staff motivation and are attractive places to gain employment hence driving up competition for available jobs creating a more talented workforce.

Part 1: Whole group discussion and Red Questions (25 minutes) The case should be distributed to the class for reading before the class discussion begins (5-7 minutes). The instructor should then show the attached video Kickz Goals Through Football that is included on the additional CD that accompanies the casebook. The video lasts for approximately 12 minutes however at the instructors discretion the first 8:10 is adequate to give a flavour of the Kickz programme. The following Red question can be asked What are some of the reasons the programme run at Elthorne Park is so successful? After a discussion of the key points the next Red task is to go through the glossary of the case and cover the key terms. This should lead to a discussion about the benefits it brings to Arsenal. Many students may say it provides Arsenal with a look at all the talent in the area. However while this could occur it is more likely to be done because they believe in sport as a tool for engaging young people. The benefits to Arsenal
Entry Level Silver

Question 1: What are the benefits of a charity becoming the official Arsenal charity for a full season? Could you imagine any possible drawbacks of this approach?
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Ethical Decision Making continued
Many students may say it provides Arsenal with a look at all the talent in the area but while this would occur if they did find someone special it is more likely to be done because they believe in sport as a tool for engaging young people. The benefits to Arsenal should also focus upon the relationships they build with the young people and also the other organisations that work with them in the project. The benefits could be seen as follows:
G
Intermediate Gold
Question 1: Why would a football club be a key organisation in issues relating to diversity? Football clubs and sporting teams in general can be very good examples of diverse cultures working together as the selection of players in these teams is generally (and of course ideally) based on merit above all other factors. This means that the very best players are picked primarily on their ability to play the sport than for any other criteria. When diversity issues are a problem within organisations staff can be appointed through criteria that are unfair and based on discrimination because of their ethnic, gender or ability characteristics. Looking beyond the playing side to the community area the Club can look to address issues of diversity on this basis, it gives them a sense of credibility that is important for engaging a wide range of cultures in the work that they do. They work with local authorities whose mandate also is to assist people who may experience disadvantage therefore the Club is an important organisation to assist in achieving these goals. Question 2: Which of the community programmes that Arsenal provides most suits their core business competencies? The instructor may need to define the term competence - it is where an organisation has a strong level of ability in certain processes. This question is clearly open to interpretation and individual judgement but one possible answer would be to recommend the soccer school and other sport led programmes. To 'Play the Arsenal Way' implies more than playing a style of football that looks like the first team, it more importantly implies that all players should play with the right spirit with respect for one's opponents. Therefore their soccer schools are focused primarily on this mantra. It is also one of their longest running programmes and would have been key to developing the organisation's competence in coaching at all levels of the game.
It is good for the charity in increasing knowledge and awareness about its activities It is good for the revenue generating potential of the charity possibility of leading to further opportunities with other organisations separate from Arsenal or communicating with Arsenal's partners It is good for people who the charity works with
Any potential drawbacks may focus on the fact that non-supporters of club may not back the charity, however these are serious issues and most consumers would not play favourites with supporting good causes. In fact Britain has one of the highest levels of charitable giving per capita in the developed world. So regardless of which football team we support we're a fairly generous bunch! Question 2: Why should businesses demonstrate they are responsible members of society if it costs them money? Students could present a range of answers for this question. Answer that focus on long term benefits and responsible practices are on the right track for ethically sound businesses. All businesses that wish to participate in the community do so for a number of reasons. Most of the activities that organisations like Arsenal in the Community do will essentially cost the organisation money. However it could be argued that the following benefits accrue to the organisation that may justify the expenditure:
G
They receive positive Public Relations communications They become an attractive employer for potential employees They gain a stake in the local community They increase their status and become a pillar of sport and coaching knowledge within the community It creates value added to sponsors for involvement opportunities And they get what may be a minor point, the first look at any potential playing talent in local area
G G
Advanced Platinum
Question 1: Ethics are an important part of the business of football. Discuss this statement. Students can address this statement through a number of approaches.
G
First they may wish to address the role that a sporting club like Arsenal play in the local community. Second they could discuss how local organisations seem to need professional sports clubs to help engage young people.
38
Ethical Decision Making
Third they can outline the number of programmes that Arsenal offer for under-privileged groups in society, such as those with disabilities, unemployed, and ethnic minorities. Finally they can highlight Arsenal's involvement in the community, while important to the Club is however a voluntary management decision and part of the way Arsenal sees itself as a member of the wider community.
Glossary
Philosophy is a set of ideas and moral imperatives that drives a group to conduct business in a certain manner. Corporate Social Responsibility a set of principles that believes organisations have a moral obligation to the community, also a philosophy of ensuring that activities are operated with regard for the wider environment around them. Public Companies companies that are listed on a stock exchange and whose shares are publically traded. Tangible the sense of substance to a given phenomena that primarily uses the sense of touch. Public Relations a communication activity whereby the organisation attempts to engage in meaningful relationships with a wide range of publics that are important to the organisation. Ethical choice a management decision that corresponds with the broad principles of CSR.
Students can also use their outside knowledge of the sport to highlight to others that there are inherent ethical decisions made in the playing of the sport let alone the management of the sport. An example of this is presenting certain style of play that while legal may not be in the best interest of the game - for instance this can be through the entire team playing behind the ball to prevent a loss with no intention to achieve a win. This could be contrasted with systems that allow for the movement and trading of players at two points (transfer windows) during the year. Question 2: You are faced with the following dilemma; If Arsenal could increase their chance of winning trophies at the expense of the community work that they do (i.e. through the acquisition of another key player) would it be worth it? Justify your answer. This is an important dilemma the Club faces and is an important ethical decision. There is a virtuous circle in professional football that strives for success on the field to attract broadcast and other commercial revenue, this money is reinvested in facilities and players in the hope of attaining more success. This increased success brings even more revenue and so on. Therefore to have a department of the organisation not generating funds toward the increase of playing success presents a challenge to this virtuous circle. However students should seek to identify the benefits that arise through this department (see Silver question 2) and also focus on the need for sporting clubs such as Arsenal to assist local community organisations communicate positively with young people. Other sporting clubs have set up separate charities to run their community activities and assist in drawing more funds from the external environment however Arsenal have not taken this approach. If the students choose to opt for another player instead of the department the instructor could ask the student to justify their decision? This could lead to an interesting ethical argument not just about the decision but the role given to clubs like Arsenal who are increasingly expected by various stakeholders to assist in community development. Part 3: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
Additional Reading
In the additional reading section there is an article on The Arsenal Community which highlights some of these concepts in detail.
39
Ethical Decision Making continued
Ethical Decision Making Case Question Sheet

Introductory Red
Question 1: What are some of the reasons the programme run at Elthorne Park is so successful? Task 2: Go through the glossary and identify to the instructor any terms you are unclear on.
Entry Level Silver

Question 1: Why should businesses demonstrate they are responsible members of society if it costs them money? Question 2: What are the benefits of a charity becoming the official Arsenal charity for a full season? Could you imagine any possible drawbacks of this approach?
Intermediate Gold
Question 1: Why would a football club be a key organisation in issues relating to diversity? Question 2: Which of the community programmes that Arsenal provides most suits their core business competencies?
Advanced Platinum
Question 1: Ethics are an important part of the business of football. Discuss this statement. Question 2: You are faced with the following dilemma; If Arsenal could increase their chance of winning trophies at the expense of the community work that they do (i.e. through the acquisition of another key player) would it be worth it? Justify your answer.
40
Stakeholders
Stakeholders
It is recommended that instructors use this case as the penultimate case in the series.
Aim of Case:
To introduce students to the concept of internal and external stakeholders and how they impact on the business of a professional sporting club.
asked to identify how each of the stakeholder groups might consider success for their organisations (the school and Arsenal) This should lead naturally into a discussion on how different stakeholders have different expectations and definitions of success. The case should then be distributed to the class (5-7 min). The instructor can then pose Red question 1.

G
To understand the importance of managing stakeholder relations To explain the difference between internal and external stakeholders To highlight how different expectations complicate the stakeholder management process
Introductory Activities:
Consider the following matrix structure which is included in the sessions PowerPoint slides. It ranks stakeholders on a diagram that considers the level of power and interest they wield. In small groups list as many Arsenal stakeholders as you can and try to estimate which groups you would feel exhibit high interest and high levels of power over the Club. When you have allocated all the stakeholders those two categories place them on the matrix to visually compare the groups. Instructors should pose the final Red question to the class.
Level of interest Low High

Stakeholders are an important concept in the study of organisations. Clubs like Arsenal do not operate in isolation and they are impacted upon by groups of stakeholders that have a stake in the organisations operations.

A considered approach to shareholders is required and positive communications with all groups regardless of the stakeholders power and/or interest is needed.
Low
A
Minimal effort Power
B
Keep informed

Whole Group Discussion and Red Questions (30 minutes) Instructors should start with the following link http://tv.arsenal.com/default.aspx?p=channels/C8_ S1&a=56514 this is Ivan Gazidis the Chief Executive Officer of Arsenal Football Club and he is talking about how he decided to take the role and how his experience in the United States was relevant to Arsenal. He is one example of a stakeholder in the club, the video goes for 5 min 47 seconds. Instructors can then start the class in discussion by asking what constitutes a stakeholder. To aid comparisons the instructor can ask students as to who the stakeholders of the school are. Then the instructor should ask them to consider who Arsenals stakeholders are. When fielding responses the instructor could attempt to list the stakeholders into two lists, one internal and one external and see if the students are becoming aware of the concept of internal and external before it is explicitly mentioned. Students should be
C
Keep satisfied High
D
Key players
Source: Adapted by Johnson, Scholes and Whittington (2005) from A. Mendelow, Proceedings of the Second International Conference on Information Systems, Cambridge, MA, 1991.
Students should be encouraged to justify their choices. The benefits should include ease of communication, a rationalisation of staff time and resources in communicating with stakeholder groups. However some groups would not welcome being categorised in the minimal effort category which could lead to public relations issues.
41
Stakeholders continued
Introductory Red
Question 1: Explain the difference between a stakeholder and a shareholder. Provide examples to elucidate your point. In Arsenals case the instructor should highlight that a shareholder is only one stakeholder group. The case comments about this difference as it is sometimes a common misconception that stakeholders are limited to shareholders. The instructor should highlight the sheer scale of the number of stakeholders and ask the students what difficulties could exist in having so many stakeholders. Some of the difficulties could be, but are not limited to;
G G
the future of the Club go through them. Other highly interested groups may include the Banks, Local Borough of Islington and the Metropolitan Police. Question 3: What differences can be seen and why? Differences occur in the level of direct power that some highly interested stakeholders have. It was noted that the local government is highly interested in the activities of the Club but unless the Club looks to redevelop any facilities or breaches local regulations it is unlikely the local borough can influence the strategic direction of the Club. The key issue in stakeholder mapping is being aware of changes in the ranking and order of the stakeholder groups. A group may traditionally have low power but as circumstances change it could result in shifts that would require Arsenals management to change their communications strategy. For instance until the move was to be made the local authority could have been classed as A but with planning permission required they moved to position D.
Different interpretations of success Many messages to send out to teach group (one size does not fit all) Many attitudes and interests to gauge
Question 2: What are the management benefits of ranking in such a system and allocating each group a communications strategy (A, B, C, D)? The benefits of a sorting/ranking system mean that it is easier for the club to manage expectations. It is a logical step in knowing which news and information will be of interest to which groups. For instance local communities may be interested in travel and building/construction issues but this group might only require fairly low levels of relevant information but on a regular basis. Alternatively the fans of the club may require much greater levels of communication on all things relevant to match day operations, team news, management decision, and community programmes. Part 2: Discussion Questions in Small Groups (25 minutes 15 min answering, 10 min discussion)
Intermediate Gold
Question 1: Who would you classify as Arsenals most important stakeholders, and why? The most important stakeholder is the fans of the Club. Internally it could be argued that the shareholders (particularly the Board) and the playing and coaching staff are the most powerful group of stakeholders within the Club. If any of these stakeholder groups were not happy with the management and operations of the club then they could use their power to bring about change through the development of policy. Staff also are important as they determine the level of service offered by the Club. Externally stakeholders such as the local community, the Banks and Delaware North Companies (DNC) also hold considerable power. The local community are important stakeholders for the Club. They are regularly consulted on many issues relating to the operations of the Club. In the organisational structure case it was suggested that when the move to Emirates Stadium was made the structure was altered to prevent the Bank taking control of the footballing operations however it still wields significant power over the financing options of the Club. The caterers DNC are contractually linked to the Club however they are influential over a very important area of Emirates Stadiums operation considering the importance of catering to the Clubs objectives. Question 2: Can a stakeholder have a high level of interest but little power? In what situations would occur at Arsenal? This indeed can occur although it is always very much open to judgement and interpretation and an awareness that a stockholders position may change as
Entry Level Silver

Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions. Question 1: Who are the most powerful groups of people for Arsenal? This question can be left open to encourage discussion as to who the most important stakeholder are for the club. Material from the case can be used to support decision. Additionally the contribution of financial information from work carried out in the Finance case can also provide some interesting support for this task. Question 2: Who would be the most interested people in the strategic direction of Arsenal? The instructor could highlight though the interest and power of those who sit on the Board of Directors (see organisational structure case), many key decisions on
42
Stakeholders
circumstances change. Some examples of stakeholder who have a lot interest but little power could be Setanta and Sky who are the broadcasters of the premier league. They may be a significant broadcaster but have little sway over the actions of individual clubs as they generally deal with the league as a whole.
Advanced Platinum
Question 1: How would the Clubs philosophy deal with a situation where an external stakeholder was making public accusations against the management of Arsenal? This would certainly be an important function for the public relations team at the Club as it would test that Arsenal have a stakeholder management system in place. In this situation the organisation would want to avoid discussing the issue through the media. The Club would seek to engage the stakeholder in dialogue on the issue to see what their concerns are first hand. The Clubs philosophy provides guidance in these dealings and negotiations ensuring that dignity, honesty and respect for the stakeholder are paramount. The other key theme in the philosophy is that the Club seeks to strive for success and therefore can use this to justify their right to be ambitious. It is clear that if the stadium was not built then the Club may not have been able to compete at the same level as they are now achieving. This can be contentious for many stakeholders to accept but the philosophy ensures that the management of the project is done the right way. As a last resort if the accusation damages the reputation and image of the Club then they may have to resort to formal proceedings against the stakeholder. Question 2: In this case we have classified fans as an internal stakeholder. Many organisations would not classify their customers as an internal stakeholder. Do you agree that Arsenal is different? This is essentially a unique feature of professional sport where it can be seen that the following points separate our fans from normal customers:
G
other organisations (such as their phone company, or their workplace). The importance of fans as spectators is that they are also essentially part of the sporting product; a match without a crowd would lack the atmosphere that has made many professional sports, including football so exciting. In this regard it is safe to classify Arsenals fans as an internal stakeholder. Nevertheless students may choose to argue against this approach. Part 3: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
Glossary:
Philosophy is a set of ideas and moral imperatives that drives a group to conduct business in a certain manner. Stakeholders in light of these cases a stakeholder is anyone who has a vested interest in the operations of a firm. Shareholders individuals or groups who own the entitlement on a share of the company. Internal Stakeholders generally fits inside the organisational structure of a club or plays a direct role in the management of the club. External Stakeholders are groups that operate outside the Club's organisational structure and have a vested interest in the operations of the firm. Social Institution a sociological term used to describe organisations of a variety of forms that act as a focal point for community interaction. Chief Executive Officer is a member of the Board but primarily is the lead manager who runs the day-today operations of the organisation. Determinants of Success characteristics by which different stakeholders view the outcomes of the organisation. Vast differences in the determinants of success place greater strain on stakeholder management and therefore organisational resources.
Sports fans can develop irrational passions that make them very loyal. It engenders vicarious identification in those that support athletes, teams and leagues, not many people walk down the street with a Tesco Logoed TShirt on. There are differences in how stakeholders judge performance, no two fans may see the result the same way and investors in clubs may look for other determinants of success. Generally sports fans exhibit high degrees of optimism in organisational, or team related, competencies.
Additional Readings:
In the case book there is an article on Community Spirit and Planning Ahead detailing how Arsenal works with local stakeholders.
These principles mean that fans have a different relationship with their sporting clubs than they do with
43
Stakeholders continued
Stakeholders Case Question Sheet

Introductory Red
Question 1: Explain the difference between a stakeholder and a shareholder. Provide examples to elucidate your point. Question 2: What are the management benefits of ranking in such a system and allocating each group a communications strategy (A,B,C,D)?
Entry Level Silver

Question 1: Who are the most powerful groups of people for Arsenal? Question 2: Who would be the most interested people in the strategic direction of Arsenal? Question 3: What differences can be seen and why?
Intermediate Gold
Question 1: Who would you classify as Arsenals most important stakeholders, and why? Question 2: Can a stakeholder have high levels of interest but little power? In what situations would this occur at Arsenal?
Advanced Platinum
Question 1: How would the Clubs philosophy deal with a situation where an external stakeholder was making public accusations against the management of Arsenal? Question 2: In this case we have classified fans as an internal stakeholder. Many organisations would not classify their customers as an internal stakeholder. Do you agree that Arsenal is different?
44
The External Environment

It is recommended that instructors use this case as the capstone case in the series.
Aim of Case:
To allow students to consider a model of external environment analysis and how this impacts on a professional sporting organisation
which examines the potential of any force in particular could have a more dramatic impact on the Club than other forces.
Introductory Red
Question 1: How do political parties impact on the management of non-public organisations in Britain? Private organisations such as Arsenal have to deal with national and local level governments in many of their activities. Because Arsenal is a private organisation they are not directly influenced by government agencies and organisations. This does not mean that a club like Arsenal cannot be of great assistance to government. In fact Arsenal work with their local government in the delivery of their community programmes, particularly the Kickz programme. They provide the local government with a high profile and successful resident who in turn creates economic activity in the local economy. At a national level the Club contributes to tax receipts, national profile when successful in Europe, and a venue for major events. Question 2: Over the past 10 years which environment has changed the most rapidly? Provide examples of this change and its impact on Arsenal. This question is open to interpretation but the most rapid change has occurred in the economic environment. From a period of relative boom in 2005 when Emirates Stadium was opened to a period of recession in 2009 the economic environment has changed dramatically. Nevertheless students should consider what this means for Arsenal Football Club. The areas that could be impacted upon are:
G G G

G
To discuss the various aspects of the external environment and how these impact on a professional sporting organisation To explain the potential impact that changes in an environmental factor may have on the Club

Professional sports organisations like Arsenal are subject to the external environment forces and must plan appropriately to deal with change

An understanding of the external environment is important for managers in order to plan strategically and deal with issues and opportunities as they arise

Part 1: Whole group discussion and Red Questions (20 minutes) The case should be distributed to the class for reading (5-7 minutes). Instructors should begin by discussing the general factors that help and hinder an organisations operations. Students should be encouraged to consider which factors could pose a greater concern to the management and operations of the Club and which might exhibit little impact. The first Red question can be posed (the example of government can be extended to any of the other 5 factors). A historical element can also be bought into the discussion to highlight how each of these factors has developed at different speeds over time. Some points that could be picked up on are the development of allseated facilities following the Hillsborough tragedy in 1989, the sale of the television rights to Sky in 1992, or the increasing internationalisation of European football aided by the diffusion of satellite broadcasts to all parts of the globe. It is beyond this case plan to go into detail on each of these issues but they are noteworthy for instructors looking to examine some historical developments. This will assist students in understanding the context of business in the sports industry. This should lead naturally into the second Red question
Reduced levels of sponsorship monies available Reduced corporate interest in dining and hospitality Reduction in disposable incomes of fans and customers Broadcast competition could narrow and reduce overall broadcasting fees
Instructors can also highlight the development of technology in the production and consumption of spectator sport in general terms and then apply this to Arsenal. Part 2: Discussion Questions in Small Groups (30 minutes 20 min answering, 10 min discussion) Students should be directed to their case question sheet. It is recommended that GCSE/BTEC start at Silver and then progress and the A2 and AS level start at the Gold questions.
45
The External Environment continued
Entry Level Silver

Question 1: Which level of the organisation has the responsibility for scanning the environment for opportunities and threats? Why do you think this is so? Traditionally the responsibility for these activities has rested with senior management (the Board, CEO and Commercial Director). These senior persons are suited to the task as their years in business have enlightened them to changing factors and allows most managers a gut feel that complements the scanning tools. In addition to this they may have also undertaken higher education qualifications that support managers in the use of these tools. However junior staff should not be counted out. The case introduces tools such as scenario planning and SWOT analysis that these individuals might use when scanning the environment. Any staff member given the task can provide insight into the potential for change in the environment and sometimes being younger and less experienced can be just as useful when the situation arises. Question 2: What changes in tastes have occurred in relation to top level football in England in the past 20 years? The sport has moved on from a working mans pastime to a high profile sporting entertainment product where the focus has shifted not just in sporting terms but in business terms also. This process has occurred over many years. London itself has changed dramatically over the past 20 years. Many traditional white working class people have left the inner-city areas and have move further afield. This has meant there has been an influx of new immigrants into the inner-city which all have their own unique tastes and interests. Happily football is a world game and Arsenal is a truly international team (which in itself is different to 20 years ago) which helps the club attract new supporters from these new populations to their club. Incidentally (outside the scope of this case but a point of note for instructors) research shows that many African football supporters in London are drawn to AFC because of the African representation on their team. The increased importance of corporate dining and hospitality has led to changes in the construction of sporting venues where luxury boxes and private dining suites are important facilities at the stadium. In terms of changes to the game of football this is one of the most dramatic but as all clubs are engaging in these activities it seems only wise that given Arsenals location to central London that they increase their ability to engage these groups.
Intermediate Gold
Question 1: In this case we see that other football clubs are seen as direct competitors to Arsenal yet in the stakeholder case we see them as an external stakeholder. How can another club be both? As with many other cases this is really one of the unique features of the professional sporting industry. Clubs in leagues such as the Premier League (the league in which Arsenal play) are required to both compete and cooperate at the same time. Similarly just because another club is a stakeholder of the league does not mean that it cannot compete against another. Direct competitors in the sport industry require each other to create the product that people would pay to watch and fulfil the requirements of the competition roster. For instance the product of the Premier League is effectively 20 organisations competing in 38 matches against each other over a ten month period. If one of these clubs failed to meet its commitment to fulfil the roster it would impact on the league as a whole. The other clubs, as competitors, can gain advantage over weaker competitors however they would draw no advantage from a team not fulfilling its obligations to field a team. If students compare this to normal business then if one organisation goes out of business it generally makes it better for the other competitors, hence a distinguishing feature of sport is apparent. Question 2: What would you say is the potential for indirect competitors to take business away from Arsenal? What are the unique selling points of Arsenal that an indirect competitor could not match? Indirect competitors could pose a competitive threat to the Club. Nevertheless the main selling points of most indirect competitors have is general family entertainment, and while that is a priority at Arsenal there is much more that the Club offer. Therefore the unique selling points (USPs) of AFC are:
G G G G G G G
High level successful football club Central London location (zone 2 north) International squad New modern facility Unpredictable outcome of matches High quality match-day service Opportunities for non-match day activities such as banqueting and conferences
If these selling points are combined it makes it very difficult for any competitor to match their business and thus lowers any potential risks. With a general shift in the marketing of Premier League football to a wide range of audiences the risk of any one demographic losing interest is therefore reduced. Formerly working
46
class males made up the majority of the crowd but these days the audience is much more fragmented. This is still a very important group but as the socio-cultural environment has changed greater levels of interest from other target groups has broadened footballs following.
and administration of the Club is also moving forward. There would be no pressing issues with technology at this time; therefore this factor could be classified as low. Competitive: The Premier League is fairly stable in its operations and it is the most popular sporting league in Britain. As the teams need to cooperate to compete then this situation will remain stable. The potential risk of this factor is low. Question 2: If a SWOT analysis was carried out that said that threats could arise with a worsening economic climate how would you propose the Club deal with the problem? The answer to this question involves individual student judgement. It is clear that from the other cases Arsenal would never take their fans and customers for granted however the high levels of loyalty of most fans combined with a commitment to providing high quality services for those that engage with the club (from the community to the stadium) will enable Arsenal to ride out the economic storm. Instructors can now start to tie in bits and pieces from the other cases that will support protecting the Club in worsening economic times;
G
Advanced Platinum
Question 1: Of the external environmental forces which do you feel has the greatest potential for impact on the operations of Arsenal Football Club? This question is once again going to be open to individual judgement and class discussion. The instructor can guide the question by getting students to address each of the 5 forces and then to arrive at a conclusion as to which has the greatest potential for impact. This is an important step as to not do this means students may not appropriately assess some forces. Political: generally the political landscape is fairly consistent and neither of the major parties at local and national level would impact of AFCs business activities. However the political environment also includes legal and regulatory aspects, such as the Disability Discrimination Act 2005. One major issue for the Club is the role of UEFA (the European Governing Body for football) and whether they will change the qualification regulations for admission into the European Champions League into a league where the only entrants are the winners of the member states National league. This could impact on Arsenal as currently the top 4 teams in England qualify for the tournament. This exclusion would cut out a valuable source of income for the Club placing greater importance on wining each Premier League title. This factor could be rated medium. Economic: As discussed in red question 2 there are issues with the downturn of the UK and global economy. This could have important knock-on effects for the economic situation of the Club. This factor could be rated as medium to high. Socio-cultural: Football could lose some of its gloss if there is a shift away from sport leagues that are not completely balanced on competitive strength. If the big clubs continue to win most of the matches at the expense of the small clubs the product could become much less unpredictable. The likely risk of this occurring and leading to a loss of fans and customers however is low as generally each league has much to play for (such as the outright Premier League win, European Champions League qualification, UEFA Cup qualification and also the battle to avoid relegation). Technological: The benefit of moving into a new facility has meant that Arsenal is a very technologically advanced Club. With the adoption of new technologies in customer services and marketing the management
Reinforcing the USP of AFC through communications to fans and customers (cases 2,3,5,7,9) Providing better value services that lead to greater customer satisfaction (cases 2,4,6,7,8,9) Increased communications of good works the club carries out (cases 2,3,8) Strengthening ties with partners and sponsors (cases 5,7,8) Any other areas that the students might identify in their work.
This should lead to a class discussion on the issue. Part 3: Additional Task (15 minutes) If the above discussion does not go for long enough then the following activity can be used. The instructor should use the additional readings to highlight some of the issues within the case. Students can be allotted a specific reading (1 of 3) that they can then discuss in pairs or to the class as a whole. This will highlight the importance of keeping abreast of changes in the political, technological and competitive environments. Each reading should only take 5 minutes but will assist in clarifying the position of the case further. Part 4: Plenary Discussion (5 minutes) Instructors should finish with the summary PowerPoint slide to conclude the case.
47
The External Environment continued
Glossary:
External Environment the field of operations an organisation carries out its business within which consists of a series of forces that impact on the management of the firm. Multiculturalism a policy that celebrates cultural diversity and wishes to maintain cultural diversity in society. Recession an economic period of negative growth. PESTCOM short form for the Political, Economic, Socio-Cultural, Technological and Competitive forces of the External Environment. Government Ideology a philosophy about how a political party views its approach to public policy. Stakeholders in light of these cases a stakeholder is anyone who has a vested interest in the operations of a firm. Direct Competitors competitors that offer very similar goods and services to the organisation. In-direct Competitors competitions that offer different goods and services but can meet the needs and wants of customers thus taking away potential or existing customers. Strengths the aspects of the organisation that provide it with an advantage over its competitors Weaknesses the aspects of the organisation that provide it with a disadvantage over its competitors. Opportunities potential occurrences in the external environment that present benefits to the organisation if capitalised upon. Threats potential occurrences in the external environment that present potential harm to the organisation if they are not considered in strategic decisions.
Additional Readings:
There are a number of articles that may be used to highlight particular forces from the environment to add to class understanding and discussion;
G G
Political Factors The Politics of Regeneration Technological Factors Stadia of the Future and Arsenal Goes Future-Proof
48
External Environment Case Question Sheet

Introductory Red
Question 1: How do political parties impact on the management of non-public organisations in Britain? Question 2: Over the past 10 years which environment has changed the most rapidly? Provide examples of this change and its impact on Arsenal.
Entry Level Silver

Question 1: Which level of the organisation has the responsibility for scanning the environment for opportunities and threats? Why do you think this is so? Question 2: What changes in tastes have occurred in relation to top level football in England in the past 20 years?
Intermediate Gold
Question 1: In this case we see that other football clubs are seen as direct competitors to Arsenal yet in the stakeholder case we see them as an external stakeholder. How can another club be both? Question 2: What would you say is the potential for indirect competitors to take business away from Arsenal? What are the unique selling points of Arsenal that an indirect competitor could not match?
Advanced Platinum
Question 1: Of the external environmental forces which do you feel has the greatest potential for impact on the operations of Arsenal Football Club? Question 2: If a SWOT analysis was carried out that said that threats could arise with a worsening economic climate how would you propose the Club deal with the problem?
49
Notes
50
Xxxxxxx continued
Tel: +44 (0)20 7133 4200 www.londonmet.ac.uk/lmbs

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PD2901 06.09
London Metropolitan Business School 84 Moorgate London EC2M 6SQ

Arsenal Teachers Guide Paul Kitchin

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Arsenal Teachers Guide Paul Kitchin

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Arsenal Business Cases

Paul Kitchin London Metropolitan Business School

How to use this supplementary book

How to use this guide book

Brief introduction to the business of sport

Brief introduction to the business of sport

Ideas for class delivery

Learning Outcomes of the Case:

To explain the purpose of organisational structure.

To understand how organisational structure functions in business.

Main Business Principle:

Why is this information important for business?

Ideas for class delivery:

Entry Level Silver

Organisational Structure continued

Organisational Structure Case Question Sheet

Entry Level Silver

Customer Experience and Care

Learning Outcomes of the Case:

Main Business Principle:

Why is this information important for business?

Ideas for class delivery:

Customer Experience and Care

Entry Level Silver

Customer Experience and Care continued

Customer Experience and Care

Customer Experience and Care Case Question Sheet

Entry Level Silver

Learning Outcomes of Case:

Main Business Principle:

Why is this information important for business?

Ideas for class delivery:

Entry Level Silver

Market Research continued

Market Research continued

Market Research Case Question Sheet

Entry Level Silver

Operational Management Matches Optional!

Learning Outcomes of the Case:

To explain the importance of catering to businesses.

To understand the logistics of providing catering in a large stadium.

Main Business Principle:

Why is this information important for business?

Ideas for class delivery:

Operational Management continued

revenues at Emirates Stadium

Entry Level Silver

Operational Management continued

Operational Management Case Question Sheet

Entry Level Silver

Learning Outcomes of Case:

Main Business Principle:

Why is this information important for business?

Ideas for class delivery:

Entry Level Silver

Grand total 84,714,500

What event caused the hike in turnover and costs in 2004?

*before exceptional items and taxation

Finance Case Question Sheet

Entry Level Silver

The Marketing Mix

The Marketing Mix

Learning Outcomes of Case:

Main Business Principle: